Average Cost of Employee Health Care Makes Up 7.6 Percent of a Company’s Annual Operating Budget

The average health care plan costs employers $8,669 per employee

August 30, 2016
ALEXANDRIA, Va. — The average cost of providing health care makes up 7.6 percent of a company’s annual operating budget and equates to an average of $8,669 per covered employee, according to the Society for Human Resource Management’s (SHRM’s) new Health Care Benchmarking Report.

The average cost per covered employee has increased by nearly $500 in the span of three years. Employers spent an average of $8,171 per employee in the previous fiscal year.

“More and more employers are having to push the increasing cost of health care onto employees,” said Evren Esen, director of workforce analytics at SHRM. “High-deductible health plans such as health savings accounts (HSAs) and health reimbursement arrangements (HRAs) are one way that employers are attempting to counter the high costs.”

Currently, 48 percent of organizations offer HSAs, and 23 percent offer HRAs. In the previous fiscal year, 49 percent reported offering an HSA and 23 percent offered an HRA.

The report analyzed data collected from the SHRM Health Care Benchmarking Survey in 2016. The survey of 2,124 respondents measured data related to health care coverage prevalence, employee participation and plans offered, costs for employees and employers, and information on high-deductible plans. The data was collected from February to April 2016 and reflects fiscal year 2015. Metrics from this report are useful to organizations as they evaluate their own operations and practices and can be customized to meet specific needs. 

Among other findings: 

• Health care coverage: 98 percent of organizations offer health care coverage for full-time employees. Twenty-three percent of companies offer health care coverage for part-time employees, which is down from 27 percent in 2014. Ninety-two percent offer coverage for the spouse of employees, which is down from 96 percent in 2011. 
• High-deductible plans: On average, employers contribute $576 to their employees’ HSA accounts, while employers contribute $1,885 to employee HRAs. In 2014, employers contributed an average of $632 to HSAs and $2,829 to HRAs.
• Prescriptions: 92 percent of companies offer generic prescriptions. Ninety-five percent of organizations offer a 90-day mail-order prescription service. 
• Prescription drug co-pays: The average employee co-pay is $11 for generic medication, $33 for formulary brand medication (insurance carriers’ preferred drugs) and $58 for nonformulary brand medication. 
• Deductibles and Premiums: Across all plans, the average annual in-network deductible for employee-only coverage is $1,554, the total monthly premium for employee-only coverage is $461 and the total monthly premium for family coverage is $1,292. 
• Co-pays: The average co-pay for in-network primary care office visits for employee-only coverage across all plans is $22. 

For more survey/poll findings, visit shrm.org/benchmarks. Benchmarking reports contain metrics in the areas of human capital, health care, talent acquisition, paid leave and benefits prevalence. 

These reports can be customized by geography, sector, industry, staff size and other factors. The benchmarking service collects data from SHRM member organizations to produce the benchmarking reports and also draws on other research. 

Media: For more information or to schedule an interview, contact Vanessa Hill at 703-535-6072 and Vanessa.Hill@shrm.org or Kate Kennedy at 703-535-6260 and Kate.Kennedy@shrm.org

About the Society for Human Resource Management
The Society for Human Resource Management (SHRM) is the world’s largest HR professional society, representing 285,000 members in more than 165 countries. For nearly seven decades, the Society has been the leading provider of resources serving the needs of HR professionals and advancing the practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at shrm.org and follow us on Twitter and Instagram @SHRMPress. 


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