Benefits and the P&L

The translator between benefits and the P&L

Employer medical spend is a payroll-sized cost that most income statements bury in benefits, insurance, or a single labor line. A CFO can still split what is fixed, what moves with claims, and what the renewal will do to next year’s forecast.

Updated Nov 5, 2026. By Matt Ragudo.

For employers with 50 to 500 employees.

Start working with Matt See the renewal calendar

Where the spend sits

The employer share of medical premium is an operating cost. On most income statements it lands in employee benefits, insurance, or a blended labor line. The invoice total is larger than the company cost, because it includes what employees pay by payroll deduction. Forecast the employer share. Reconcile it to the invoice so the two are not mixed.

A public filing is the outside view of that cost. The Health Plan Visibility Studies read the 2024 DOL Form 5500 peer set of 52 Texas electrical, plumbing, and HVAC contractors. Median annual medical premium in that set is $6,094 per covered participant. From the 10th to the 90th percentile, premium per participant runs from $3,802 to $9,972.

Those dollars are premium, not a payroll ratio. To put medical spend next to payroll, divide your employer medical cost by your own estimated payroll. The peer set does not publish that ratio. Use the $6,094 median as context for premium per covered participant, then build the payroll share from your books.

Fixed and variable exposure

Fully insured

You pay a premium. The insurer pays the claims. For the policy year the employer cost is fixed, aside from enrollment changes. The renewal is where the number moves.

Level-funded

You pay a fixed monthly amount built to cover expected claims, plan administration, and stop-loss. Any surplus or refund follows the contract and is not guaranteed. The side-by-side is on level funded vs fully insured.

Self-funded

Claims are a variable cost up to the stop-loss attachment point. Stop-loss premium is the fixed piece that caps a bad year. The contract terms are on stop-loss basics. Self-funded is a standard option shopped every renewal alongside fully insured and level-funded. Running a self-funded structure once it is in place is a special project priced in the engagement letter before that letter is signed.

Broker pay on the same filing

In that 52-contractor peer set, median carrier-reported broker pay is $29 per covered participant per month. Median broker pay is 5.3% of medical premium. That 5.3% is a share of premium, not a share of estimated payroll. How to read the form is on Schedule A broker pay.

Pay on a current engagement is carrier commission, often set in the rates the carrier files with the state. Every dollar paid on the contract is disclosed in writing, in dollars and per employee, before the plan goes through, for the current plan and every option quoted.

Forecasting the renewal

Start the full cycle 150 days before renewal, so the forecast can move before the letter arrives. By about 90 days, the renewal can be set next to the market. The dates, including the Texas notice window, are on the renewal calendar.

The Plan Report follows a signed broker-of-record letter and the transfer, usually about a month, and it is written from the carrier’s own data. That is the internal number. The public filing is the outside number. Call (808) 358-1477 or email aloha@mattragudo.com.

Questions people ask

Where does employer medical spend sit on the income statement?

Usually inside employee benefits or insurance, sometimes blended into a labor line with payroll taxes and retirement. The P&L shows the employer share. Employee payroll deductions are not the company’s cost, even when the invoice shows one total premium.

What is fixed and what is variable?

Fully insured premium is a fixed employer cost for the policy year. Level-funded is a fixed monthly amount built for expected claims, admin, and stop-loss, with any surplus following the contract. Self-funded claims are variable up to the stop-loss point, and the stop-loss premium is the fixed cap on that exposure.

How do I benchmark spend per employee?

Start with public filings. In the 2024 DOL Form 5500 peer set of 52 Texas contractors, median annual medical premium is $6,094 per covered participant, and the 10th to 90th percentile runs from $3,802 to $9,972. Divide your own employer medical spend by your own payroll if you want a payroll share. That ratio is not a published median in the peer set.

What does that peer set say about broker pay?

Median carrier-reported broker pay is $29 per covered participant per month. In the same set, median broker pay is 5.3% of medical premium. That 5.3% is a share of premium, not a share of payroll. Your own disclosure is in dollars and per employee, in writing, before the plan goes through.

How far ahead should I forecast a renewal?

Start the full cycle 150 days before renewal. By about 90 days, the renewal can be set next to the market. The working dates are on the renewal calendar.

I built and sold a health insurance agency: grew it to 60 agents in about 3 years, then sold it. Licensed insurance agent since 2014: Texas license 2501238, NPN 17369817.

Put the renewal on the forecast before you accept it.

The Plan Report follows a signed broker-of-record letter and the transfer, usually about a month, and it is written from the carrier’s own data. Call (808) 358-1477 or email aloha@mattragudo.com.

Start working with Matt See the renewal calendar

Questions first? Email aloha@mattragudo.com or book a 30 minute call.

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