How Much Is Health Insurance?

Open enrollment for health insurance plans—whether it's an employer-sponsored plan or an Obamacare plan you buy through a federal or state healthcare exchange—generally takes place in the last two or three months of the year. Unless you have a qualifying life event such as getting married or losing your job at a different time of the year, open enrollment is the time to shop around to ensure that you’re paying the best price for the right coverage.

It helps to first understand what average premiums are, how the rates have changed over the past few years, and ways you can reduce your monthly premium.

How Much Is Health Insurance?

The average American spent $3,667 on health insurance in 2020, according to the Bureau of Labor Statistics. And per to the Kaiser Family Foundation, the average person's monthly premium for plans made available through the Affordable Care Act (ACA—also known as Obamacare) during open enrollment for 2019 (the most recent year for which data is available) was $612, before subsidies. That’s 1.5% less than 2018 ($621) but about 29% more than 2017 ($476).

Average Monthly Obamacare Premiums Per State

While $612 was the national average monthly premium for ACA plans, it’s important to understand that the majority of people enrolled get subsidies in the form of advance premium tax credits (APTCs).

The table below shows the state-by-state average premium for Obamacare plans in 2019, the most recent year for which data is available. It also gives the average monthly premium after the average advance premium tax credit is applied, as well as the average monthly premium after APTC for consumers who received an APTC. (More on APTC eligibility in the "Health Insurance With and Without a Subsidy" section below.)

Employer-Sponsored Health Insurance Plan Costs

About 57% of workers in the U.S. get insurance through their employer. And while employer-sponsored plans can be a better deal for consumers who don't qualify for Obamacare subsidies, they are usually not free.

In fact, premiums have been rising. The average premium for employer-sponsored health insurance in 2020 was up 4% from 2019 at $7,470 per year for single coverage (about $623 a month) and $21,342 for family coverage (about $1779 a month)—also a 4% increase from 2019. The cost of family coverage rose by 22% between 2015 and 2020.

With employer-sponsored health insurance, it's important 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 in 2020 was $21,342, employees paid about $5,588 for family coverage that year ($466 a month), and the employer paid the rest. 

Deductibles are on the increase, too. The average deductible for covered workers who had a deductible in 2020 was $1,644. That's 25% higher than five years earlier, and 79% higher than a decade earlier.

Obamacare Insurance Subsidies

To qualify for an Affordable Care Act (ACA) subsidy in the form of a premium tax credit, you must not have affordable coverage available through an employer. You must also earn between 100% and 400% of the Federal Poverty Line (FPL).

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 that you need to cover your health insurance costs rises dramatically. You can use a subsidy calculator to help estimate what you can expect to pay for ACA health insurance this year.

What Determines the Price of Your Health Insurance?

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 my 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's or spouse’s employer
• The type of plan you have

Which ACA Health Insurance Plan Costs the Least? 

There are four metal tiers of plans for Obamacare: bronze, silver, gold, and platinum. Looking at the most common tiers (the bottom three), the average Marketplace premium decreased in each 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.

Those average numbers can be deceiving. Your total costs may vary, depending on factors such as how much the out-of-pocket costs are for each category of plan, whether you qualify for a subsidy, and the actual cost of each tier in your area.

According to the Kaiser Family Foundation, insurers have lowered the cost of gold plans in recent years more than they've dropped the cost of silver plans, so that in some cases, the monthly cost of a silver plan is equal to or above that of a gold plan. Insurers generally load extra costs entirely onto the silver tier. That is known as “silver loading” and could impact your choice of a plan if you are unsubsidized.

Tips For Reducing Health Insurance Costs

Shopping and doing the research to find the best health insurance are 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 if you have a qualifying high-deductible plan to go with it.
• 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 fits with 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 find it harder not to rack up additional costs for using out-of-network providers.  
• 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's needs and plans in mind. Some health insurance plans may have better coverage for pregnancy and childbirth than others.

The Bottom Line

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, that 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.

Even if you don't have access to an employee plan, the cost of an ACA health insurance plan may still be affordable or, in some cases, even free for those who qualify for marketplace subsidies. 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.

Frequently Asked Questions (FAQs)