You want to do right by your team. Offering health benefits shows you care, but figuring out how much to contribute can feel like walking a tightrope between supporting your employees and keeping your budget intact.

Here's the reality: employee contributions (the portion of health plan premiums your business covers) can be one of your strongest tools for attracting and retaining talent. Let's break down what works and how to approach contributions in a way that benefits everyone.

‍

What Are Contributions for Employee Health Benefits? (and why they matter)

Employee contributions are the amount your business pays toward your team's health plan premiums. You might cover the full cost, a percentage of it, or a set dollar amount. The rest comes out of employees' paychecks. Why it matters:

‍

Value to your employees: When you contribute toward premiums, you're directly reducing what employees pay out of pocket. That makes healthcare more accessible and shows your team you're invested in their wellbeing. When future candidates are job hunting, comparing you to the competitor, a solid healthcare offering will give you a leg up.

Value to your business: Contributions help you compete for talent, especially when you're up against larger companies or if you're hiring a more experienced candidate that would expect benefits to be part of the hiring package. They also come with tax advantages. The money you put toward employee health premiums is generally treated as a business expense, reducing your taxable income. The Bureau of Labor Statistics found that, on average, about 30% of a businesses annual budget accounts for employee health premium contributions.

Meanwhile, employees don't pay federal income tax on those employer-paid premiums either. That means $1,000 in health benefits keeps its full value for your employee, while $1,000 in wages gets reduced by taxes.

What's typical? Among Meridio clients that do make contributions, 65% contribute a set dollar amount toward medical, dental, or vision plans, while 35% contribute a percentage of the total premium cost. This set dollar amount can range from $50 per employee to $500 per employee depending on the plan offering.

‍

Nationwide, only about 50–60% of small businesses with 10–199 employees offer health benefits at all, so when you do offer contributions, your business immediately stands out from the crowd. 

‍

Three Tips for Offering Employee Contributions

1. Start with a flat dollar amount, not a percentage

A fixed contribution (like $200 per employee per month) keeps your expenses predictable. When premiums go up, and they will, a percentage-based contribution means your costs automatically rise too. A flat fee lets you control your investment while still providing meaningful support.

2. Begin with employee-only contributions

You don't have to cover dependents right out of the gate. Start by contributing toward coverage for employees only. Once you've got that system running smoothly and you know what it costs, you can add dependent contributions later if your budget allows.

3. Review contributions annually

Your business changes. Your budget shifts. What felt generous two years ago might not be competitive today. Set a reminder to review your contribution strategy every year to make sure it still aligns with your goals and the market standards.

‍

How Meridio Helps You Build a Smarter Contribution Strategy

Every business is different, and there's no one-size-fits-all approach to contributions. That's where Meridio's team comes in.

Guidance based on your goals: Let's say you're a medical staffing firm trying to retain travel nurses who often leave for higher-paying contracts. Instead of competing solely on hourly pay, we might recommend contributing to employee-only health plans to increase retention and reduce recruiting costs.

‍

Or maybe you run a pool and spa company looking to attract skilled technicians for peak season, employer contributions can encourage technicians to return year after year and stay through the full season.

Flexibility when things change: Your contribution strategy isn't set in stone. If you need to adjust contributions as your business grows or your budget shifts, just reach out to a benefits partner to make changes. At Meridio your dedicated Customer Success Manager (CSM) can help you adjust contributions, plan offerings, and manage your account.

‍

With Meridio as your strategic benefits partner, your CSM will make sure our Benefit Guide team is communicating the most up-to-date information when they meet with your employees for one-on-one enrollments. As your dedicated rep, your CSM works to make sure your business needs are met year round, not just during renewal.

Partnership that takes the weight off your shoulders: Contributions are just one piece of your overall benefits strategy. Meridio's team helps you see the bigger picture—how your contribution approach fits with plan design, enrollment, and communication to your team. We guide you toward smarter benefits decisions so you can focus on running your business, not managing healthcare logistics.

‍

Ready to talk strategies?

Learn more about Meridio’s affordable health benefit solutions designed for small businesses. Connect with our team today to see if Meridio is a good fit for your business. 

‍

Current customer of Meridio? Reach out if you’d like to review your contribution strategy to ensure it’s working for your business and your team.