How Much Does Health Insurance Cost?

How Much Does Health Insurance Cost?

Americans pay radically varied monthly premiums for medical coverage across the United States. Despite the fact that, owing to the Affordable Care Act, rates are not determined by gender or pre-existing health issues, a variety of other factors influence how much you pay. We’ll go through each of these elements in more detail below to help you figure out how much health insurance will cost you and why.


  • State and federal laws, where you reside, whether you get insurance via your work, and the type of plan you choose all play a role in the cost of health insurance premiums.
  • Annual health insurance premiums for a family of four in 2020 totaled $21,342, although employers covered 73 percent of that cost.
  • One reason wages haven’t risen much in the last two decades could be the surge in corporate health costs.
  • Wyoming had the highest benchmark plan premium for a 27-year-old in 2020, at $648, and New Hampshire had the lowest, at $273.
  • Deductibles vary depending on the size of your company or the type of plan you purchase on a federal or state government exchange.

10 Factors That Affect Premiums

Many factors that influence the cost of health insurance are beyond your control. Nonetheless, it’s beneficial to be aware of what they are. Here are ten important elements that influence the cost of health insurance premiums.

  • Both state and federal laws apply. What health insurance must cover and how much insurers may charge are both governed by legislation.
  • Insurance of a specific type. The amount you’ll pay depends on whether you’re covered by your employer’s group plan or if you buy it on your own.
  • the level of income Low-wage workers tend to pay more through their employers, but thanks to subsidies, they may pay less through a federal or state exchange.
  • Size of the company. Insurance is typically less expensive at large corporations. The place where you live. The cost of a premium varies by state and county.
  • The community’s type. Premiums in metropolitan areas are typically cheaper than those in rural locations.
  • The county where you live. Some counties have only one plan, whilst others have many options, which can assist lower costs.
  • Type of plan. The most expensive plans are preferred provider organizations (PPOs) and platinum plans through the federal Health Insurance Marketplace.
  • Age. As a policyholder gets older, his or her health insurance prices rise, with the highest increases occurring after the age of 55.
  • Tobacco consumption. Tobacco smokers can expect to pay up to 50% more in premiums.

Employer-provided coverage is one of the most important elements in determining how much your coverage costs and how comprehensive it is. Let’s look at it more closely.

Employee Health Insurance Premiums

According to the Kaiser Family Foundation’s 2020 Employer Health Benefits Survey, health insurance at a large employer may cost as much as a new automobile. According to Kaiser, the average yearly premium for family coverage in 20202 was $21,342, which was nearly identical to the base manufacturer’s recommended price of a 2022 Honda Civic—$22,715.3.

Employers paid 73 percent of the premium bill, with workers contributing an average of $5,588 to the annual cost. In 2020, the average payout for a single worker was $7,470. Workers paid $1,243, or 17% of the total.


The average premium statistics were calculated using health maintenance organizations (HMOs), preferred provider organizations (PPOs), point-of-service plans (POS), and high-deductible health plans with savings options (HDHP/SOs). PPOs were found to be the most frequent plan type, with 47 percent of covered employees insured by them. 31% of insured workers were covered by HDHP/SOs.

Naturally, whatever firms spend on health insurance for their employees leaves less money for wages and salaries. As a result, workers are responsible for a greater portion of their premiums than these figures indicate. Indeed, rising healthcare expenses may be one reason wages haven’t increased much in the last two decades.

At the same time, because employees pay their health insurance premiums with pretax dollars, their financial burden is likely to be lower than that of consumers who purchase their own insurance through the federal Health Insurance Marketplace or their state’s health insurance exchange. (The terms “marketplace” and “exchange” are interchangeable in this article.)

Employees’ premiums, deductibles, choice of healthcare professionals and hospitals, and eligibility for a health savings account (HSA) are all influenced by the type of plan they select.

When both couples have employer-provided health insurance, a thorough comparison is essential—one plan may be a considerably better deal than the other. The partner whose plan isn’t used can keep the portion of their earnings that isn’t deducted for health insurance. Alternatively, a couple without children may choose to each choose their own company’s plan (couples coverage rarely includes any form of discount—essentially it’s a doubling of the individual costs).

Individual Health Insurance Premiums on the Exchanges

Despite years of political opposition, the federal insurance plan marketplace at, also known as Obamacare, is still operational in 2021. It has plans from around 175 different companies. Twelve states and the District of Columbia run their own health exchanges, which are essentially the same as the federal site but focus on plans accessible to their population. Rather than using the federal exchange, residents in these places sign up through their state.

There are four levels of coverage available for each plan, each with its own pricing. They are branded platinum, gold, silver, and bronze in order of price from highest to lowest. The benchmark plan is the second-lowest-cost silver plan offered through a health insurance exchange in a specific location, and it varies even within the same state. It’s called the benchmark plan because it’s the one the government uses to determine your premium subsidy, if any, coupled with your income.

The good news is that prices are decreasing. According to the Centers for Medicare & Medicaid Services (CMS), the average premium for a 27-year-old in the second-lowest-cost silver plan on declined by 4% from 2019 to 2020.

Six states, including Delaware (20%), Nebraska (15%), North Dakota (15%), Montana (14%), Oklahoma (14%), and Utah (14%), had double-digit percentage drops in average second-lowest-cost silver plan premiums for 27-year-olds (10 percent ).

  • From 2020 to 2021, the average second-lowest-cost silver plan for a 27-year-old fell by 3%. Average benchmark plan premiums have decreased by 10% or more in four states (Iowa, Maine, New Hampshire, and Wyoming).
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  • A special enrollment period (SEP) for open market plans was also established by the American Rescue Plan Act of 2021. Because of the additional subsidies, the average monthly plan premium for new consumers picking plans through during this time was reduced by 27%, from $117 to $85. Deductibles were reduced by over 90%, from $450 to $50, lowering out-of-pocket expenditures.

Digging Deeper for Pricing Information

However, the news isn’t all positive. We reviewed the CMS’ 2020 Health Insurance Exchange Premium Landscape Issue Brief for further information. It shows that premiums for 27-year-olds buying silver plans increased by 10% or more in Indiana, Louisiana, and New Jersey.

More crucially, it shows that percentage drops don’t necessarily reflect what consumers are Paying: “Some of the states with the highest decreases nonetheless have relatively high premiums, and vice versa,” according to the brief.

“The average 27-year-old PY20 benchmark plan premium is $583, despite the fact that Nebraska’s benchmark plan premium reduced 15% from PY19 [the plan year 2019] to PY20. While Indiana’s average PY20 benchmark plan premium climbed 13% from PY19, the average 27-year-old PY20 benchmark plan premium remained unchanged “”$314. “


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