How Much Does Health Insurance Cost?

In 2022, the average monthly cost of an employer-based plan was $659.25 for individual coverage or $1,871.92 for family coverage. Health insurance costs vary by location, the age of the insured, their income, tobacco use and other variables.

Fortunately, there are several ways to help reduce how much health insurance costs, such as using generic medications, choosing in-network providers and leveraging tax-advantaged accounts like health savings accounts (HSAs) or flexible spending accounts (FSAs).

Key Takeaways The average annual premium for employer health insurance in 2022 was $7,911 for single coverage and $22,463 for family coverage. Monthly costs for individual and family employer plans were $659.25 and $1,871.92 respectively. State and federal laws restrict what healthcare companies can use to calculate premiums, like gender and medical history. Older individuals generally face higher health insurance premiums. Maintaining a healthy lifestyle can reduce your need for costly medical interventions.

How Much Is Health Insurance?

In 2022, the average annual health insurance cost for employer-based plans is $7,911 for single coverage and $22,463 for family coverage^.[1] Premiums are generally similar for both small and large firms.

How Much Does Health Insurance Cost per Month?

Based on the above information, the monthly costs for individual and family employer health plans in 2022 was $659.25 and $1,871.92 respectively. Below is a table reflecting data taken from the Kaiser Family Foundation.^[1]

What Factors Impact the Costs of Health Insurance?

Your cost of health insurance is going to depend on a number of factors. We've provided a list of 10 common variables that help dictate health insurance premiums.

State and Federal Laws

Government bodies have placed restrictions as to what healthcare companies can use when calculating your premium. Specifically, health insurance companies cannot charge men and women different rates. They also can't factor in your medical history or current health.

Income Information

The higher your income, the more you will pay for coverage. For those who have low income or temporarily do not have a job, there are viable alternatives through your state's Medicaid program. In the U.S., your 2023 eligibility for reduced-cost health coverage depends on your income relative to the federal poverty level (FPL). If you earn above 400% FPL, you may get premium tax credits.^[2]

You're also eligible for credits if you fall between 100% and 400% of the FPL. Below 150% FPL, you may qualify for a special enrollment period unless you're on Medicaid or CHIP (Children’s Health Insurance Program). If you're below 138% FPL and in a Medicaid-expansion state, you qualify for Medicaid. Below 100% FPL, you're likely ineligible for savings.

The following table shows the 2023 numbers to calculate the FPL.^[2]

Family Size	2023 Household Income
For individuals	$14,580
2	$19,720
3	$24,860
4	$30,000
5	$35,140
6	$40,280
7	$45,420
8	$50,560
9+	Add $5,140 for each extra person

Where You Live

Healthcare providers will look at the state you live in, the county and the type of area where you reside. In general, rural areas often pay higher premiums for health insurance than urban areas.

Size of Employer

While it isn't always guaranteed, the larger your employer, the less you will pay for health insurance. In 2022, the average rate for small business group healthcare was $8,012 and $7,873 for larger companies.^[1]

Health Plan Tier

When shopping for private health insurance on the health insurance marketplace, you will come across health plan tiers. Health insurance plans are given tiers characterized by a metal type; bronze, silver, gold and platinum. Bronze plans are the cheapest while platinum is the most expensive. The table shows the percentage difference in what you pay for a given service based on the metal type associated with your plan.^[3]

Plan Category	Insurance Company Pays	You Pay
Bronze	60%	40%
Silver	70%	30%
Gold	80%	20%
Platinum	90%	10%

Your Deductible

What you pay for a health insurance plan will be in part dictated by the deductible you choose. Opting for a higher deductible will lower your premium payments, while having a lower deductible will cause your monthly rates to be higher.

To give you an idea of the variety of deductible amounts, we’ve gathered some data on various Medicare plans in 2023. The median deductible for a bronze plan is $7,471, $5,388 for a silver plan and $1,684 for a gold plan.^[4]

Health Plan Type

HMOs (health maintenance organizations), PPOs (preferred provider organizations), POSs (point of service) and EPOs (exclusive provider organizations) all cost different amounts. Here’s a simple table that breaks down the differences.

	HMO	EPO	POS	PPO
Primary Care Physician Required?	Yes	No	Yes	No
Referral Required for Specialists	Yes	No	Yes	No
Out-of-Network Coverage?	No	No	Yes	Yes
Network Size	Lowest	Lower	Higher	Highest
Cost	Lowest cost	Lower cost	Higher cost	Highest cost

Number of People Covered

An individual plan costs less than a family plan due to the number of people potentially needing care.

Your Age

Health insurance costs are going to be higher for older individuals. In fact, 37% of adults 65 years and older fear they won't be able to afford needed care.^[5] Between 2009 and 2019, out-of-pocket healthcare costs increased 41% for elderly adults.^[6]

If You Use Tobacco

Insurance companies can charge up to 50% more for coverage for those who use tobacco depending on the state.^[7] California, Massachusetts, Rhode Island, Vermont and the District of Columbia have prohibited insurance companies from using tobacco use as a metric for calculating health insurance costs.^[7]

Are There Ways To Lower the Cost of Health Insurance?

The rising cost of healthcare necessitates taking steps to limit out-of-pocket expenses while still receiving essential care. Firstly, consider saving money on medicines by asking your provider for generic brands or cheaper alternatives. Also, make the most of your insurance benefits by getting routine screenings, using free or discounted services and seeking help from health advocates or case managers for complex health issues.

Planning for urgent and emergency care can also save both time and money. Recognize when to opt for urgent care centers instead of emergency departments and always keep a list of nearby urgent care locations.

Maintaining a healthy lifestyle is not only good for you but also helps avoid costly medical interventions. Regular exercise, weight management and not smoking can significantly lower your risk of developing chronic conditions, lowering your need to utilize your health insurance.

You should keep in mind cost-sharing subsidies that can help lower your out-of-pocket costs, such as your premium, copays and coinsurance. And for those who didn’t purchase a plan during annual enrollment, you can purchase a short-term healthcare plan, saving you potentially 54% compared to a traditional plan.^[8] Lastly, use tax-advantaged HSAs or FSAs to save on healthcare costs, understanding the key differences and benefits of each.

How To Calculate and Compare Health Insurance Plans

When searching for health insurance options, it's advisable to gather quotes from at least three to five different providers. Luckily, utilizing a health insurance marketplace like SmartFinancial can simplify this task considerably. Complete a single questionnaire about your healthcare needs and budget constraints and you can be matched with a customized health insurance plan in a matter of minutes. To get your FREE health insurance quote, simply input your zip code below.