Health insurance is a must-have if you want to defray medical costs. Whether you have a preexisting medical condition or simply want to be prepared for the unexpected, the type of policy you choose has a major impact on pricing.
Learn how much health insurance costs for both employer plans and Marketplace plans, plus which factors influence your bottom line.
How much does health insurance cost
Group health insurance
Group health insurance refers to a policy offered to a group of people — usually employees who work at the same company. They can choose between individual plans or family plans that cover their immediate family members. In most cases, the employer pays for a portion of the plan, so costs may be lower compared to other options.
Individuals enrolled in group health plans paid an average annual premium of $8,435 in 2023 (about $703 per month), according to data from independent health and medical research firm KFF. For families, the total annual premium averaged at $23,968 — or about $1,997 per month.
Those prices are higher than they were in 2022, with both family and individual group health plan premiums jumping by 7%.
Individual health insurance
How much does it cost to buy health insurance on your own? If you don’t have a group policy offered through your job (or a family member’s job), you can access health plans on the Health Insurance Marketplace. The Marketplace provides multiple health and dental plan choices based on several factors including what’s available in your state.
Individual health insurance costs vary depending on several factors, including your age, your family size and the amount of subsidies you qualify for.
We analyzed nearly 790 Marketplace plans across 33 states to determine average pricing. For overall averages, we looked at age groups that included children and those up to 60 years old. Policy sizes included individuals up to families with three or more children. Premium data does not account for any tax subsidies that might lower the cost of your health care.
Monthly premium costs
For monthly premiums, the overall average cost was $1,178. But that number can change a lot based on age. For instance, a 21-year-old paid a monthly average premium of just $397, while a 50-year-old paid an average of $712.
Deductibles
The average yearly deductible for an individual was $5,101. That number more than doubles for families, who had an average deductible of $10,310 per year.
Maximum out-of-pocket expenses
The maximum out-of-pocket expense for individual policyholders averaged $8,335. It doubled for families, averaging $16,672 per year.
How to calculate health insurance costs
In addition to your premium, health insurance policies come with other costs throughout the year. All of these extra fees can impact how much you pay for your health insurance.
Deductible
Your deductible is a dollar amount you have to pay out of pocket each year before your plan’s benefits activate. Let’s say your annual deductible is $8,000 and you have a hospital bill for $12,000. You haven’t had any other medical expenses this year so far. You would be responsible for $8,000 before your health insurance plan covers some or all of the additional $4,000.
Copay
This is the amount you must pay for a visit to a health service provider. In most cases, your copay will be a set dollar amount for certain services. For example, your plan may have a $25 copay for primary care visits, a $50 copay for specialist visits, a $75 copay for urgent care visits and a $300 copay for emergency room trips.
If your copay doesn’t kick in until you’ve met your deductible, what you pay for a doctor’s visit depends on which services you receive and the rate that your insurer has negotiated with your doctor.
Coinsurance
After your deductible is met, you may be responsible for a percentage of your bills, known as your “coinsurance.” For instance, if your deductible is already paid in full but you have a $1,000 medical bill and your coinsurance responsibility is 20%, you’d pay $200.
Out-of-pocket maximums
Your annual out-of-pocket maximum is the limit of how much you’re expected to pay for your health care in a year. It includes your deductible, copayments and coinsurance. Once you hit the limit in these categories, you no longer have to pay for services. Expenses that don’t count toward your out-of-pocket maximum include out-of-network care, services your insurer doesn’t cover and your premiums.
Marketplace plans have limits on their out-of-pocket maximums. For example, in 2024, out-of-pocket maximums can be no higher than $9,450 for an individual and $18,900 for a family.
Potential health care savings
Despite having multiple types of expenses impacting the cost of your health care, there are ways to save. The type of savings you may see depends on whether you have a group policy or individual health plan.
Group policy savings
In most states, employers are required to contribute to their employee’s health care plans to lower the premium costs. The size of your company may impact how much you save on your policy. Research from KFF shows that larger companies are more likely to contribute greater amounts towards employee’s family coverage.
Individual health plan savings
The Affordable Care Act (ACA) can offer monthly subsidies through the Health Insurance Marketplace based on your income and the number of people in your household. The subsidies can cover part or all of your premiums. However, because your subsidy is based on your income, you may have to return some of those subsidies at tax time if you earned more than what you reported.
What factors impact health insurance rates?
Watch for several variables that affect your health insurance rates.
“The type of plan it is, who you are covering, the deductible, age, location and tobacco use are all health insurance cost factors,” Kim Buckey, vice president of customer service at benefits company Optavise, said.
For instance, there are five plan tiers in the Marketplace, although not all of them may be available in your state: Bronze, Silver, Gold, Platinum and Catastrophic. Lower tiers like Bronze have a higher out-of-pocket limit and deductibles but lower premiums in general. Higher-tier plans like Platinum have a higher premium and lower out-of-pocket limit.
Factors impacting your health, such as age and tobacco use, also cause premiums to increase. In most cases, ongoing medical issues shouldn’t impact costs. However, some plans outside the Marketplace, such as short-term health insurance, may not follow these rules.
“If you are not buying an ACA-compliant plan, preexisting conditions can also impact costs,” Buckey said.
How to choose the best health insurance
The most important part of choosing the best health insurance for you is understanding how the policy works.
“You should look at total cost — not just the premium but what you will be expected to pay when you actually use the plan,” Buckley said.
This includes ongoing expenses such as copays, deductibles and coinsurance. In addition to health care services, remember to consider the cost of medications.
“Ask yourself: how are prescription drugs covered: flat dollar copay per tier, or coinsurance?” Buckley said. “Be sure to carefully evaluate what is and what isn’t covered.”
Also look at the plan’s network, which is the pool of doctors and health care centers you can access with your health care coverage. Some plans may offer more doctors and care centers in your area than others. Also, if you already have a primary care physician and specialists, you can see if those doctors are part of a prospective plan’s network.
Different types of health insurance plans
There are several different types of health insurance plans that dictate how your coverage works with providers. You’ll find these options on the Marketplace and may also see some of them offered as choices in a group health care plan.
| Plan type | Primary care physician required? | Referral required to see a specialist? | Out-of-network coverage? |
|---|---|---|---|
Exclusive provider organization (EPO) | No | Not as likely | Emergencies only |
Health maintenance organization (HMO) | Yes | Yes | Emergencies only |
Point of service (POS) | No | Yes | Only in certain circ*mstances |
Preferred provider organization (PPO) | No | Not as likely | Yes |
Generally speaking, PPO and POS plans provide more flexibility than EPOs and HMOs. PPOs and EPOs typically make it easier for you to see a specialist because, in the case of a PPO, you probably won’t need a referral from your primary care physician to see a specialist.
Can I lower my health insurance costs?
It depends on where you’re shopping for insurance. When you purchase health insurance through your job, look at all the available plans during your employer’s open enrollment period. There may be plans that have a higher deductible in exchange for a lower monthly premium.
When purchasing individual health plans on the Marketplace, your income and family size can affect your monthly subsidy. If any of those details have changed, you could qualify for additional savings or your subsidy may decrease.
Frequently asked questions (FAQs)
Employer-sponsored health insurance plans may be less expensive than Marketplace plans because your employer pays for part of your premium. This is especially true if you don’t qualify for Marketplace subsidies based on your income and family size. However, employer plans may offer fewer options to choose from to keep costs low.
One benefit is that employer plans are paid from your paycheck before taxes, lowering your overall income tax bill each year.
Generally speaking, the older you get, the more health insurance will cost. Some states limit price increases based on age. However, you can expect prices to be as much as three times higher for older individuals.
Marketplace plans are required to cover preexisting conditions without charging you more. Per Marketplace guidelines, preexisting conditions include everything from diabetes to pregnancy. These changes apply to both Marketplace plans and employer policies.
No, prices for Marketplace plans do not fluctuate throughout the year, but they will likely change from year to year when you choose a plan during the Marketplace open enrollment period.
