Contribution strategy

A company’s policy regarding the payment of group health insurance premiums to the insurance carrier. For example, if an employer pays 100% of an employee’s premium and 50% for dependents, this policy as a whole is the company’s contribution strategy.

Questions & Answers

Q: What is an employer contribution?
A: The amount of money that an employer has committed to paying toward the costs of an employee’s health insurance. This may or may not be extended to cover dependents. Using the sample strategy described above, if an employee’s plan is $200 and he/she has a dependent whose plan costs another $200, the employer contribution would be $300 (100% for the employee and 50% for the dependent).

Q: What is my contribution strategy?
A: If you have benefits with Gusto, sign into your account and click the Benefits tab. On your benefits dashboard, you will see your contribution below each benefit type. 

Q: How much do I have to contribute?
A: No employer with fewer than 50 full-time employees is subject to a minimum contribution. If you have 50+ employees, your company is likely subject to the employer mandate of the Affordable Care Act, including the "Employer Responsibility" provision. Learn more from the IRS.

Q: How can I collect the employee contribution?
A:  Your contribution strategy is set up in your benefits settings and your employees’ contribution is withheld from their paycheck each time you process payroll. This money is left in your account to make the full payment to the carrier when you receive your invoice. You’ll need to pay the full invoice from the carrier, however the employee contributions have already been collected via payroll deductions.

Q: What does it mean to contribute a percentage to a base plan?
A: When your benefits package includes a base and buy-up plan, you can establish your contribution to be a percentage of the base plan and allow your employees to buy up to another plan in the package (which typically has better benefits but is more expensive). In other words, you (the employer) will commit to paying for a percentage of the base plan but your employees may choose to apply that contribution toward another, more expensive plan and pay the difference. You would only be paying the maximum amount that you committed to paying toward the base plan and the employee would pay the rest.

Note: This is relevant to customers who have benefits with Gusto. Customers who have benefits managed externally should direct contribution strategy questions to their broker and will need to manually set up benefits to reflect their strategy.