Health Care is Employers’ Largest Benefit Cost

According to data from the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) health insurance was the largest individual employer benefit cost at $2.12 per hour, which accounted for 7.5% of total compensation costs. This compares to March 2001, when employer costs for health benefits averaged $1.16, or 5.6% of total compensation.  

Private industry employer costs for retirement and savings benefits averaged $1.00 per hour worked (3.5% of total compensation).  

Among occupational groups, employer costs for health insurance benefits ranged from 91 cents per hour worked and 6.5% of total compensation for service workers, to $3.17 and 6.3% of total compensation for management, professional, and related occupations. Among other occupational categories, employer costs for health benefits averaged $1.90 (8.6%) for sales and office occupations, lower than $2.47 (8%) for natural resources, construction, and maintenance occupations, and $2.39 (10.1%) for production, transportation, and material moving occupations.  

Employer costs for health insurance benefits were significantly higher for union workers, averaging $4.63 per hour (12.3%), than for nonunion workers, averaging $1.85 (6.8%).   

In goods-producing industries, health insurance benefit costs were higher, at $2.94 per hour (8.9% of total compensation), than in service-providing industries, at $1.95 per hour (7.2% of total compensation).   

Among the four regions, costs for health insurance benefits ranged from $1.79 per hour in the South to $2.49 in the Northeast. Health insurance costs were $2.28 in the Midwest and $2.13 in the West. Within census divisions, hourly health benefit costs ranged from $1.72 in the West South Central division to $2.50 in the Middle Atlantic division.   

Health insurance benefit costs increased, both in average hourly dollar amount and as a proportion of total compensation, with establishment size. Establishments with fewer than 50 workers averaged $1.34 per hour worked (6% of total compensation); those with 50-99 workers averaged $1.83 (7.1%); those with 100-499 employees averaged $2.40 (8.4%); and those with 500 or more employees averaged $3.54 (8.7%).