Who pays the increase: you or your employees?
A percent contribution grows with each renewal. A frozen dollar contribution does not. See the difference in cost and what it means for each employee.
Contribution strategy comparison
Enter your current premiums, your employer share and the renewal increase you expect.
Your estimate
Estimates only. Results depend on the figures you enter and on your plan documents. Not tax, legal or financial advice. Affordability and fairness rules may apply.
Two ways to set a contribution
A percent contribution means the employer pays the same share every year, so cost rises with each renewal. A frozen dollar contribution fixes the employer amount and asks employees to cover the increase.
Choosing between them
Many employers split the difference by raising the dollar amount each year by a set percent below the increase. The right choice depends on your budget, your hiring market and the affordability test under the ACA.
Common questions
Which approach costs less?
A frozen dollar amount costs less in year two, but the savings come from employees paying more. Weigh the savings against turnover and morale.
Does the ACA affordability test matter?
Yes. If the employee cost for employee-only coverage rises above the affordability threshold, large employers can face penalties. Check it before freezing.
Can I mix both methods?
Yes. Some employers use a percent for employee-only coverage and a dollar amount for dependents, which controls the costliest tiers.
How should I communicate it?
Show employees the total cost and the employer share. People accept changes better when they see the amount you pay.
Laws and rules referenced
26 U.S.C. § 36B(c)(2)(C) — Employer coverage is affordable when the employee’s cost is within the percentage of household income the IRS sets each year.
26 C.F.R. § 54.4980H-5 — Affordability and the three safe harbors (Form W-2 wages, rate of pay and federal poverty line) in paragraph (e)(2).
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 your numbers
Book a 30-minute call and we will check these figures against your plan, your carriers and your goals. Visit us at 41000 Woodward Avenue, Suite 350 East, Bloomfield Hills, MI 48304, or call 248.370.8853.
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