Payroll Contribution

See Section 202-203 of the full bill text for details. Note: The Payroll Tax Contribution is referred to as the Health Security Assessment. Employers are responsible for collecting the employee’s contribution towards the Health Security Assessment from employees, but may pay it on behalf of employees. The Employee’s Contribution is referred to as the Personal Health Assessment.

After an exemption, employers will contribute 8.5% for each employee based on their Gross Pay (GP) and deduct the employee’s contribution of 2% from their pay. Employers may pay the employee’s contribution on behalf of employees as a benefit of employment.

  • This is the less than half the average 18% paid now. (Page 41 footnote 79 of Friedman analysis)
  • The Payroll Tax Contribution would be assessed quarterly.

Exemption = $15,000 – (Gross Pay x 0.25)

The exemption does not come into play for any Gross Pay above $60,000.

Calculation Example

Miguel has three employees: Jane grosses $90,000/yr and Trey and Sara gross $50,000/yr

Jane makes $90,000/yr which does not qualify for an exemption

  • Employer’s Contribution
    90,000 x 8.5% = $7650/yr or $638/mo
  • Employee’s Contribution
    (employer may pay on behalf of employee)
    90,000 x 2% = $1800/yr or $150/mo

Trey and Sara make $50,000 GP which would qualify for an exemption.

  • $50,000 x .25 = $12,500
  • $15,000 – 12,500 = $2,500
  • Employer’s Contribution
    $50,000 – 2,500 x 8.5% = $4038/yr or $337/mo
  • Employee’s Contribution
    (employer may pay on behalf of employee)
    $50,000 – 2,500 x 2% = $950/yr or $79/mo

Miguel’s total Health Security Assessment would be:

Health Security Assessment = 10.5%

Employee Employer’s Contribution
8.5% gross payroll and may
pay employee’s contribution
as a benefit of employment
Employee’s Contribution
Personal Health Assessment
up to 2% gross payroll
collected by employer
Jane $7650/yr or $638/mo +$1800/yr or $150/mo
Trey $4038/yr or $337/mo +$950/yr or $79/mo
Sara $4038/yr or $337/mo +$950/yr or $79/mo
Total $15,726 or $1311/mo +$3700/yr or $308/mo

More examples for illustration:

Health Security Assessment = 10.5%
Employee Employer’s Contribution Employee’s Contribution
$20,000 $71/mo $17/mo
$40,000 $248/mo $58/mo
$60,000 $425/mo $100/mo
$80,000 $567/mo $133/mo
$100,000 $708/mo $167/mo

Employers with less than 50 employees that experience a hardship due to the Payroll Contribution may be eligible for a waiver or reduction in of this assessment.