How Much Do Costco Employees Pay for Health Insurance?

Costco Wholesale is known for providing exceptional benefits, including health insurance coverage, for its employees. Compared to many other major retailers, Costco employees get comprehensive health benefits at very low personal cost.

Costco Health Benefits Overview

Costco offers health insurance options that include:

• Medical plans
• Dental plans
• Vision plans
• Prescription drug coverage
• Mental health benefits
• Domestic partner coverage
• Healthcare flexible spending accounts (FSA)

Coverage is available for regular full-time and part-time employees working at least 20 hours per week. Dependents are also eligible.

Costco health plans feature low deductibles and out-of-pocket maximums. The company pays the vast majority of the premium costs. Even part-time hourly workers have nearly their entire health insurance premium covered by Costco.

Employee Premium Contributions

The amount Costco employees pay toward their health insurance is exceptionally low compared to employer-sponsored plans at most companies.

For full-time employees working over 30 hours per week, Costco covers 92% of medical plan premiums and 88% of dental premiums. The employee contribution is:

• Medical: Approximately $750 per year for employee-only coverage or $2,130 for family coverage.

• Dental: Around $95 per year for employee, or $285 for family coverage.

Part-time employees working 20-29 hours per week receive slightly lower premium subsidies:

• 76% of medical premiums covered by Costco (employee pays 24%).

• 64% of dental premiums covered (employee pays 36%).

Even with the lower company contribution, part-time Costco workers pay just $120 annually for individual medical insurance or $360 for family coverage.

This is compared to the average worker contribution of $1,186 for single coverage and $5,547 for family coverage across all employer health plans in the U.S.

So Costco employees get health insurance coverage for around 10% or less of what the typical U.S. worker pays. The company picks up 90-95% of the total premium cost.

Plan Offerings

Costco offers several PPO medical plan options through UnitedHealthcare with varying coverage levels and premiums.

The options include:

• UnitedHealthcare PPO Low Plan – $1,000 individual/$2,000 family deductible with $20 office visit copays and $7/$35/$60 prescription drugs.

• UnitedHealthcare PPO Medium Plan – $500 individual/$1,000 family deductible with $15 office visit copays and $7/$25/$50 prescription drugs.

• UnitedHealthcare PPO High Plan – $250 individual/$500 family deductible with $10 office visit copays and $5/$15/$30 prescription drugs.

The High PPO Plan has the lowest deductible and copays, but higher premiums. Employees can choose the plan that provides the best balance of premium cost and coverage for their healthcare needs.

Part-time employees have access to the Medium and High PPO Plans. Overall, the plans offer robust coverage with moderate out-of-pocket costs.

Dental and Vision Benefits

Along with medical insurance, Costco employees also get:

• Dental – Delta Dental PPO plan. Covers preventive visits at low or no cost. Basic services covered at 80%, major services at 50%. Annual maximum benefit amounts apply. Orthodontia covered for kids and adults at 50%.

• Vision – VSP vision plan. Annual eye exam for $20 copay. Frames covered up to $130 every other year. Lenses or contact lenses covered at low copays annually.

Coverage for dental and vision services further reduces healthcare expenses for employees and their families.

Employee Cost Summary

The total annual premium costs for Costco health plans in 2022 are approximately:

• Medical – $760 individual, $2,120 family
• Dental – $280 individual, $840 family
• Vision – $100 per person

With the company covering 92-95% of medical premiums and 88% of dental premiums, the typical Costco employee pays:

• Individual coverage: $120 per year
• Family coverage: $360 per year

Part-time employees pay slightly higher percentages, but still very affordable rates.

Bottom line – Costco provides gold-standard healthcare benefits to its workforce for a fraction of what employees pay at other companies. The premium contributions are nominal, even for part-timers.

Costco Health Insurance for Retirees

The benefits don’t stop once Costco employees reach retirement age.

Costco offers lifetime health benefits to retirees who have worked at the company for at least 10 years.

Retirees pay just $50 per month for medical coverage and $1 per month for dental and vision. Their spouses can also receive benefits for $150 per month.

This incredibly generous retiree health coverage is almost unheard of today. It provides invaluable financial protection into an employee’s senior years.

How Costco Keeps Premiums Low

Costco is able to offer top-tier health benefits at such little cost to employees through:

• Lower administrative costs – The company self-insures their health plans instead of purchasing group coverage. This eliminates insurer profit margins and overhead. Costco just pays a third-party administrator to manage enrollment and claims processing.

• Leveraging scale – With over 275,000 employees (2022), Costco has enormous leverage in negotiating rates with health providers in its network.

• High participation – Nearly 90% of eligible Costco employees enroll in the company health plans. This minimizes adverse selection risks that drive up premiums when participation is low.

• Cost discipline – Costco is laser focused on controlling costs throughout its operations. This extends to managing its health plans efficiently while still delivering maximum value to employees.

• Generous employer – Ultimately, Costco prioritizes providing exceptional benefits as a strategy to attract and retain employees. The company recognizes insurance costs as an investment in their workforce.

The result is health coverage that provides complete financial protection for the Costco workforce at the lowest possible out-of-pocket cost.

Costco Health Benefits for Part-Time vs. Full-Time

Nearly 60% of Costco’s 205,000+ U.S. employees work part-time. The company offers its health insurance benefits to ALL employees, full and part-time.

The differences are:

• Eligibility – Part-time employees must work at least 20 hours per week to qualify for health benefits after 180 days of employment. Full-time employees are eligible after 90 days.

• Premiums – Part-time employees have slightly higher premium contributions at 24% of medical and 36% of dental costs. Still far below average costs.

• Plan selection – Part-timers can choose between the Medium and High PPO medical plans. Full-time employees get all three plan options.

So while part-time team members pay marginally more than full-timers, the coverage is still much better than what the vast majority of part-time retail workers receive.

How the Costco Health Plan Compares

Costco stands head-and-shoulders above competitors when it comes to employee health benefits:

• The average retail cashier pays $4,964 annually for family health coverage according to Mercer Consulting data. Costco cashiers pay under $400.

• A full-time Walmart associate makes $6,960 per year in premium contributions for family coverage, plus deductibles up to $5,000.

• Even at Amazon, warehouse workers pay high premiums up to $4,000 annually for family coverage. Plus deductibles range from $1,000 – $3,000.

• Starbucks was notoriously stingy with health benefits until unionization effortsprompted enhancements. But even now, employees are required to work at least 240 hours per quarter to qualify. Costco just requires an average of 20 hours per week with no minimum quarterly hours.

Very few organizations come close to matching Costco in providing affordable, comprehensive health benefits for all employees. The company really sets the benchmark.

Why Health Insurance Matters to Employees

The issue of health benefits has only grown in importance over time for workers and job seekers. Surveys show that employer-provided health insurance is consistently top-of-mind for several reasons:

• Cost – Rising healthcare costs make employee premium contributions unaffordable for many families if the employer doesn’t subsidize. Out-of-pocket costs also continue growing rapidly.

• Security – Company health insurance provides financial protection from devastating medical bills, especially for serious illness or injury.

• Peace of mind