How Much is Health Insurance?

Health insurance can cost thousands a year, but your total costs are dependent on the plan you chose and how much care you need.

Written by Kat Tretina / May 20, 2022

Quick Bites

  • Your premium will depend on factors like the size of your deductible, how narrow your network is and whether you get insurance on the job or buy a plan on your own.
  • On average, a single person pays $108 a month for employer-sponsored coverage and $438 a month for a plan on the health insurance marketplace, before any subsidies.
  • Besides monthly premiums, health insurance expenses include co-payments, co-insurance and spending to meet your deductible.

Health insurance is an essential safeguard against unexpected and unaffordable medical expenses, but policies can be pricey. You can spend thousands a year on premiums, and even with health insurance you may face copayments, coinsurance and a deductible. The costs can add up.

In fact, healthcare costs make up an average of 8.4% of all consumer spending in the United States.[1]

Here’s how much health insurance could set you back, plus what other costs you can face.

Inside this article

  1. How much is health insurance?
  2. Other costs to consider
  3. Factors that affect costs
  4. Buying health insurance

How much is health insurance?

When calculating the cost of health care, most people think about health insurance premiums—how much you have to spend each month to maintain coverage. Premiums vary based on the type of coverage you have and whether you get it through an employer or purchase a policy on your own.

Employer-sponsored plans

With an employer-sponsored plan, or health insurance you get at work, costs vary based on the plan you choose and how much of your premiums your employer covers.

The average annual premium for employer-sponsored coverage was $7,739 for an individual policy in 2021 and $22,221 for a family plan, an increase of about 4% compared to the previous year, according to the Kaiser Family Foundation. But keep in mind that those totals include what your employer pays. On average, workers contribute 17% of the premium for single coverage and 28% of the premium for family coverage. So in 2021 the average annual worker contribution was $1,299 for an individual plan and $5,969 for a family plan.[2]

Individual plans

If you don’t have access to health insurance via your employer, you can purchase an individual policy through the Health Insurance Marketplace at healthcare.gov, or through your state’s health insurance exchange.

Each state has their own benchmark health insurance plan, which is the plan used to determine premium subsidies (more on those later) as well as the plan that serves as the standard to establish essential benefits.[3] Premiums for benchmark plans vary by state, but in 2022 the nationwide the average benchmark premium is $438 per month, or $5,256 per year.[4]

Other health insurance costs to consider

Your monthly premiums are only a portion of your overall healthcare expenses, even when you have insurance. When choosing a health insurance plan, consider these other costs:

Deductible

The deductible is how much you have to pay out-of-pocket for healthcare services before your insurance will start covering costs. Let’s say you have a plan with a $2,000 deductible. You’re responsible for all of your healthcare costs—except for certain preventive care services—until you reach your deductible. After that, your insurance company covers the costs of care, though you may owe a copayment or coinsurance.

Typical deductibles vary based on several factors, including the type of coverage you have:

Employer-sponsored coverage

The average deductible for an employer-sponsored plan is $1,945 for an individual plan, $3,722 for family coverage.[5]

Marketplace plans

For plans purchased through the Health Insurance Marketplace, the average deductible is $2,825 for single coverage.[6]

Copays and coinsurance

Copayments and coinsurance are what you put toward healthcare once you reach your deductible. Co-payments are flat dollar amounts—say $25 for a doctor’s visit—while coinsurance is a percentage of the cost of the healthcare service. Depending on your plan and the type of care, you could owe one or both.

Employer-sponsored coverage

Average copayments are $25 for primary care and $42 for specialty care. The average coinsurance rate is 19% for primary care and 20% for specialty care.[2]

Marketplace plans

For coverage purchased through the Health Insurance Marketplace, your coinsurance could be 10% to 40% of the bill.[7]

Out-of-pocket maximums

The out-of-pocket maximum is how much you have to pay for covered services during the plan year, beyond your premiums. After you spend that amount on deductibles, copayments or coinsurance, your health plan will cover 100% of your remaining costs.

Employer-sponsored coverage

For workplace health insurance plans that are compliant with the Affordable Care Act, the out-of-pocket maximum limits in 2022 are $8.700 for individual plans, $17,400 for a family plan. [8] The average out-of-pocket maximum for employer-sponsored plans was $4,065 in 2021.[9]

Marketplace plans

For 2022, the maximum out-of-pocket limit is $8,700 for an individual plan; $7,050 if it’s a high-deductible plan.[10]

Here's a breakdown of the typical costs of health insurance for a single person:

Annual premium Average deductible Copayment/ coinsurance Out-of-pocket maximum limit
Employer- sponsored coverage $1,229 average worker contribution $1,945 $25 for primary care $42 for specialty care/ 19% for primary care 20% for specialty care $8,700
Health Insurance Marketplace Coverage $5,256 $2,825 10% to 40% of healthcare costs$8,700

5 factors that affect health insurance costs

There is no one right plan for everyone. “Choosing the right health insurance is highly subjective to the individual, based on their healthcare needs, risk tolerance, financial situation and how they consume healthcare,” says Ross Baker, benefits strategist with American Exchange. [11]

“You want to strike a balance between pre-paying through premiums for the amount of care you need and limiting your out-of-pocket exposure in the case of a high-cost healthcare event,” says Baker. “Cheaper plans typically have coverage gaps, or a very high deductible and maximum out-of-pockets, which can leave you exposed. That being said, for some with low healthcare needs and the ability to cover that higher exposure in a worst case scenario, the cheapest plan can be the best.”

When evaluating your health insurance options, these are some of the variables that can affect your premiums and out-of-pocket costs:

  1. Metal tier: When you buy insurance through the Health Insurance Marketplace, you choose between tiers: bronze, silver, gold and platinum. Bronze plans have the lowest monthly premiums, but have higher deductibles, making them best for healthy people who want coverage for worst-case scenarios.

    On the other end of the spectrum are platinum plans, which have the highest premiums but very low deductibles. They are best for those with chronic health conditions.[8] While an employer-sponsored plan may not use go by metal tiers, you similarly may have a choice of plans with higher and lower cost-sharing.

  2. Network type: Insurance plans can limit you to a certain network of doctors and medical facilities. A Health Management Organization (HMO) is the most restrictive plan since you can only see doctors within the network, and you need a referral to consult with a specialist. By contrast, a Preferred Provider Organization (PPO) offers more flexibility and won’t require referrals. Because of that flexibility, PPO plans tend to be more expensive.[12] “Network has a significant impact on the premium, and this is very important in rural areas where certain providers or facilities can be hours away,” says Baker. “Generally, a thinner network, like an HMO, can save you in monthly premiums, but you will have to decide if that network will meet your healthcare needs.”

  3. Employer contributions: If you are eligible for insurance through your employer, your employer will likely cover some of the premiums. On average, workers are responsible for just 17% of the premiums for single coverage, and 28% of the premiums for family coverage.[13]

  4. Subsidies: If you’re purchasing coverage through the Health Insurance Marketplace or your state’s exchange, you may be eligible for a tax credit that reduces your monthly premiums.[14] These subsidies are based on your income. You can use the calculator on Healthcare.gov to estimate your tax credit.

  5. Location: Premiums and other costs can vary by location. For example, the average premium in Vermont is $1,050 per month. On the other end, the average premium in Utah is just $405 per month.[15]

Buying health insurance

Health insurance is a critical part of staying healthy, but it can be expensive. The good news is that you have many different types of health plans to choose from, and you may be eligible for subsidies to help reduce your costs if you buy an individual plan on the marketplace. When evaluating your options, make sure to consider how often you typically need medical care.

“Start by gaining an understanding of your healthcare needs and the cost of those needs,” advises Baker. “Health insurance is merely the vehicle we choose to use to pay for healthcare. Look at things from an annual perspective and evaluate your needs and coverage every year as your life changes. Compare all of your options and find the balance of premium cost and coverage that works for you.”

If you’re overwhelmed or don’t know where to start, a health insurance agent, broker or what’s called an insurance assister can help you identify your needs and evaluate your options. You can find assistance by using the Healthcare.gov searchable database.[16]

Article Sources
  1. “Consumer Expenditures 2020,” page 6, U.S. Bureau of Labor Statistics, https://www.bls.gov/news.release/pdf/cesan.pdf
  2. “2021 Employer Benefits Survey,” Kaiser Family Foundation, https://www.kff.org/report-section/ehbs-2021-section-1-cost-of-health-insurance/
  3. “Information on Essential Health Benefits (EHB) Benchmark Plans,” Centers for Medicare & Medicaid Services, https://www.cms.gov/CCIIO/Resources/Data-Resources/ehb
  4. “Average Premiums By Metal Tier,” Kaiser Family Foundation, https://www.kff.org/health-reform/state-indicator/average-marketplace-premiums-by-metal-tier/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
  5. Kaiser Family Foundation. “Average Annual Deductible per Enrolled Employee in Employer-Based Health Insurance for Single and Family Coverage.” https://www.kff.org/other/state-indicator/average-annual-deductible-per-enrolled-employee-in-employer-based-health-insurance-for-single-and-family-coverage/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
  6. “Health Insurance Deductibles Among Healthcare.gov Enrollees,” Page 4, Department of Health and Human Services, https://aspe.hhs.gov/sites/default/files/documents/748153d5bd3291edef1fb5c6aa1edc3a/aspe-marketplace-deductibles.pdf
  7. “The ‘Metal’ Categories: Bronze, Silver, Gold and Platinum,” Healthcare.gov, https://www.healthcare.gov/choose-a-plan/plans-categories/
  8. “Cost Sharing Limits Under the Affordable Care Act,” Cigna, https://www.cigna.com/individuals-families/understanding-insurance/what-is-an-out-of-pocket-maximum
  9. “Among Covered Workers With an Out-of-Pocket Maximum for Single Coverage, Average Out-of-Pocket Maximums By Firm Size,” Kaiser Family Foundation, https://www.kff.org/report-section/ehbs-2019-section-7-employee-cost-sharing/attachment/figure-7-46-5/
  10. “Out-of-Pocket Maximum/Limit,” Healthcare.gov, https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
  11. Baker, R. Insurance Costs. 2022.
  12. “Health Insurance Plan and Network Types: HMOs, PPOs, and More,” Healthcare.gov, https://www.healthcare.gov/choose-a-plan/plan-types/
  13. “2021 Employer Health Benefits Survey: Summary of Findings,” Kaiser Family Foundation, https://www.kff.org/report-section/ehbs-2021-summary-of-findings/
  14. “How to Save on Monthly Premiums,” Healthcare.gov, https://www.healthcare.gov/lower-costs/save-on-monthly-premiums/
  15. “Marketplace Average Premiums and Average Advanced Premium Tax Credit,” Kaiser Family Foundation, https://www.kff.org/health-reform/state-indicator/marketplace-average-premiums-and-average
  16. “Find Local Help,” Healthcare.gov, https://localhelp.healthcare.gov

About the Author

Kat Tretina

Kat Tretina

Kat is dedicated to teaching people how to pay down debt, boost their incomes and reduce financial stress. Her work has been published by Reader's Digest, The Huffington Post, Forbes Advisor and more.

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