The Many Ways Employers Structure Contributions

Plan design gets most of the attention in benefits conversations. Deductibles, copays, networks—these are the details that fill benchmarking reports. But contribution strategy often has a bigger impact on both employer costs and employee satisfaction.

We've been tracking how employers structure contributions, and the variety of approaches is striking.

Beyond Simple Dollar Amounts

The basic question—"how much does the employer contribute?"—turns out to have a lot of different answers. Yes, there's a dollar amount. But increasingly, that dollar amount varies based on factors beyond just which tier the employee selects.

Here's what we're seeing employers do.

Salary-Based Contributions

Some employers tie contribution amounts to employee compensation. Higher earners pay more for the same coverage; lower earners get more help.

The logic is straightforward: a $200/month employee premium hits differently for someone making $40K versus someone making $150K. Salary banding attempts to equalize the burden.

We're tracking adoption of salary-banded contributions across our dataset. It's more common in larger employers and in industries with wide compensation ranges.

Wellness-Based Contributions

Wellness incentives have moved beyond gift cards and gym discounts. Some employers now tie contribution levels to participation in wellness programs—health screenings, coaching programs, activity challenges.

Employees who participate get lower premiums. Those who don't pay more.

These programs raise questions about fairness and privacy, but they're growing. We're tracking both adoption rates and how employers structure the incentive differentials.

Tobacco Surcharges

Tobacco surcharges have become increasingly common. Employees who use tobacco—or who decline to certify that they don't—pay higher premiums.

The surcharges vary widely. Some are nominal. Others add meaningful cost. We're seeing these primarily in self-funded employers who have more flexibility in plan design.

Spousal Surcharges

Working spouse surcharges are another mechanism gaining traction. If an employee's spouse has access to coverage through their own employer but enrolls in the employee's plan instead, there's an additional cost.

The rationale: why should the employer subsidize coverage when another employer could be bearing that cost?

These surcharges require verification processes and can create administrative complexity, but employers facing cost pressure are increasingly willing to implement them.

The Tier Question

Underneath all these mechanisms, the fundamental tier structure remains: employee-only, employee plus spouse, employee plus children, family. And the gap between what employers contribute across these tiers continues to be one of the biggest sources of employee cost variation.

We're building out our contribution tracking to give better visibility into all of these dimensions—not just the headline dollar amounts, but the mechanisms employers use to vary those amounts based on behavior, circumstances, and coverage choices.