What Does It Actually Cost a SaaS Company to Offer Health Insurance in 2026?
The number founders need before they finalize a headcount budget: offering health insurance to a 10-person seed-stage team costs roughly $95k–$115k per year in employer-paid premiums alone, depending on plan type and geography. At 50 employees, that number lands between $350k and $450k. The exact figure depends on three variables — plan type, employee geography, and how much of the dependent premium you cover. This post breaks down the 2025 benchmarks and what Series A SaaS companies actually pay versus the KFF national average.
1. The National Baseline: KFF 2025 Benchmarks
The KFF Employer Health Benefits Survey is the most comprehensive annual dataset on US employer-sponsored health insurance. Here are the numbers you need:
Single coverage (employee only)
- Average annual premium: $9,325
- Employer share: $7,884 (84%)
- Employee share: $1,440 (16%)
Family coverage
- Average annual premium: $26,993
- Employer share: $20,143 (75%)
- Employee share: $6,850 (25%)
At small firms (10–199 employees), employees pay more: the family premium worker share rises to 36%, versus 23% at large firms. This is where the small-firm disadvantage shows up. You're in the fully-insured small group market, where community rating rules apply and you don't have the bargaining power of a 5,000-person employer.
The deductible gap is equally stark. Average single deductible at a 10–49-person firm: $2,853. Average at a 5,000+ person firm: $1,448. Your employees pay nearly twice as much out-of-pocket before coverage kicks in, even if you're paying the same percentage of the premium.
2. What SaaS Companies Actually Pay (vs. the KFF Average)
The KFF numbers cover all US employers — including retailers, manufacturers, and nonprofits. The Sequoia 2026 Benefits Benchmark covers technology and venture-backed companies specifically. The gap is significant:
| Coverage | KFF all-firm average | SaaS market standard | Survey finding (143 SaaS companies) |
|---|---|---|---|
| Employee-only premium | 84% employer-paid | 100% employer-paid | 82% of respondents cover 100% |
| Dependent premium | 74% (large firm avg) | 50–75% employer-paid | Median 50%; 0% at bootstrapped/seed stage |
| Dental (employee) | Variable | 100% | 89% of Series A+ cover 100% |
| Vision (employee) | Variable | 100% | Universal at Series A+ |
| Annual wellness/fringe | N/A | ~$1,500/year | Median $1,200/year |
The SaaS standard is 100% employer-paid employee-only premium. If you're offering less than that at the Series A stage, you're below market. For dependent coverage, the seed-stage norm is 0% employer contribution — most early-stage companies cover the employee only, and employees pay 100% of dependent premiums themselves.
3. Cost by Plan Type
Not all plans cost the same. The average annual employer premium per employee varies significantly by plan design:
| Plan type | 2025 avg annual single premium | What the employer typically pays |
|---|---|---|
| PPO | $9,818 | 84–100% of premium |
| POS | $9,377 | 84% (avg) |
| HMO | $9,229 | 84–100%; Kaiser markets often lowest |
| HDHP + HSA | $8,620 | 84–100% of premium + optional HSA seed |
The HDHP+HSA combination is the most common at Series A SaaS companies — 52% offer PPO + HDHP/HSA as a two-plan structure. The employer pays 100% of the HDHP premium (the lower-cost base plan) and employees who want the PPO pay the delta between the two premiums themselves.
Companies using this two-plan design report 8–12% lower average employer health cost versus companies paying 100% of a PPO premium for everyone.
4. How Geography Changes the Number
A 15-person company with employees in one city pays differently than a 15-person company with employees in 8 states. Two reasons:
Group plan network gaps. A single-carrier group PPO designed around a California network will have coverage gaps in Texas, Georgia, or Ohio. Solving this usually means going to a national carrier (Anthem, United) whose premiums run higher than regional carriers.
ICHRA allowance variation. If you're using an individual reimbursement model (ICHRA), the right allowance varies by state. ACA marketplace premiums are significantly higher in New York and California than in Tennessee or Indiana. A $600/month allowance covers a mid-tier silver plan in most of the country — but underfunds a comparable plan in Manhattan.
The right design: set geography-based ICHRA classes. Higher monthly allowances in high-cost states (CA, NY, MA) and lower in low-cost states. This is legally permitted under IRS rules and prevents the SF engineer from being systematically under-covered.
5. What a 10-Person and 50-Person Team Actually Costs
10-person team, all in one city (group PPO)
| Item | Annual cost |
|---|---|
| Employer premium share ($7,884/emp × 10) | $78,840 |
| Dental + vision (~$50/emp/mo × 10) | $6,000 |
| 401(k) admin | $2,508 |
| 401(k) match (3% of $50k avg) | $15,000 |
| HRIS (Gusto Plus) | $3,120 |
| Broker | $0 |
| Estimated annual total | ~$105k |
15-person distributed team (ICHRA)
| Item | Annual cost |
|---|---|
| ICHRA allowance ($600/emp/mo × 15) | $108,000 |
| ICHRA admin (PeopleKeep) | $2,940 |
| 401(k) admin | $2,508 |
| 401(k) match (3% of $50k avg) | $22,500 |
| HRIS (Gusto Plus) | $3,120 |
| Estimated annual total | ~$139k |
50-person team on a PEO (Justworks)
| Item | Annual cost |
|---|---|
| Employer health premium share ($7,884 × 50) | $394,200 |
| PEO platform fee ($79/emp/mo × 50) | $47,400 |
| 401(k) match (3% of $60k avg) | $90,000 |
| Estimated annual total | ~$532k |
At 50 employees going direct instead of PEO, you save roughly $35–40k/year in platform fees plus recover ~$38k/year in FICA savings (you don't pay 7.65% Social Security and Medicare taxes on employee pre-tax health contributions when you're not co-employed under a PEO EIN). That's $73–78k/year in savings — enough to fund a junior ops hire.
Not Sure What's Right for Your Budget?
Benefits spend is one of the faster-moving lines in a SaaS company's P&L, and the benchmark gap between "what everyone else does" and "what's right for your stage" is real. The Sequoia 2026 SMB Benchmark and KFF data give you the industry context — but translating that into a budget model for your specific headcount plan, comp structure, and geography requires someone who knows the numbers.
Bridges works with vertical SaaS companies as a fractional finance team. We build the benefits budget, benchmark your current spend against what companies at your stage actually pay, and flag where you're over- or under-investing before it shows up as a recruiting problem or a surprise at renewal. Talk to us if you want a second opinion on what this should cost you.
