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Percentage of Plan Contribution Scheme

The employer establishes a base plan and selects a percentage of that plan’s premium to cover. This translates into a dollar amount. That dollar amount is then used as the employer’s fixed contribution for the other medical insurance plans.

Examples

  • Company offers two plans, an HMO and a PPO. They establish the HMO as their "base plan," and will cover 100% of employees' premium on the base plan. They will cover 50% of dependent's premiums on the base plan.
  • Employee premium is $200 for the HMO and $300 for the PPO. Employee elects to enroll in the PPO, and also enrolls a dependent whose premium is $200 for HMO, $300 for PPO.
  • Company will pay $200 of the employee's $300 (100% of their premium on the HMO, put towards their premium on the PPO) and $100 for the dependent (50% of their premium on the HMO, put towards their premium on the PPO).
  • Employee's responsibility is the remaining $100 of their own premium on the PPO post-employer contribution, and $200 of their dependent's premium on the PPO post-employer contribution, for a total of $300.
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