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Bureau of Labor Statistics > Employer Costs for Employee Compensation > Home

The Cost of Insurance: Examining insurance components covered by the ECEC

Insurance is an important component of overall compensation that many prospective employees consider when comparing job opportunities. Consequently, it is important to examine the cost to employers for providing insurance benefits to employees. The National Compensation Survey (NCS) publishes statistics on the cost of insurance benefits through the Employer Cost for Employee Compensation (ECEC) program.

Different types of insurance benefits

The ECEC provides estimates for cost of compensation (cost per hour worked) and percent of total compensation for four different subcategories of insurance: life, health, short-term disability, and long-term disability. Incidence and provision rates for these types of insurance can be found in the NCS benefits page.

Insurance benefit costs accounted for 7.6 percent of total compensation and 26.8 percent of total benefits among private workers in September 2022. The component breakdown can be seen in table 1. Health insurance accounted for 7.1 percent of total compensation, with 0.2 percent for short-term disability insurance, 0.1 percent for life insurance, and 0.1 percent for long-term disability insurance. (See chart 1.)

Chart 1 data table

Table 1. Benefit percentages of total compensation, private workers, September 2022
	Percentage
Insurance	7.6
Legally required benefits	7.5
Paid leave	7.4
Supplemental pay	3.6
Retirement and savings	3.4
Source: U.S. Bureau of Labor Statistics, National Compensation Survey

Health insurance provides preventive and protective medical, dental, vision, or prescription drug coverage to employees and their families. Health insurance is typically one of the most expensive benefits for employers to provide. For private industry workers in September 2022, the employer cost for health insurance averaged $2.83 per hour worked. Health insurance includes several different components including medical care premiums, high deductible health plans, and savings accounts. A full list can be found in the NCS benefits glossary.

Life insurance provides a lump-sum payment to a designated beneficiary or beneficiaries of a deceased employee. The employer cost for life insurance in September 2022 averaged $0.04 per hour worked. The NCS only includes plans with employer contributions that cover active employees. The following plans are considered out of scope for the NCS:

Retiree - Coverage to retirees for longer than 30 days after retirement.
Supplemental - Employees purchasing additional coverage beyond what is provided by the basic plan.
Dependent - Benefits to the beneficiary, most often the employee, in the event of death of the covered spouse and/or children.

Short-term disability insurance provides benefits for non-work-related illnesses or accidents on a per-disability basis, typically for a 6-month to 12-month period. The cost of compensation for short-term disability insurance in September 2022 averaged $0.08 per hour.

Long-term disability insurance provides a monthly benefit to eligible employees who, because of a non-work-related illness or injury, are unable to work for an extended length of time. The cost of compensation for long-term disability insurance in September 2022 averaged $0.05 per hour.

Insurance costs by census division and establishment size

Among census divisions, the cost of compensation for health insurance was $3.30 per hour in the Middle Atlantic division and $2.09 per hour in the West South-Central division for private industry workers. At the national level, employer costs averaged $2.83 per hour. (See chart 2.)

Chart 2 data table

Table 2. Cost of compensation (cost per hour worked) for health insurance by census division, private workers, September 2022
Census division	Cost of compensation
Middle Atlantic census division	$3.30
Northeast census region	$3.27
Pacific census division	$3.23
New England census division	$3.19
West North Central census division	$3.12
Midwest census region	$3.08
West census region	$3.07
East North Central census division	$3.06
United States (National)	$2.83
Mountain census division	$2.72
South Atlantic census division	$2.31
East South Central census division	$2.24
South census region	$2.23
West South Central census division	$2.09
Source: U.S. Bureau of Labor Statistics, National Compensation Survey

For private industry workers, short-term disability costs varied from $0.17 per hour worked for establishments with 500 workers or more and $0.04 per hour worked in establishments with less than 50 workers in September 2022. Life insurance costs averaged $0.07 per hour worked among establishments with 500 workers or more and $0.04 per hour worked among establishments with 50-99 workers. Long-term disability insurance cost employers $0.05 per hour worked on average. (See chart 3.)

Chart 3 data table

Table 3. Cost of compensation (per hour worked) for various insurances by establishment size, private workers, September 2022
Establishment size	Life insurance	Long-term disability insurance	Short-term disability insurance
All workers	$0.04	$0.05	$0.08
50-99 workers	$0.04	$0.04	$0.06
100 workers or more	$0.06	$0.07	$0.14
100-499 workers	$0.05	$0.05	$0.11
500 workers or more	$0.07	$0.09	$0.17
Source: U.S. Bureau of Labor Statistics, National Compensation Survey

Accessing the data

To assist users in evaluating the reliability of these compensation costs, relative standard errors are also published for each estimate. The standard error for the series is divided by the cost estimate and expressed as a percent of the compensation cost.

ECEC data involving leave benefits, are available for private industry workers, civilian workers, and state and local government workers from 2004 to the present and will be produced for the March, June, September and December reference periods. ECEC data is available through the public database, as well as in Excel form. The cost of benefits is impacted by worker participation and users can obtain information on incidence and provisions of employer-sponsored benefits in the U.S. through the annual benefits publication, also produced by the National Compensation Survey program.