What Is ER Health Cost on Pay Stub?

A pay stub is a critical document for every employee, offering a detailed breakdown of their compensation for a given pay period. It summarizes gross earnings, itemized deductions, and net pay. Understanding this statement is important for verifying accurate payments and tracking various withholdings and benefits, providing transparency on how total compensation is calculated.

Decoding “ER Health Cost”

On a pay stub, “ER Health Cost” refers to the employer’s contribution towards an employee’s health benefits. “ER” is short for “Employer,” clarifying this amount is a cost borne by the employer, not a deduction from wages. “Health Cost” includes the employer’s share of health insurance premiums, and may also cover contributions to health savings accounts (HSAs) or health reimbursement arrangements (HRAs). HSAs are tax-advantaged savings accounts for qualified medical expenses, often paired with high-deductible plans. HRAs are employer-funded plans that reimburse employees for qualified medical expenses.

Employers display this for transparency and compliance with reporting requirements. For example, under the Affordable Care Act (ACA), many employers must report the aggregate cost of employer-sponsored health coverage on an employee’s Form W-2. This reporting provides insight into the value of health benefits.

Its Financial Implications

The “ER Health Cost” on a pay stub represents the employer’s financial contribution and is not deducted from an employee’s gross pay. This differs from employee-paid health insurance premiums, which appear as separate deductions like “Medical Premium” or “Health Insurance Deduction,” reducing taxable income. Employer contributions to health insurance premiums, HSAs, and HRAs are excluded from an employee’s gross income. This means these amounts are not subject to federal income, Social Security, or Medicare taxes for the employee, provided they are within IRS limits. These tax advantages make employer-sponsored health benefits a valuable component of an employee’s overall compensation package, as they effectively increase an employee’s take-home pay.

Verifying and Understanding Your Pay Stub

To ensure the accuracy of “ER Health Cost” and other health information on your pay stub, cross-reference it with your benefits enrollment forms or annual benefits statements. These documents detail your elected coverage and contributions from both you and your employer. Any discrepancies should be promptly addressed. Contact your employer’s Human Resources (HR) or Payroll department to clarify questions or resolve errors. These departments have the records and expertise to provide personalized information regarding your benefits and payroll details.