Whether you’ve just turned 26 and got kicked off your parents’ health plan or you’ve been paying for your own health insurance for years, the question comes back year after year: How much does health insurance cost?
Maybe you’re in a job that sponsors your health insurance plan or maybe you’ve been perusing the marketplace for the best prices. No matter your situation, the cost of health insurance can put a strain on that monthly budget.
So how expensive is it? And are there any ways to get the premium cost down? Settle in because we’ve gathered the important numbers, and we’re ready to walk you through them—in detail.
What Types of Health Insurance Are There?
If you’re just getting into the health insurance game, you’re probably unsure of where to start, what all these terms are, and what public versus private insurance even means.
Private coverage is coverage provided through your employer, union or even the armed forces. But private coverage could also mean that you purchase your health insurance through the marketplace and not through your employer.
Public insurance includes Medicare and Medicaid or care provided by the Department of Veterans Affairs.
Do you have the right health insurance coverage? You could be saving hundreds!
Now . . . let’s dig into the numbers.
What Are the Average Costs of Health Insurance?
The cost of health insurance all depends on a few important things: how old you are, how many people are on your plan and how much coverage you’re looking for.
In 2020, roughly over 157 million people bought into their employer-based health care plan.1 Within those plans, the average monthly cost for an individual was $623 per month and $1,779 for a family.2
Check out the health care cost roundup from 2019:
- 68% of health insurance was sourced from the private health insurance marketplace.3
- 56.4% of private health insurance was employer-based.4
- 35.4% was provided by the government (through Medicaid or Medicare).5
- 10.2% of health insurance coverage was purchased by individuals directly through the marketplace and not through an employer.6
- And the average monthly premium for a single 27-year-old nonsmoker was $406 for a silver plan or $288 for a low-cost plan.7 Yikes. (Don’t worry about the silver category, we’ll get into that later.)
What Affects My Health Insurance Premium Costs?
Your Gender and Marital Status
If we’re looking at the average costs for individual health insurance a young single male could pay premiums as low as $100 or as high as $300 depending on the level of coverage he wants. This is because young single men are the lowest-risk group when it comes to health insurance.
It used to be that the premiums for basic health insurance for women could average higher because of costs related to having children. But things have changed under the Affordable Care Act’s standards.
A study by the Kaiser Family Foundation found that: “Historically, insurance carriers sold plans on the individual insurance market that often placed women at a disadvantage, either by charging them higher premiums than men for the same level of coverage (gender rating) at many ages or disqualifying women from coverage because they had certain pre-existing medical conditions, including pregnancy. The ACA plans are barred from instituting these policies.”8
Now, what about families? As we mentioned above, families paid an average of $1,779 each month for their health insurance in 2019. But if your family’s income falls below a certain level, a tax credit could save money on your health insurance premium.9 Check Healthcare.gov to see if you and your family qualify.
But gender and marital status aren’t the only things that determine how much you could be shelling out for health insurance each month. Here are some other things they look for:
Your Personal Details
Age: A few states (including New York, Hawaii and New Hampshire) do not factor in your age when it comes to setting their health insurance rates.10 But the majority of states do. So that means the older you are, the more you’ll pay for health insurance.
Smoking: Are you a smoker? Since smokers are at a greater risk of health issues, smoking is a big factor in how much your premium will be. In fact, if you’re a smoker, insurers can charge you up to 50% more for health insurance! 11 Cut out smoking and you could cut that bill in half!
Location: Premiums can vary slightly by location, but less significantly than some of the other factors. For example, in 2019, monthly premiums in the Northeast averaged $655 but $626 in the Midwest. And, for a family, the premium in the Northwest averaged $1,929 compared to $1,804 in the South.12
The bottom line? Your age and whether or not you smoke will have a bigger influence on your health insurance premium than where you live.
Type of Plan
The other big factors that affect your health insurance premium have to do with the plan itself—the type of plan and the level of coverage you’re looking for.
First, Does Your Plan Cover an Individual or the Whole Family?
If you’re just insuring yourself, your monthly premium will be lower compared to covering your spouse plus any dependents.
What’s Your Plan Type?
Shopping for a health insurance plan can feel like being in a grocery store and staring at rows of the same product for what seems like hours—only it’s less exciting and way more expensive!
Here are the plans and networks you can shop for in the health insurance marketplace:
- Preferred Provider Organization (PPO): If you have a PPO plan, you pay less for medical care if you use a provider within the plan’s network.
- Health Maintenance Organization (HMO): Enrolling in an HMO plan means you’ll be limited to using doctors within your network except in an emergency.
- Point of Service (POS): This plan offers lower medical bills if you use doctors, hospitals and health care providers within the plan’s network. If you have a POS plan, you’ll always need a referral from your primary care doctor in order to see a specialist.
- Exclusive Provider Organization (EPO): This is more of a managed plan where you’re only covered for care if you use doctors and hospitals in the plan’s network unless in an emergency.
Level of Coverage
Once you’ve decided on a plan, it’s time to talk about the level of coverage you need and how much you can afford to pay each month. Think of this like the range of medals the Olympics. These tiers provide different options on how much your plan will actually pay for, and how much you will pay. Note: these tiers are solely based on the budget, not on how well you’ll be cared for or the quality of care you’ll receive.14
If you decide to go for the bronze coverage, you’ll pay lower monthly costs, but more out-of-pocket costs when you do need care:
- Your provider will pay: Around 60%
- You will pay: Around 40%
Silver is the middle ground with lower deductibles. You’ll pay more in premiums every month, but have lower out-of-pocket costs compared to the bronze level:
- Your provider will pay: Around 70%
- You will pay: Around 30%
- Cost-Sharing: Silver plans also come with the discount of “cost-sharing” reductions. It all depends on your income. But if you qualify for a cost reduction, you could see your provider cover more of the cost of care up to the 90% mark.
Gold plans have high monthly premiums, but low deductibles, coinsurance and out-of-pocket costs:
- Your provider will pay: Around 80%
- You will pay: Around 20%
This is the highest monthly premium out there, with the lowest out-of-pocket costs. With this type of coverage, you’re really putting all your eggs in that big monthly premium basket! But having a lower deductible means that your insurance company will start covering those crazy health care expenses much sooner.
- Your provider will pay: Around 90%
- You will pay: Around 10%
How to Choose the Best Health Insurance
Choosing the right health insurance plan for you or your family can feel like a daunting task. There are so many options out there that it can feel like you’re stuck in the middle of the woods with no way out. We know some people who can help you understand the marketplace or even what your employer is offering you.
Get connected with one of our Endorsed Local Providers (ELP). We’ll match you up with an expert in your area who will guide you to the right health insurance plan for you (and your wallet).