In the United States, only 49 percent of Americans have health insurance from their employers, according to 2016 data from the Kaiser Family Foundation. Those who do enjoy employer-provided coverage likely don't enjoy the bite it takes out of their weekly paycheck. With wages stagnating and health insurance costs inflating, health insurance costs are rapidly closing in on the average American's paycheck gains.
Based on a survey of 2,100 employees at non-federal public and private companies, KFF's 2017 Employer Health Benefits Survey finds that the average worker pays $5,714 toward the cost of family coverage (which totals $18,764 on average) annually. For single coverage, the average worker pays about $1,213 annually, and yearly premiums average $6,690. The covered workers surveyed contributed 31 percent of the premium for family coverage and 18 percent of the premium for single coverage.
Per Bureau of Labor Statistics figures from the first quarter of 2018, median weekly earnings in the United States clocked in at $783. Analyzing the most recently available BLS data on hours worked places the average number of weeks worked per year at about 46.8. Therefore, if you made the median amount, got 46.8 weekly paychecks and paid average premiums, you'd contribute $122.09 per week to your family plan or $25.92 to your single plan. That comes out to about 15.6 or 3.3 percent of your paycheck, respectively.
The exact amount of each paycheck directed toward health insurance depends on factors such as your health insurance program and your company's contribution strategy. KFF includes figures from those paying for supplementary or voluntary benefits, but the foundation also reports that 14 percent of covered workers in 2017 enjoyed plans that do not require contributions.
Overall Health Insurance Spending
A 2016 study from the Commonwealth Fund reflects the average figures compiled from the Kaiser Foundation and the BLS. Commonwealth reports that the average American family spends 10.1 percent of its overall income on health insurance premiums and deductibles.
Though Commonwealth finds that the cost of coverage slowed down during the five years leading up to 2016, wages are not keeping up with health insurance inflation; in 2006, families spent only 6.5 percent of their income on premiums and deductibles.
Health Insurance Trends
The Commonwealth Fund isn't the only group to spot troubling health insurance trends. Between Kaiser's 2016 and 2017 surveys, premiums for employer-sponsored family health insurance plans rose 3 percent. Similarly, HCMS Group found that while health care expenses reported by 300 employers rose more than 10 percent in 2014, wages increased just 4.1 percent.
According to CNBC, the average American spent $10,345 per year on general health care needs in 2016. Even when adjusted for inflation, that's nine times the cost of health care in 1960.
Speaking to Bloomberg in 2017, health economist Thomas Buchmueller of the University of Michigan's Ross School of Business put things into a plain perspective: "When health care costs go up faster, that really takes a bite out of wages more than profits. We’re getting more of our compensation in the form of health insurance, and that doesn’t make us feel richer, because you can’t take it to the store."
- Kaiser Family Foundation: Health Insurance Coverage of the Total Population
- PeopleKeep: What Percent of Health Insurance is Paid by Employers?
- Kaiser Family Foundation: 2017 Employer Health Benefits Survey
- Bureau of Labor Statistics: Economic News Release: Table 3
- Bureau of Labor Statistics: Time Spent Working by Full- and Part-Time Status, Gender and Location in 2014
- The Commonwealth Fund: The Slowdown in Employer Insurance Cost Growth: Why Many Workers Still Feel the Pinch
- CNBC: Here's How Much the Average American Spends on Health Care
- HCMS Group: What's Eating Up Your Paycheck? Health Care Costs (Health Care Waste)
- Bloomberg: Rising Health Insurance Costs Are Eating into Employees' Paycheck Gains
Dan's decade-long experience as a freelance writer and small business owner has seen him contribute to financial publications including Chron.com, Zacks.com, MSN Money, Fortune, Motley Fool and others.