How Much Is Health Insurance?

Plus, potential ways to reduce your premium

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Every year, open enrollment for health insurance plans takes place from November to December. If you don’t have a qualifying life event throughout the year, then this is the time to shop around to ensure you’re paying the best price for the right coverage.

If you’re wondering how much health insurance costs, learn how the rates have changed over the past few years, plus ways you can reduce your monthly premium.

Key Takeaways

  • Open enrollment for health insurance plans takes place from November to December each year.
  • The average premium for Healthcare Marketplace plans was $612 in 2019, but premiums vary by state.
  • The average premium for employer-sponsored health insurance in 2020 was $7,470 per year for single coverage and $21,342 for family coverage.
  • To qualify for a subsidy or tax credit, you must not have coverage available through an employer and make between 100% and 400% of the Federal Poverty Line.

How Much Is Health Insurance?

According to the Bureau of Labor Statistics, the average American spent $3,529 on health insurance in 2019. And according to the Kaiser Family Foundation, open enrollment for 2019 saw an average monthly premium of $612 for Healthcare Marketplace plans that were available in 39 states.

Compared to prior years, that’s just 1.4% less than 2018 ($621) but about 29% more than 2017 ($476).

President Biden has issued an executive order for a special enrollment period for health insurance. The enrollment period assists those who are uninsured or underinsured due to COVID-19. The period will last from February 15, 2021, to August 15, 2021, and applies to the 36 states that use as their health insurance exchange. Other states may also offer a special enrollment period.

Average Monthly Premiums per State

While $612 was the national average, it’s important to consider how monthly premiums change from state to state. While 36 states use the federal Healthcare Marketplace, 15 states and the District of Columbia run their own marketplaces, and data is not always reported for every state.

Marketplace Average Premiums and Average Advanced Premium Tax Credit (APTC) for 2019
Location Average Premium Average Premium After APTC
United States $612 $143
Alabama $669 $123
Alaska $746 $174
Arizona $596 $195
Arkansa $513 $173
California $582 $168
Colorado $710 $240
Connecticut $625 $264
Delaware $842 $202
District of Columbia $469 $447
Florida $605 $100
Georgia $598 $127
Hawaii $664 $214
Idaho N/A N/A
Illinois $646 $207
Indiana $491 $259
Iowa $918 $126
Kansas $661 $149
Kentucky $595 $196
Louisiana $613 $182
Maine $675 $155
Maryland $552 $191
Massachusetts $392 $204
Michigan $498 $171
Minnesota $455 $279
Mississippi $641 $76
Missouri $645 $158
Montana $670 $174
Nebraska $866 $80
Nevada $509 $152
New Hampshire $540 $237
New Jersey $511 $235
New Mexico $483 $174
New York $618 $224
North Carolina $729 $114
North Dakota $502 $165
Ohio $538 $234
Oklahoma $674 $77
Oregon $560 $222
Pennsylvania $654 $193
Rhode Island $443 $174
South Carolina $669 $116
South Dakota $652 $137
Tennessee $659 $141
Texas $544 $118
Utah $459 $82
Vermont $573 $148
Virginia $687 $175
Washington $551 $286
West Virginia $937 $265
Wisconsin $700 $161
Wyoming $960 $125

Employer-Sponsored Health Insurance Plan Costs

Employer-sponsored health insurance plan costs are trending upwards. The average premium for employer-sponsored health insurance in 2020 was up 4% from 2019 at $7,470 per year for single coverage and up 4% from 2019 at $21,342 for family coverage.

The cost of family coverage has increased 22% since 2015.

When it comes to the cost of employer-sponsored health insurance, you need to consider that your employer may contribute to the cost of your plan as part of your employee benefits.

While the average cost of a family plan is $21,342, the data shows that employees are paying about $5,588 per year, and the employer is paying the rest. 

Health Insurance With and Without a Subsidy

To qualify for an Affordable Care Act (ACA) subsidy or advanced premium tax credit (APTC), you must not have coverage available through an employer. You must also make between 100% and 400% of the Federal Poverty Line (FPL), or qualify for Medicare, Medicaid, Children’s Health Insurance Program, or other forms of public assistance.

In the 48 contiguous United States (excluding Alaska and Hawaii) the subsidy range is from $12,760 to $51,040 for an individual and from $26,200 to $104,800 for a family of four.

If you do not qualify for a subsidy, the percentage of your income you need to cover your health insurance costs rises dramatically.

In 2021, the American Rescue Plan temporarily increased the availability of these subsidies in response to the COVID-19 pandemic. In 2021 and 2022, many people who buy insurance through the Health Insurance Marketplace are now eligible for a subsidy, even if their income was too high to qualify in previous years. The size of these subsidies varies with income.

Health insurance rates also increase by age. The Kaiser Family Foundation found that in 21% of U.S. counties, individuals with a $50,000 salary would pay a different percentage for health insurance because of their age:

  • If they were 27, they would pay about 7% of their income for the lowest-cost plan nationally.
  • If they were 40, they would have to pay more than 10% of their income. 
  • If they were 60, they would pay 17% of their income for the same plan.

What Makes the Price of Health Insurance Go Up or Down?

Now that you understand the average costs of health insurance and how to qualify for a subsidy, the question you may have is: What is going to make the price of your health insurance go up or down?

Factors that will impact your cost of health insurance may include:

  • Whether you qualify for a subsidy or not
  • Your age
  • Where you live
  • How many people are covered by the plan (individual vs. family coverage)
  • Whether you use tobacco
  • What out-of-pocket costs your health insurance plan will require, and whether there is a maximum
  • Whether you have coverage available from your domestic partner or spouse’s employer
  • The type of provider network in your plan

You can use a subsidy calculator to help estimate what you can expect to pay for ACA health insurance this year.

Your health insurance premium will also be based on the tier of coverage that you choose. The average Marketplace premium by "metal tier" decreased between 2018 and 2020. 

  • The average lowest-cost premium for Bronze coverage was $340 in 2019, $331 in 2020, and $328 in 2021. 
  • The average lowest-cost premium for Silver coverage was $454 in 2019, $442 in 2020, and $436 in 2021.
  • The average lowest-cost premium for Gold coverage was $516 in 2019, $501 in 2020, and $482 in 2021.

Due to the subsidy changes under the American Rescue Plan, taxpayers may find that their actual premium costs are much lower. Some taxpayers may find that advance tax credits reduce their monthly premiums to $0 in 2021 and 2022. However, if your income is higher than expected over the course of the year, you may have to repay some of these credits at tax time.

Which ACA Health Insurance Plan Costs the Least? 

There are four metal tiers of plans in the Healthcare Marketplace. You might think that choosing the policy with the lowest monthly premium will save you the most money.

However, there are more factors to consider, including how much the out-of-pocket costs are for each category of plan and whether you qualify for a subsidy.

According to the Kaiser Family Foundation, when assessing the costs of the tiers of health plans and related increases in recent years, insurers' trend has been to increase the cost of the silver plans.

Research shows that they’ve sometimes increased the monthly cost of a silver plan above that of a gold plan. This is known as “silver loading” and could impact your choice of a plan if you are unsubsidized or don’t qualify for cost-sharing reductions.

Get quotes for all metal tiers when comparing coverage options.

Tips For Reducing Health Insurance Costs

Shopping and doing the research to find the best health insurance is important, because your situation and medical expenses play large roles in what you get out of your health insurance plan. 

  • A health savings account (HSA) may help you save money on your medical spending.
  • Compare the out-of-pocket costs for different plans. Out-of-pocket costs may include deductibles, copays, and coinsurance.
  • Create a checklist of what is important for you or your family, and compare how each plan responds to what you are looking for. 
  • Make sure your plan allows you access to the providers you want. If you choose a plan with a limited provider network, you may have additional costs if you use services out-of-network, because your insurance may not cover you. 
  • If both you and your spouse have access to health insurance, consider using coordination of benefits to leverage your coverage and potentially reduce costs.
  • If you foresee costs, such as those related to mental health needs or pregnancy in the near future, review your health insurance options with your family needs and plans in mind. Some health insurance plans may have better coverage for pregnancy and childbirth than others.
  • If you are looking to buy individual health insurance, consider direct-enrollment sites or using the services of a health insurance broker to help check ACA-compliant insurance plans off the marketplace.

The Bottom Line

For those who qualify for marketplace subsidies, the cost of health insurance may still be affordable or, in some cases, even free.

If you work for an employer that provides health benefits, your cost of health care may be on the rise, but the trade-off is that you may benefit from having your employer pay into your plan. In some cases, this may help lighten the expense.

Employer health benefit plans may also provide more coverage than Marketplace plans or alternative services that may save you money, such as virtual doctor consultations or some element of value-based care.

If you do not qualify for a subsidy, the cost of health insurance can be increasingly challenging. Be sure to check out all of your options in the various marketplace tiers.

Look into membership-based health insurance or other options like direct-enrollment sites to give you the most options to save money.