of base salary is the typical employer cost of a full compensation package, on top of wages
average annual employer contribution for single-coverage health insurance in 2023, the largest benefits cost component
of employees cite benefits as a top reason for staying, ranking above base salary increases
Employee benefits are either required by law or voluntarily offered. Required benefits include employer FICA, FUTA and SUTA unemployment insurance, and workers compensation. Optional benefits are the employer’s choice and directly affect recruiting, retention, and compensation cost.
The key challenge is modeling cost before committing. Adding health insurance for 10 employees adds $85,000 to $100,000 annually. The calculator below shows total costs for any payroll size.
Benefits cost breakdown: what each element costs at a $65,000 median salary
The ACA mandate applies to businesses with 50 or more FTEs only. Businesses under 50 FTEs are not required to provide health insurance but may qualify for the Small Business Health Care Tax Credit at average wages under $56,000.
Total benefits cost calculator
Required vs. optional employee benefits
| Benefit | Required | Optional | Approximate annual cost |
|---|---|---|---|
| Employer FICA (SS + Medicare) | ✓ | N/A | 7.65% of wages |
| FUTA + SUTA (unemployment) | ✓ | N/A | ~$400–$900/employee |
| Workers compensation | ✓ | N/A | Varies by industry ($0.35–$7.40/$100 payroll) |
| Health insurance | ✗ (<50 FTE) | ✓ | ~$7,000–$10,000/employee (single) |
| Retirement plan (401k match) | ✗ | ✓ | 3% match = $1,950 at $65K salary |
| Paid time off (PTO) | State varies | ✓ | ~$2,500/employee at 10 days + $65K salary |
| Dental + Vision | ✗ | ✓ | ~$1,200/employee/year combined |
A QSEHRA lets businesses under 50 FTEs reimburse employees for individual health premiums tax-free, without a group plan. The 2024 limit is $6,150 (self-only) or $12,450 (family). Contributions are employer-deductible and employee-tax-free.
HR software with benefits administration handles enrollment, eligibility windows, ACA compliance reports, and payroll integration.
