How much should I expect to pay for small business health benefits?

The average annual premium cost for single coverage in 2017 as $6,690, with employers paying 82% of that.¹ An employer’s contribution is often not the same for single employee and family coverage. In fact, one-third of workers in small firms (3-199 employees) contribute more than 50% of the total family premium.

Use this interactive map , opens new window to get a sense for the premium and deductible costs in your state.

Antara Dutta, a mentor for SCORE, a small business counseling organization recommends keeping total benefits costs for all employees to 10 to 20 percent of your overall revenue. Dutta explains, “Anything more than that, and you could bankrupt out because your year-over-year inflation of healthcare may be larger than your year-over-year revenue growth."

While the ACA may no longer be the rule of the land, it considered health coverage affordable if the employee's contribution for covering himself only was no more than 9.69 percent of his annual income. Keeping annual premium costs around 10% of an employee’s income can help inform which plan you select, and how much the company will contribute.

For example, if the average salary at your company is $40,000/year, aim for a premium around $335/month per employee, adjusting up/down based on how much the company will contribute. (Premiums are typically shared by the employer and employees and how that’s split is determined by the employer.)

Employer contributions to healthcare costs are typically tax deductible. Your accountant can explain how deductions offset the cost, potentially making benefits more affordable than you may think.