Some employers pay part of the membership and employees pay the rest, for example through payroll deductions. That works, but you have to decide who collects the employee's share, how it's billed and how it shows in your books. Keep it simple, or the split will cost you more time than it's worth.
Three common setups
- The employer pays you the full fee and takes the employee's share out of their paychecks. You send one invoice. Simplest for you.
- employees pay theirs to you directly, for example by card through your membership platform. Two payments per member. More to track.
- The employer pays for employees and employees pay for dependents directly to you.
Why the first one is easiest
When the employer pays the full fee, you have one payer, one invoice and one thing to reconcile. The employer handles the payroll deduction. If an employee stops paying their share, that's between them and their employer.
In a made-up example, the fee is $80 and the employer covers $60. The employer pays you $80 a member and deducts $20 from each employee's pay. Your invoice for 25 members is $2,000.
If employees pay you directly
- Set up each employee's share as its own recurring charge.
- Decide what happens if their card fails. Does the membership pause, or does the employer cover it?
- Reconcile both payment streams every month.
Taxes and HSAs
Whether employees can pay their share before tax, and what that means for their HSAs, is a question for the employer's CPA. IRS Notice 2026-5 treats fees paid through pre-tax salary reductions as employer payments that an HSA can't reimburse. Here's the summary.
In your books
Record the employer's payments on the employer revenue line. If employees pay you directly, record their payments on their own line, or tag them to the employer, so you can see the whole contract together. This post covers the setup.
What I'd do this week
- Check which setup each employer contract uses.
- For any contract where employees pay you directly, list failed payments from the last 90 days.
- Offer the full-fee setup at renewal where it would save you time.
Common questions
Can I charge employees and the employer on one invoice?
An invoice goes to one payer. Bill the employer for its share and charge employees separately, or bill the employer for the full amount.
What if an employee stops paying their share?
Follow the contract. Decide in advance whether the membership pauses or the employer covers the gap.
Do employee payments count as employer revenue?
They're part of the same contract. Tag them to the employer so you can see the full contract's revenue.
Want both sides of a split contract reconciled each month?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.