Payroll deduction calculator: what comes out of each paycheck for health premiums?
Enter the monthly employee cost and the pay schedule to see the deduction per paycheck. Built for HR and payroll teams setting up open enrollment deductions, especially in years with extra pay dates.
Turn a monthly premium into a deduction.
Set the premium and the schedule. The result updates as you type.
The employee share of the monthly premium for the coverage tier.
Many plans take 24 deductions from biweekly pay and skip the third check in a three-check month.
Your deduction
A planning estimate. Round the deduction as your payroll system does and confirm the schedule with payroll before enrollment opens.
How is the deduction figured?
The yearly cost is the monthly employee cost times 12. Divide it by the number of deductions the payroll takes in a year and you have the amount for each paycheck. Weekly pay has 52 pay dates, biweekly has 26, semimonthly has 24 and monthly has 12. The deductions have to total the yearly cost, or the employee will have paid too much or too little by the end of the year.
What goes wrong with extra pay dates?
Biweekly pay has two three-check months in most years. If payroll takes 24 deductions, those months take nothing from the third check and the plan year still collects the full amount. If payroll takes 26 deductions, the amount per check is smaller. The choice has to be set before open enrollment and used the same way for everyone on the same schedule.
Common questions
Are premium deductions pretax?
Under a Section 125 plan, employees can pay premiums with pretax dollars, which lowers their taxable pay. Our Section 125 savings calculator shows the effect.
Does the deduction change if the employee is added mid-year?
The monthly cost stays the same. The number of remaining deductions changes, so the amount per check changes for the rest of the year or the first deduction catches up.
What if the premium changes at renewal?
Payroll needs the new rates before the first pay date of the new plan year. Missing that date is a common source of over- and under-deductions.
What about a school or seasonal pay schedule?
Some employers pay over fewer months than the coverage runs. In that case, set the deduction count to match the months employees are paid and check that the year’s total still equals their share.
Laws and rules referenced
26 U.S.C. § 125 — Cafeteria plans: pre-tax premium payments, plan limits and nondiscrimination rules.
MCL 408.477 — Michigan Payment of Wages and Fringe Benefits Act: wage deductions require the employee’s written consent.
This tool gives estimates for education, not tax or legal advice. Rules change, so confirm your situation with a qualified advisor.
Talk to us about payroll and benefits
Book a 30-minute call and we will check how enrollment elections reach payroll and where the deduction errors start. Visit us at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304, or call 248.370.8853.
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