Total Annual Cost Per Employee: How Does Your Health Plan Compare?
Healthcare costs continue to rise, and for many employers, one of the biggest unanswered questions is simple:
How much are we really spending per employee, and how does that compare to others like us?
National benchmarking data shows that the average annual cost per employee enrolled in an employer-sponsored health plan is:
• $9,054 for individual coverage
• $24,439 for family coverage
These figures represent more than just premiums, they reflect the growing financial pressure employers face when balancing competitive benefits with long-term sustainability.
Why Cost Per Employee Matters
Understanding your total annual cost per employee is foundational to effective benefits strategy.
Without benchmarking, organizations often rely on renewal increases alone to gauge performance. But renewal percentages only tell part of the story. True benchmarking evaluates:
• Cost per employee (PEPY) compared to national averages
• Industry-specific comparisons
• Geographic cost differences
• Funding strategy impact
• Workforce demographics and utilization patterns
Two employers may both experience a 7% renewal increase, yet one may already be operating far above market norms.
That difference matters.
National Averages Are Just the Starting Point
While national averages provide helpful context, they rarely tell the full story.
Healthcare costs vary significantly by:
• Industry
• Location
• Group size
• Workforce age and risk profile
• Plan design structure
Benchmarking solely against national data may lead employers to assume they are “on track,” when in reality they may be overspending relative to their true peer group.
That’s why meaningful benchmarking goes deeper.
Turning Benchmarking Into Strategy
At Innovative Benefit Planning, benchmarking is not just about comparison, it’s about strategy.
We analyze your total annual cost per employee against:
• National benchmarks
• Your specific industry
• Your geographic region
• Employers of similar size and structure
From there, we develop a tailored strategy designed to:
• Control rising healthcare costs
• Improve plan efficiency
• Support retention and recruitment
• Align benefits with workforce needs
Cost control without strategy leads to reactive decisions.
Benchmarking provides the clarity needed to act intentionally.
The Question Every Employer Should Ask
Do you know how your health plan costs compare to your competitors?
If your cost per employee is above market, there may be opportunities to restructure, renegotiate, or redesign your plan.
If your costs are below market, benchmarking can validate your strategy and strengthen leadership confidence.
Either way, data creates leverage.
If you’re unsure where your organization stands, now is the time to find out.
Reach out to Innovative Benefit Planning to understand how your total annual cost per employee compares, and what strategic opportunities may exist within your plan.
*Date collected through our partnership with UBA
