How Much Is Health Insurance?
Plus ways to potentially reduce your premium
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 is health insurance, here’s how the rates have changed over the past few years, plus ways you can reduce your monthly premium.
How Much Is Health Insurance?
According to the Bureau of Labor Statistics, the average American spent $3,405 on health insurance in 2018. 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).
Open enrollment for 2019 took place between Nov. 1, 2018, and Dec. 15, 2018.
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 39 states use the federal Healthcare Marketplace, 12 states run their own marketplaces, and data is not always reported for every state.
|Marketplace Average Premiums and Average Advanced Premium Tax Credit (APTC)|
|Location||Average Premium||Average Premium After APTC|
|District of Columbia||$469||$447|
Employer-Sponsored Health Insurance Plan Costs
Employer-sponsored health insurance plan costs are trending upwards. The average premium for employer-sponsored health insurance in 2019 was up 4% from last year at $7,188 per year for single coverage, and up 5% from last year at $20,576 for family coverage. The cost of family coverage has increased 22% since 2014.
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 $20,576, the data shows that employees are only paying about $6,015 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 FPL is $48,560 for an individual or $100,400 for a family of four. In Hawaii, this number is $14,380 for an individual, and in Alaska, it’s $15,600.
If you do not qualify for a subsidy, the percentage of your income you need to cover your health insurance costs rises dramatically.
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:
- If you qualify for a subsidy or not
- Your age
- Where you live
- How many people are covered by the plan (individual vs. family coverage)
- If you use tobacco
- What out-of-pocket costs your health insurance plan will require, and if there is a maximum
- If you have coverage available from your domestic partner or spouse’s employer
- The type of provider network in your plan
- Your personal needs and medical conditions
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 has decreased between 2018 and 2020.
- The average lowest cost premium for Bronze coverage was $341 in 2018, was $339 in 2019, and is $331 in 2020.
- The average lowest cost premium for Silver coverage was $456 in 2018, was $452 in 2019, and is $442 in 2020.
- The average lowest cost premium for Gold coverage was $526 in 2018, was $514 in 2019, and is $501 in 2020.
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, but there are a lot more factors to consider, including how much the out-of-pocket costs are for each category of plan and whether or not you qualify for a subsidy.
According to the Kaiser Family Foundation, when assessing the costs of the different tier health plans and related increases in recent years, insurers have trended on increasing the cost of the silver plans. Research shows that they’ve increased the cost to a point where there have been cases when a silver plan cost more per month than a gold plan. This is known as “silver loading” and could impact your choice of plan if you are unsubsidized, or don’t qualify for cost sharing reductions.
The Kaiser Family Foundation found that in 2019, the unsubsidized lowest-cost gold plan premium was lower than the unsubsidized lowest-cost silver plan premium in 25% of counties (792 counties). That’s compared to 15% of counties (478 counties) in 2018.
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 a large role 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, co-pays, 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 those related to 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 and 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. And 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. This could include 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.
Bureau of Labor Statistics. "Consumer Expenditures 2018, Table A: Table A. Average Income and Expenditures of All Consumer Units, 2016-18," Accessed Nov. 1, 2019.
Kaiser Family Foundation. "Marketplace Average Premiums and Average Advanced Premium Tax Credit (APTC)," Accessed Nov. 1, 2019.
Kaiser Family Foundation, "2019 Employer Health Benefits Survey," Accessed Nov. 1, 2019.
Kaiser Family Foundation. "Explaining Health Care Reform: Questions About Health Insurance Subsidies," Accessed Nov. 1, 2019.
Federal Register. "Annual Update of the HHS Poverty Guidelines," Accessed Nov. 1, 2019.
Kaiser Family Foundation. "Among People Ineligible for Subsidies, Middle-Class Older Adults Face the Least Affordable ACA Premiums, Especially Those Living in Rural Areas Where Premiums Are Highest," Accessed Nov. 1, 2019.
Healthcare.gov. "How Insurance Companies Set Health Premiums," Accessed Nov. 1, 2019.
Kaiser Family Foundation. "Average Marketplace Premiums by Metal Tier, 2018-2020," Accessed Nov. 1, 2019.
Kaiser Family Foundation. "How ACA Marketplace Premiums Are Changing by County in 2019," Accessed Nov. 1, 2019.
Kaiser Family Foundation "How ACA Marketplace Premiums Are Changing by County in 2019," Accessed Nov. 1, 2019.
Kaiser Family Foundation. "How ACA Marketplace Premiums Are Changing by County in 2019," TABLE: Counties Where the Lowest-Cost Bronze Plan Premium Costs Zero Dollars After the Tax Credit in 2019," Accessed Nov. 1, 2019.