The cost of health insurance can vary widely for American households depending on whether household members are eligible for subsidized premiums. Even with subsidies, the add-on costs for health insurance can take a significant chunk out of the household budget.
Average Household Health Insurance Expenditure
According to the U.S. Bureau of Labor Statistics, the average American household spent $4,612 on health care in 2016. This represents 8 percent of the total average household expenditure of $57,311. Out of this total expenditure for health care, almost 70 percent, or $3,160, was spent on health insurance. This was about 6 percent of total household expenditures.
Health Insurance Deductibles
A health insurance premium is the cost of a health insurance plan, usually billed on a monthly basis. In addition to the premium, the cost of health insurance may include a deductible that represents an out-of-pocket medical expense for the policy owner. Each year, the deductible must be met before the insurance company starts paying on claims. For example, if you have a $2,000 family deductible, you’ll be required to pay the first $2,000 in health care costs. Whether you have a deductible and how much it is varies by policy.
Additional Health Insurance Costs
Another add-on health insurance cost is coinsurance. If a policy has coinsurance, it means health insurance pays for a portion of medical costs once the deductible is met, such as 80 percent, and the policy owner is responsible for the remainder. Copayment, which is a flat fee a policy holder must pay for every doctor visit or prescription, is an additional add-on health insurance cost that applies to some policies.
Subsidized Health Insurance
According to the U.S. Census Bureau, 55.7 percent of the population had employer-sponsored health insurance during some or all of 2016. Employer-sponsored health insurance, also known as a group plan, is selected by an employer. The employer also selects all of the options that will be offered with the plan. The cost of insurance premiums is shared between the employer and the employee who is part of the group plan. On average, employers paid 82 percent of the premium per employee in 2016. Besides employer-sponsored health insurance, other forms of subsidized health insurance include Medicare and Medicaid, used by a combined 36.1 percent of the population.
Personal Health Insurance
Americans who don’t qualify for some type of subsidy must pay for personal health insurance on their own. According to eHealth, an online health insurance marketplace, the average health insurance premium for a family not receiving subsidies was $9,996 in 2016, which represented 17 percent of total household expenditures.
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