Benefits Cost Calculator
Budget a benefits package with KFF 2025 actuals, not guesses — total cost, per-employee-per-month, and the share of payroll it eats.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator budgets a benefits package from actual survey data instead of guesses: health premiums come from the KFF 2025 Employer Health Benefits Survey, and you layer on dental, vision, a retirement match, and life/disability. It returns the total annual cost, the per-employee-per-month (PEPM) figure benefits brokers quote in, and the share of payroll the package consumes.
The formulas
- Health cost per employee
- (% single × $9,325 × employer share single) + (% family × $26,993 × employer share family)Annual KFF 2025 average premiums; the employer-share defaults of 84% (single) and 74% (family) are the complements of the survey’s average worker contributions ($1,440 and $6,850).
- Other components (each)
- headcount × monthly amount × 12 for dental, vision, and life/disability; headcount × match % × average salary for retirement
- Total annual benefits cost
- health + dental + vision + retirement match + life/disability, all × headcount
- PEPM and share of payroll
- total ÷ headcount ÷ 12; total ÷ (average salary × headcount)
Worked example
- Say 5 employees split 60% single / 40% family coverage, you pay 84% of single and 74% of family premiums, plus $35/month dental, $10/month vision, a 3% match on a $55,000 average salary, and $20/month life & disability.
- Health per employee = 0.6 × $9,325 × 0.84 + 0.4 × $26,993 × 0.74 = $4,699.80 + $7,989.93 = $12,689.73 — $63,448.64 for the team.
- Other components: dental $2,100 + vision $600 + retirement match $8,250 (5 × 3% × $55,000) + life/disability $1,200 = $12,150.
- Total = $75,598.64 per year, or $1,259.98 per employee per month.
- Against $275,000 of payroll that is 27.5% — above the 25% line that the rule-of-thumb bands label a rich package (10–20% is typical for a small business).
Rates, benchmarks & sources
- Average annual premiums ($9,325 single / $26,993 family), average worker contributions ($1,440 single / $6,850 family) behind the default employer shares, and the small-firm gap: family-plan workers at firms with 10–199 employees contribute $8,889 vs $6,227 at large firms — KFF 2025 Employer Health Benefits Survey (2025-10-22)
- The % of payroll bands — under 10% lean, 10–20% typical small business, 20–25% generous, over 25% rich — Industry rule of thumb
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- Health premiums are national survey averages, and premiums vary a lot by state, plan design, insurer, and the age mix of your group — get real quotes before committing; the KFF figures are budgeting anchors, not prices.
- The % of payroll bands are rules of thumb for orientation, not compliance or market standards; competitive norms differ sharply by industry.
- Employer payroll taxes, PTO, workers’ compensation, and perks such as stipends or meals are not benefits lines here — the True Cost of Employee calculator covers the full loaded picture.
- The retirement match is modeled as a flat match % × average salary for everyone; real match formulas with tiers and participation rates are priced in the 401(k) Match calculator.
- Assumes every employee enrolls; waived coverage (a spouse’s plan, for instance) lowers real cost below this estimate.
Frequently asked questions
Where do the health premium numbers come from?
From the KFF 2025 Employer Health Benefits Survey, the standard annual survey of employer coverage: average premiums of $9,325 for single and $26,993 for family coverage, with workers contributing $1,440 and $6,850 on average. The default employer shares of 84% and 74% are simply the complements of those worker contributions. They are survey averages — your quoted rates will differ by state, ages, and plan design.
What percent of payroll should benefits cost?
There is no official standard — the bands in this tool are rules of thumb: under 10% of payroll reads lean, 10–20% is typical for a small business, 20–25% generous, and over 25% rich. The default inputs land at 27.5% largely because family health coverage is expensive. Where you should sit depends on your labor market; benefits-heavy industries compete on the package as much as the wage.
Why do small firms pay attention to the employer share on family plans?
Because it is where small employers most visibly lag: KFF 2025 found family-plan workers at firms with 10–199 employees contribute $8,889 a year versus $6,227 at large firms — over $2,600 more from the worker’s pocket for similar coverage. Picking up a bigger share of the family premium is one of the most direct retention levers a small employer has, and this tool lets you price exactly what each share level costs.
Is there a cheaper route than a group health plan for a very small team?
For fewer than about 10 employees, a QSEHRA or ICHRA is worth pricing: instead of sponsoring a group plan, you reimburse employees tax-free for individual-market coverage up to a set allowance, which caps your cost and skips group underwriting. Whether it beats a group plan depends on your local individual market and your team’s situations — this is an alternative to evaluate, not a recommendation.
Does this estimate include payroll taxes or PTO?
No — it prices the benefits package only: health, dental, vision, the retirement match, and life/disability. Employer payroll taxes (Social Security, Medicare, FUTA, SUTA), paid time off, and workers’ compensation are real costs of employment but separate lines; the True Cost of Employee calculator stacks all of them into one loaded figure if that is the number you need.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions.