In health insurance and benefits, EE means employee and ER means employer. On a rate sheet or pay stub, “EE” by itself usually means employee-only coverage, and the other codes describe who else is on the plan: ES is employee plus spouse, EC is employee plus child or children, and EF or FAM is family coverage. These groupings are called coverage tiers, and each tier has its own premium and its own employee contribution.
Key takeaways
- EE = employee, ER = employer. “EE cost” is what the employee pays; “ER cost” is what the employer pays.
- Tiers set the price. Each coverage tier has its own premium, and most employers pay a larger share of the employee-only tier than of the family tier.
- The ACA looks only at the EE tier. Affordability is tested on the employee’s cost for employee-only coverage, not family coverage.
- Tier structure is a design choice. Two, three and four tier structures shift cost between single employees and families in different ways.
Common benefits abbreviations
| Code | Means | Also written as |
|---|---|---|
| EE | Employee only | EO, Single, Employee Only |
| ES | Employee + spouse | EE+SP, E+S (may include a domestic partner, depending on the plan) |
| EC | Employee + child or children | EE+CH, E+C, ECH |
| EF | Employee + family (spouse and children) | FAM, Family |
| EE+1 | Employee + one dependent (spouse or child) | E+1 |
| ER | Employer | ER contribution, ER cost |
| EE contribution | The employee’s share of the premium, usually by payroll deduction | EE cost, EE share |
You may also see COB (coordination of benefits, when a person has two plans), QB (qualified beneficiary under COBRA) and OE (open enrollment).
Coverage tier structures
Employers and carriers choose how many tiers a plan has. The more tiers, the more closely each person’s price matches who they cover.
| Structure | Tiers | Effect |
|---|---|---|
| Two-tier | Single; Family | Simple, but an employee covering one child pays the same as a family of six. |
| Three-tier | EE; EE+1; Family | Common middle ground; separates the smallest households from full families. |
| Four-tier | EE; ES; EC; Family | The most common structure for mid-sized employers; prices spouses and children separately. |
| Five-tier or more | Four-tier plus splits such as EE + 1 child vs EE + 2 or more children | Closest to actual cost, more complex to explain. |
In the small-group market, premiums start from each member’s age. Carriers commonly convert those age-based rates into tier rates, often called composite rates, so that everyone in the same tier pays the same amount.
How EE and ER contributions work
Once each tier has a premium, the employer decides how much of it to pay. The two usual approaches:
- Percentage of premium: for example, the employer pays 80% of EE and 60% of dependent tiers. Easy to explain; the employer’s cost rises automatically with every renewal.
- Flat dollar amount: the employer pays a fixed amount per tier. Renewal increases fall to employees unless the employer raises the amount.
Employee contributions are normally taken pre-tax through a Section 125 cafeteria plan. To see how your contributions compare with other employers, see contribution and out-of-pocket benchmarking.
Why the EE tier matters for ACA compliance
An employer with 50 or more full-time employees, including full-time equivalents, has to offer coverage that is affordable, and affordability is measured on the employee’s cost for the lowest-cost employee-only (EE) option that meets minimum value. The cost of family coverage is not part of that test. For 2026 coverage is affordable if the employee’s EE contribution is no more than 9.96% of household income, and employers usually use one of the IRS safe harbors, such as W-2 wages or the federal poverty line, instead of household income.
Large employers must also offer coverage to employees’ dependent children up to age 26 to avoid the largest ACA penalty. They are not required to offer coverage to spouses. See the ACA affordability percentage for 2026 and 2027.
Changing tiers
Employees choose a tier at open enrollment. Because contributions are usually pre-tax, they can change tiers mid-year only after a qualifying life event, such as marriage, divorce, birth or adoption, or a spouse gaining or losing coverage, and usually must ask within 30 days. See open enrollment.
More plain-English benefits explainers
- What Is an HSA?: health savings accounts, limits and employer rules
- What Is an HMO?: how HMO plans work and who they fit
- What Is Form 1094-C?: the employer transmittal and the 95% offer test
- What Is Form 1095-C?: the employee statement, its codes and deadlines
- What Is an ASO Health Plan?: how administrative services only, self-funded plans work
- How Much Does COBRA Insurance Cost?: averages, deadlines and cheaper options
- What Is a PBM?: how pharmacy benefit managers make money
- What Is EBSA?: the Department of Labor agency that enforces ERISA
- What Is a Broker of Record Letter?: how to change brokers without changing your plan
- Offering Group Health Insurance With No Employer Contribution: a guide for businesses with 2-50 employees
- Health Insurance for Employees: how Michigan employers set up a group plan
- What Is Commercial Health Insurance?: private coverage versus government programs
Frequently asked questions
What does EE mean in health insurance?
EE means employee. On a rate sheet or benefits summary, EE alone usually refers to employee-only coverage, and “EE contribution” means the share of the premium the employee pays.
What does ES mean on a benefits form?
ES means employee plus spouse: coverage for the employee and their spouse, and in some plans a domestic partner. It does not include children.
What is the difference between EC and EF?
EC is employee plus child or children, without a spouse. EF, often written FAM, is family coverage for the employee, spouse and children.
What does ER mean in benefits?
ER means employer. “ER contribution” is the part of the premium the employer pays.
What does EE+1 mean?
EE+1 means employee plus one dependent, which can be either a spouse or a child. It is used in three-tier plans in place of separate ES and EC tiers.
Does ACA affordability apply to family coverage?
No. ACA affordability is measured on the employee’s cost for the lowest-cost employee-only coverage that provides minimum value. The cost of family coverage does not affect the employer penalty test.
Are your tiers and contributions working for you?
CFH Insurance Consultants is an independent employee benefits firm. We are licensed insurance brokers, and for proper coverage of an account we work in teams of five. Send us your rate sheet and contribution strategy and we will show you how your tier structure and employer share compare with similar employers, and what a change would cost you and your employees. Start here, call 248.370.8853, or book a 30-minute call.
This article is general information, not legal or tax advice. Affordability percentages are adjusted by the IRS each year; confirm the current figure before setting contributions.
