Monthly Deductions Amounts for Insurance Coverage
Total monthly deduction amounts are determined by the contributions made by employees towards the cost of benefits.
Cost of Benefit - Company Contribution (if applicable) = Employee Contribution (Deduction Amount)
While an employee's total monthly premiums depend on the cost of premiums for themselves and any enrolled dependents (e.g., spouse, children), the actual deductions amounts depend on the company's contribution scheme.
There are a variety of common schemes:
- Non-contributory: Company pays for 100% of entire monthly premium (including dependents, if any)
- Contributory: company pays some of the premium, employee pays the rest.
- Voluntary: Employee pays for 100% of entire premium (including dependents.
For contributory schemes, companies can choose different contribution levels for the employee and dependents. Some examples are:
- Percentage: What percentage of premiums the company covers, for both employees and their dependents (total % for all dependents, equally)
- Fixed: Set dollar ($) amount of premiums the company covers, for both employees and their dependents (total dollar amount for all dependents, equally)
- Fixed Employee, Percentage Dependent: A fixed dollar ($) amount for employees but a percentage amount for dependents.
- Percentage Employee, Fixed Dependent: A percentage amount for employees, but a fixed dollar ($) amount for dependents.
The amount not covered by the company is the employee's contribution amount, or monthly deduction. These monthly amounts are then spread across the number of paychecks in a month.
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