Cost of Employee Benefits: Per Hour, Month, and Year (2025)

When people ask “What’s the cost of employee benefits?” they’re talking about everything employers spend beyond wages to compensate an employee—health insurance, paid leave, retirement contributions, legally required programs (FICA, unemployment, workers’ comp), and other perks or stipends. It’s part of total compensation and can be expressed per hour, per month, or per year. On average, benefits account for roughly a third of compensation, but the true figure depends on your industry, workforce mix, plan design, and location.

This guide turns the latest 2025 BLS data into clear, usable numbers. You’ll get benchmarks per hour, month, and year; the current wages-versus-benefits split; sector and occupation averages; and a breakdown by benefit category. We’ll share conversion formulas, a quick calculator, budget ranges for legally required benefits, key health cost drivers, and practical steps to build a benefits budget for a 10–250 person company—plus strategies to control costs without cutting value and trends to watch through 2026. First up: what’s included in “benefits cost,” and what isn’t.

What “employee benefits cost” includes (and what it doesn’t)

To keep your numbers clean and comparable, use the Bureau of Labor Statistics (BLS) definition of benefits within total compensation. In BLS Employer Costs for Employee Compensation (ECEC), the cost of employee benefits includes five buckets. Knowing what’s in (and out) prevents double-counting when you turn hourly benchmarks into monthly or annual budgets.

• Paid leave: Vacation, holiday, sick, and personal leave.
• Insurance: Medical/health, dental, vision, life, and short/long-term disability.
• Retirement and savings: Employer 401(k) matches and pension contributions.
• Legally required benefits: Employer FICA (Social Security and Medicare), unemployment insurance, and workers’ compensation.
• Supplemental pay: Overtime and premium pay, shift differentials, and nonproduction bonuses.

What’s not included in “benefits” (so don’t mix it in):

• Base wages and salaries
• Equity/ownership awards (e.g., stock options/RSUs)
• Recruiting, training, equipment, and office space
• Expense reimbursements and per diems
• Third-party admin/platform fees (use a separate line item)

2025 benchmarks at a glance: per hour, month, and year

Here’s the headline number you can budget around: in June 2025, BLS reports civilian workers cost employers $48.05 per hour in total compensation—$33.02 in wages and $15.03 in the cost of employee benefits (about 31%). To make this usable, the table below converts those hourly figures to monthly and annual estimates using a standard 40-hour workweek (2,080 hours/year). We’ll share formulas and alternate assumptions later.

These are national averages; your mix will vary by sector, occupation, plan richness, and location. Private industry and state/local government benchmarks are covered in the next sections, along with category-level breakouts so you can see what’s driving your benefits line.

Wages vs. benefits: share of total compensation in 2025

BLS 2025 data puts the civilian split at roughly 69% wages and 31% benefits ($33.02 wages + $15.03 benefits = $48.05 per hour). For budgeting, that translates to benefits ≈ 0.45 × wages at the civilian benchmark—so $100,000 in wages implies about $45,000 in benefits (total comp ≈ $145,000). Sector mix nudges the ratio: private industry trends near 70/30 (≈ $0.43 in benefits per $1.00 wages), while state and local government skews richer at about 62/38 (≈ $0.61 per $1.00 wages). Use these as starting points, then adjust for your plan design, workforce, and location. Sector-level averages are next.

Average costs by sector: private industry, state and local government, and civilian workers

Sector matters. The BLS shows that the cost of employee benefits as a share of total compensation is lowest in private industry and highest for state and local government, with “civilian workers” sitting in between as the combined average. In 2025, use these ratios as quick, defensible starting points—then adjust for your plan design, workforce mix, and location. The higher public‑sector load typically reflects richer insurance and retirement contributions.

How to use it: multiply your average wages by the sector multiplier to estimate per‑hour benefits, then convert to per month/year with your hours assumptions. Next, see how occupation skews these averages within each sector.

Average costs by occupation: management, service, sales, and more

Job mix meaningfully shifts the cost of employee benefits. Higher-paid roles carry the biggest dollar outlay per hour, while benefit share as a percent of compensation tends to cluster near 27–33% across most groups. Using 2025 BLS civilian worker data as a baseline, here’s how benefits stack up by major occupation group. Use these to weight your own averages by headcount mix.

Service roles have the lowest per‑hour benefits cost, while management/professional posts the highest dollars. Skilled trades and production hover near one‑third of compensation in benefits. Expect even higher shares for similar roles in state and local government.

Benefit category breakdown: health insurance, paid leave, retirement, legally required, and supplemental pay

Within the BLS framework, the cost of employee benefits is concentrated in five buckets. In 2025 civilian benchmarks, three of them—insurance, paid leave, and legally required benefits—each make up roughly a quarter of the total benefits cost, with retirement and supplemental pay accounting for the remainder. Use this mix to sanity‑check your budget and to allocate dollars across categories. If your benefits total is B (per hour, month, or year), a quick estimate for insurance cost is B × insurance share, and similarly for the other categories.

To convert from shares to dollars, plug in your benefit total: for example, insurance cost = benefits_total × 0.257.

Per hour to per month and year: conversion assumptions and formulas

BLS reports compensation per hour worked. To turn that into monthly or annual budgets, pick a standard schedule and stay consistent across wages and benefits. Common annual hour assumptions are 2,080 (40 hours × 52 weeks), 1,950 (37.5 × 52), or 1,820 (35 × 52). Using a different schedule will scale your benefits line up or down proportionally.

• Annual from hourly: annual = hourly × hours_per_week × 52
• Monthly from hourly: monthly = hourly × hours_per_week × 52 / 12
• Hourly from annual: hourly = annual / (hours_per_week × 52)
• Apply to wages, benefits, or total: use the same formulas for each component.

Example (civilian benefits): 15.03 × 40 × 52 = $31,262/year and 15.03 × 40 × 52 / 12 ≈ $2,605/month. If you use 35 hours/week, multiply by 1,820 instead of 2,080.

A simple calculator: estimate benefits cost from wages or headcount

Use these two quick methods to turn BLS ratios into a working budget. Pick your sector multiplier first: private ≈ 0.43, civilian ≈ 0.45, state/local ≈ 0.61 (benefits dollars per $1 of wages).

• From wages (fastest):

  • benefits = wages × sector_multiplier
  • total_compensation = wages × (1 + sector_multiplier)
  • Example: $6,000,000 wages × 0.45 ≈ $2,700,000 in benefits; total comp ≈ $8,700,000.

• From headcount (bottom‑up):

  • benefits_monthly = headcount × benefits_per_hour × hours_per_week × 52 / 12
  • Use BLS civilian 2025 benefits_per_hour = 15.03 (40‑hr wk gives ≈ $2,605 per employee per month).
  • Example: 50 × 15.03 × 40 × 52 / 12 ≈ $130,250/month in benefits (≈ $1.56M/year).

Tip: If you run 35‑hour weeks, replace 40 with 35 to keep estimates accurate.

What to budget for legally required benefits (FICA, FUTA, workers’ compensation)

Legally required benefits are a meaningful slice of the cost of employee benefits—about a quarter of the total benefits line in BLS civilian benchmarks. Build them in first, then layer on medical, retirement, and paid leave.

• FICA (Social Security + Medicare): Budget the employer share at 7.65% of wages. FICA = wages × 0.0765. Example: $100,000 in wages → $7,650.
• Unemployment insurance (FUTA/SUTA): Varies by state and experience rating. A practical planning range is roughly 0.1%–0.4% of compensation. UI ≈ wages × 0.001–0.004 (state rules and taxable wage bases apply).
• Workers’ compensation: Highly job‑class dependent. Plan for about 1% on average; clerical roles can be near 0.3%, while higher‑risk manufacturing can reach 7.5%. Workers’ comp = wages × class_rate.

Quick roll‑up for a white‑collar mix: legal_benefits ≈ wages × (0.0765 + 0.002 + 0.003) → about 8.0%–8.5% of payroll. For mixed field or manufacturing teams, model each job class rate to avoid surprises.

Health benefits cost drivers in 2025 (medical, dental, vision, disability)

Insurance is one of the biggest slices of the cost of employee benefits—about a quarter of total benefits. BLS category data shows private‑industry insurance costs around the mid‑$3s per hour, with state and local government higher. “Insurance” in BLS terms bundles medical, dental, vision, life, and disability, but medical dominates the spend. Your renewal will swing on the levers below.

• Plan richness and design: PPO vs. HDHP, deductibles, coinsurance, out‑of‑pocket maximums, and any employer HSA/HRA funding.
• Enrollment tier mix: Employee‑only vs. employee+dependents; spousal carve‑outs/surcharges materially shift costs.
• Employer/employee contribution strategy: The premium split you set is a direct driver of employer cost.
• Network and geography: Unit prices and negotiated discounts vary widely by region and carrier network.
• Pharmacy mix (especially specialty): Formulary controls, step therapy, and site‑of‑care programs curb trend.
• Workforce utilization and demographics: Age, chronic conditions, and recent claims history affect rates.
• Funding model: Fully insured vs. self‑funded with stop‑loss changes fixed vs. variable costs and volatility.
• Dental and vision design: Annual maximums, ortho coverage, and allowances for frames/contacts drive usage.
• Disability plan terms: STD/LTD elimination periods, benefit percentage, caps, and occupation class affect premium.
• Compliance and access: Mental health parity, required preventive care, and telehealth provisions influence pricing.

Budget tip: allocate roughly one‑quarter of your benefits dollars to insurance, then sanity‑check against BLS hourly markers (e.g., private industry ≈ mid‑$3/hr) and model best‑/base‑/worst‑case renewals before you lock contributions.

Retirement and paid leave: typical employer contributions and ranges

Two big, predictable pieces of the cost of employee benefits are retirement and paid leave. In 2025 BLS civilian benchmarks, paid leave accounts for about 25% of total benefits while retirement/savings is roughly 12%. Using the civilian benefits cost of $15.03 per hour as a guide: paid leave is ≈ $15.03 × 0.252 = $3.79/hr (about $657/month at 40 hours), and retirement is ≈ $15.03 × 0.116 = $1.74/hr (about $303/month). Convert with your own hours to size these lines accurately.

• Plan for retirement funding: Includes employer 401(k) matches and/or pension contributions. Estimate with retirement_cost = benefits_total × 0.116, or bottom‑up with match_cost = eligible_wages × match_rate × participation_rate.
• Plan for paid leave: Covers vacation, holidays, sick, and personal time. A quick top‑down: paid_leave_cost = benefits_total × 0.252. A bottom‑up approach: paid_leave_cost ≈ paid_leave_hours × average_wage (+ payroll taxes), adjusted for carryover, sellback, or forfeiture rules.

Use these slices as guardrails, then fine‑tune for your PTO design and retirement match strategy.

Vendor and platform fees: PEPM, tiered, and usage-based pricing models

Admin platforms and TPAs aren’t counted in BLS “benefits” categories—budget them as a separate line. Pricing is predictable once you know the model you’re buying and any add‑ons. Here are the common options you’ll see in 2025 and how to plan for them.

• Per employee per month (PEPM): Simple and forecastable. Example: PEPM $10 × 200 employees = $2,000/month.
• Tiered pricing: Headcount bands with volume discounts as you scale.
• Custom pricing: Tailored to complexity, locations, and compliance needs.
• Usage‑based/pay‑as‑you‑go: Pay by claims, transactions, or active users; variable month‑to‑month.
• Bundled packages: Good–Better–Best feature sets at fixed tiers.
• One‑time/ancillary fees: Implementation/onboarding, contract minimums, and potential add‑ons (e.g., replacement cards, foreign exchange, premium support). Get them in writing before you sign.

What moves costs up or down: size, industry, workforce mix, and location

BLS gives you a solid baseline, but your true cost of employee benefits moves with a few predictable levers. Treat these as dials you can set in budgeting: some you control (plan design, contributions), others you monitor (claims trend, labor market). Start with the sector ratio that fits you, then adjust for the factors below.

• Company size and purchasing power: Bigger groups typically secure better carrier rates and lower PEPM admin fees; smaller teams see more volatility and higher unit costs.
• Industry and job risk profile: Construction, healthcare, and manufacturing carry higher workers’ comp and medical costs than office‑based tech or professional services.
• Workforce mix and demographics: Age, dependent tiers, and occupation mix shift premiums and benefit share; management/professional roles drive higher dollar outlay per hour.
• Geography and markets: State rules, local healthcare pricing, and unemployment/workers’ comp rates vary widely by location and can materially change budgets.
• Plan design and employer contributions: Rich PPOs, low deductibles, and HSA/HRA funding raise employer spend; HDHPs and cost‑sharing lower it.
• Participation, utilization, and schedule: Higher enrollment and strong benefit usage increase spend; part‑time/seasonal mix and standard weekly hours change monthly and annual conversions without changing the hourly baseline.

How to build a benefits budget for a 10–250 person company

At this stage of growth, you need a budget you can explain to your CFO and live with at renewal. Start with defensible BLS baselines, convert them to your schedule, and then tune for your mix. Use a fast top‑down number to set the envelope, validate it with a bottom‑up headcount build, and only then layer in plan decisions and admin fees.

• Set your hours assumption: 40, 37.5, or 35 hours. Stay consistent across wages and benefits.
• Pick your baseline ratio: Most SMBs map to private industry ≈ 70/30 (benefits ≈ $0.43 per $1 wages). Civilian ≈ $0.45.
• Top‑down envelope: benefits = wages × sector_multiplier; total = wages × (1 + sector_multiplier).
• Bottom‑up validation: benefits_monthly = headcount × 15.03 × hours_per_week × 52 / 12 (civilian 2025).
• Allocate the pot: Start with BLS shares (insurance ≈ 25.7%, legally required ≈ 25.5%, paid leave ≈ 25.2%, retirement ≈ 11.6%, supplemental ≈ 12%). Then hard‑code legal items: FICA = wages × 0.0765; add UI (≈ 0.1–0.4%) and workers’ comp by class.
• Add platform/TPA costs: PEPM, tiered, or usage fees as a separate line.
• Scenario it: Best/base/worst renewals for insurance; plus/minus headcount; 35 vs. 40 hours. Calendarize monthly to watch cash flow.

Strategies to control costs without cutting value

Slashing benefits usually costs you more in turnover and hiring. A better play is to trim waste, tune plan design, and steer usage—while keeping the employee experience intact. Start with your BLS‑anchored budget, then pull the levers below to lower the cost of employee benefits without gutting what people value.

• Right-size plan design: Offer a dual option (HDHP + PPO), seed HSAs, and use tiered networks/high‑performance providers.
• Tighten eligibility and dependents: Run dependent audits and set sensible waiting periods for new hires.
• Tune contribution strategy: Keep value, adjust the employer/employee split and spousal surcharges instead of cutting coverage.
• Steer smarter care: Promote telehealth, in‑network care, and site‑of‑care redirection; tighten specialty Rx management.
• Reduce comp risk costs: Correct workers’ comp classifications, improve safety, and manage claims to lower mod factors.
• Optimize PTO mechanics: Use a unified PTO bank with reasonable accruals, carryover caps, and clear blackout rules.
• Stretch retirement dollars: Keep the same budget but “stretch” the match formula to drive higher savings at equal cost.
• Consolidate vendors: Replace point solutions with a single platform, negotiate PEPM, and eliminate add‑on/hidden fees.
• Use flexible stipends/LSAs: Consolidate fringe perks into one allowance to cut waste while preserving choice.

Common budgeting mistakes (and how to avoid them)

Benefits budgets usually break on assumptions, not intentions. Sloppy conversions, double‑counting, and one‑size‑fits‑all averages can swing you off by six figures. Use a consistent framework, separate what’s truly “benefits,” and pressure‑test the plan before you lock a number in with finance.

• Mixed hour bases: Pick one (2,080, 1,950, or 1,820) and stick to it.
• Double‑counting admin: Keep platform/TPA fees off the benefits line.
• Skipping legal items: Budget FICA 7.65% plus UI and workers’ comp.
• No renewal scenarios: Model best/base/worst for medical (and stop‑loss).
• Flat averages for diverse teams: Weight by occupation, location, and job class.
• Ignoring dependent tiers: Model employee‑only vs. family and employer splits.
• Headcount drift: Add growth/seasonality and participation glidepaths.
• PTO accrual blind spots: Accrue true cost, taxes, carryover, and sellbacks.
• Bad comp classifications: Correct workers’ comp codes and manage your mod.
• Hidden vendor costs: Document implementation, minimums, card/FX fees before signing.

Trends shaping 2025–2026 benefit costs

Budget pressure won’t come from one place. Expect a mix of price trend, plan design changes, and workforce expectations to move your cost of employee benefits over the next 12–18 months.

• Healthcare renewals running hot: Carriers are pushing higher rates; one regional Blues plan even sought ~19.5% for 2025, signaling continued pressure from hospital and oncology costs.
• Richer care menus: Employers are expanding mental health, caregiving, and well-being supports—adding breadth and cost even when take-up is moderate.
• Remote and hybrid reshape the mix: With roughly 28% of workers remote globally (and far higher in tech), budgets tilt toward WFH setups and flexible stipends over on‑site perks.
• Benefits share stays near one‑third: BLS shows benefits ≈31% of total compensation in 2025—likely steady, but dollars rise with wage growth.
• Admin efficiency matters: PEPM transparency, consolidation of point solutions, and LSA-style flexibility help redirect spend from fees to value.
• Legally required costs float with payroll: FICA, UI, and workers’ comp rise as wages and exposure grow; accurate job classing remains a must‑have control.

Methodology and sources

All benchmarks come from the U.S. Bureau of Labor Statistics Employer Costs for Employee Compensation (ECEC), June 2025 release and related tables. We convert hourly figures to monthly/annual using 40 hours × 52 weeks unless noted; alternate 37.5–35‑hour scenarios scale proportionally. Sector shares, occupation dollars, and benefit‑category percentages are from ECEC tables. Legally required rates use SSA/IRS rules (FICA 7.65%) plus planning ranges for unemployment and workers’ comp informed by BLS/industry references. Trend notes reference Excellus’ 2025 filing and Statista remote‑work data. Rounding may affect totals.

Key takeaways

Budgeting the cost of employee benefits doesn’t need to be guesswork. Use BLS 2025 as your compass, convert hourly figures to monthly and annual with a consistent hours assumption, then tune for sector, occupation mix, plan design, and location. Scenario your renewals and document assumptions.

• Anchor your baseline: Civilian 2025 ≈ $48.05/hour total: $33.02 wages + $15.03 benefits (~31%).
• Use quick ratios: Private ≈ 70/30 (≈ $0.43 benefits per $1 wages); state/local ≈ 62/38 (≈ $0.61).
• Allocate smartly: Insurance, paid leave, and legally required each ≈ one‑quarter of benefits; retirement and supplemental cover the rest.
• Convert consistently: Apply 2,080 (or your schedule) across wages and benefits; avoid double‑counting admin fees.
• Cover the mandates: FICA 7.65% + UI (~0.1–0.4%) + workers’ comp (by class) before plan extras.

Ready to turn benchmarks into a budget your CFO can defend? Partner with Soteria HR to design, administer, and optimize a benefits program that fits your stage of growth.