Everyone needs health insurance. Without it, you might end up owing thousands of dollars for medical treatment or a hospital stay. The result? An enormous credit card balance.
Meanwhile, Americans are spending a lot of money to get health insurance this year. Here are some of the numbers you might be looking at.
What workers with coverage through work are paying
Many people are privy to subsidized health insurance through their employers. The Kaiser Family Foundation found that the average annual premium for family coverage soared to $24,000 this year, marking a 7% increase from last year.
Thankfully, employers are subsidizing the bulk of that sum. But the average employee with family coverage is still shelling out $6,575 for their share of their annual premium. Ouch.
Meanwhile, the average premium for individual coverage rose to $8,435 this year. That, too, is a 7% uptick from a year prior. Of that, the typical worker is paying $1,400 as their share, with employers picking up the rest.
Of course, it’s not just premiums that those paying for health insurance need to cover. There are also deductibles to meet. Workers are paying an average of $1,735 among those with single coverage whose plans impose a deductible.
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What workers without coverage through work may be paying
It’s hard to get an accurate read on what people without employer-subsidized health insurance are paying for coverage on average. Many variables dictate how much a marketplace plan (one purchased individually) costs, including location and income.
For example, in New Jersey, a single 40-year-old might pay $317 a month for a bronze-level plan (the lowest tier for marketplace plans, resulting in the highest deductibles and out-of-pocket costs). A silver plan (the next tier up for marketplace plans) might cost that same person $399 a month and come with a lower deductible and out-of-pocket costs than a bronze plan.
Marketplace plans come in four tiers: bronze, silver, gold, and platinum, with bronze being the lowest and platinum being the highest. The higher the tier, the more premiums tend to cost, but the less deductibles and out-of-pocket expenses tend to be.
How to choose the right health insurance plan
Whether you’re about to choose a health insurance plan through your workplace or the open insurance marketplace (you can go to HealthCare.gov, and from there, you’ll be directed to your state’s site, if applicable), it’s important to find the most cost-effective coverage. That doesn’t automatically mean choosing the plan with the lowest premium, though.
Rather, you’ll need to look at the following for each plan you’re considering:
- Premium costs
- Out-of-pocket maximums
A plan with a lower premium might come with a higher deductible and higher co-pays, as well as a higher out-of-pocket maximum you might have to pay for the year. A plan with a higher premium might result in a lower deductible and copays, and a lower out-of-pocket maximum.
Crunch all of those numbers when assessing your choices, and keep your general medical needs in mind. If you have kids who tend to get sick a lot, you may be more likely to have to shell out your entire deductible than someone who’s single and doesn’t tend to see a doctor all that often.
Finally, once you choose your plan, do your best to pad your savings account balance so you have enough to cover your annual deductible. If your plan has a $1,500 deductible, for example, aim to have at least that much cash on hand in case a single injury or issue makes it so you have to come up with that sum in one fell swoop.
It’s also a good idea to add to your savings so you can cover copays and other costs you might incur outside of your premium and deductible. Remember, even if your employer is generous and covers 100% of your annual premium, that doesn’t mean you won’t spend anything on healthcare during the year.
Keep cash on hand so you’re not left scrambling. And, if you’re eligible, you may want to save for healthcare in a tax-advantaged manner by contributing to an HSA or FSA.
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