Company contribution

Federal minimum

No employer with fewer than 50 full-time employees is subject to a federal minimum contribution. If you have 50+ employees, your company is likely subject to the employer mandate of the Affordable Care Act, known as the employer responsibility provision. 

Your insurance carrier's minimum

Most small-group health insurance carriers require a minimum company contribution of 50% for employees. In a few states, some also require a minimum contribution toward dependents.

Percentage of any plan 

If you set your company contribution as a percentage, this means you’ll cover a specified portion of each enrolling employee’s monthly premium.

For example, say your company offers Bronze, Silver, and Gold plans and sets the company contribution as 75% of any plan. Whichever plan an employee chooses, the company pays 75% of their monthly premium, and the employee pays the other 25%.

The total company cost will depend on what plan each employee chooses—it’ll be lower for employees who choose the Bronze plan and higher for employees who choose the Gold plan. 

Percentage of a base plan 

If you offer more than one health plan to choose from, you have the option to tie the company contribution to a base plan. This means that no matter which plan an employee chooses, the company only contributes the specified percentage of what their premium would be for the designated base plan. This is a good way to keep company costs more predictable while offering employees flexibility in their plan choices.

For example, say your company offers Bronze, Silver, and Gold plans. You set the company contribution as 75% of the Silver plan. If an employee enrolls in the higher-cost Gold plan, the company only pays 75% of what their Silver premium would be and the employee pays the difference. If an employee picks the lower-cost Bronze plan, the company contribution goes further toward that plan and the employee pays any remainder. 

Flat dollar amount 

Though less common than percentages, you can also set the company contribution as a flat dollar amount, such as $300 per employee. The flat dollar amount must still meet your carrier’s minimum contribution requirements.  

Offering a different contribution to different employees 

Non-discrimination rules require that employers offer benefits equally to a given class of employees. For example, some insurance carriers may let you offer one contribution to all full-time employees and a different contribution to all part-time employees. This is known as a class-based contribution (as the company contribution is based on what class an employee is in). Not all companies are able to offer this compliantly, and not all carriers allow it.

If you offer benefits through Gusto (including the broker integration), employees' contributions are deducted from their paychecks each time you run payroll. These funds are left in your company bank account so benefits admins can pay the insurance carrier invoice in full. 

If you offer benefits through Gusto (including the broker integration), you can change your company contribution in Gusto during the health plan's annual renewal before open enrollment begins.

If you offer benefits outside of Gusto and you've changed your company contribution with the insurance carrier, make sure to change your employees' benefit deductions as needed.