How Much Can You Spend On Health Insurance?

According to the Kaiser Family Foundation's 2020 Employer Health Benefits Survey, health insurance for those who work for major corporations might cost as much as a new automobile. According to Kaiser, the average yearly premium for family coverage in 20202 was $21,342, almost comparable to the basic manufacturer's recommended retail price of a 2022 Honda Civic—$22,715 (according to the same source).

Worker contributions totaled an average of $5,588 per year, which meant that employers covered 73 percent of the yearly premium expenditure. According to the Bureau of Labor Statistics, the average premium in 2020 was $7,470 for a single worker. Workers contributed $1,243, or 17 percent, of the total. There are several factors to consider when selecting a health insurance plan for workers, including premiums, deductibles, choice of healthcare providers and hospitals, and whether or not they may use a health savings account (HSA).

Prescription Drug Plans

It provides plans from over 175 different firms. The health exchanges in 12 states and the District of Columbia are essentially replicas of the federal site, emphasizing plans accessible to individuals in the state or district in which the exchange is located. Rather than using the federal exchange, people in these locations enroll via their state's enrollment portal.

Search for Pricing Information

However, the news is not always positive. We turned to the Centers for Medicare and Medicaid Services' 2020 health Insurance Exchange Premium Landscape Issue Brief for further information. The study suggests that rates for 27-year-olds purchasing silver plans increased by 10% or more in Indiana, Louisiana, and New Jersey. The brief also demonstrates that percentage cuts may not always reflect what consumers are saying: "Some of the states with the highest drops continue to have very high premiums, and vice versa," the short explains. For example, although Nebraska's benchmark plan premium declined by 15 percent from PY19 [the plan year 2019] to PY20 the average benchmark plan premium for a 27-year-old in PY20 is $583, despite the states benchmark plan premium decreasing by 15 percent.

The Importance of Subsidies in the Economy

In the good news column, many people who buy health insurance via the marketplace will pay cheaper premiums due to what the administration refers to as advanced premium tax credits, which are also known as subsidies. Eighty-eight percent of those who signed up for health insurance via HealthCare.gov were qualified for advanced premium tax credits in 2019. As part of the American Rescue Plan Act (ARPA), approved in March 2021, subsidies for lower-income Americans have been boosted, while subsidies for higher-income Americans have been extended. The ARPA enhanced the number of marketplace subsidies available to people earning more than 400 percent of the poverty level and subsidies available to those earning between 100 percent and 400 percent of the poverty level.

It is possible to claim your advance premium tax credit in one of three ways: in equal amounts each month; in larger amounts in some months and smaller amounts in others, which is beneficial if your income is irregular; or as a credit against your income tax liability when you file your annual tax return, which could result in you owing less tax or receiving a larger refund. The tax credit is intended to make premiums more reasonable for you and your family, depending on the size and income of your household.

Because your premium credit is calculated based on your expected income for the year, it's important to update your information on HealthCare.gov as soon as possible if your income or family size changes throughout the year. This will allow your premium credits to be adjusted as needed. You'll avoid unpleasant surprises around tax time, and you'll avoid paying greater premiums than you need to throughout the year.

Plans for the Short Term

If you miss the yearly enrollment period and do not qualify for a SEP for one of the reasons listed above, you may be forced to purchase a short-term health insurance plan that lasts three months to three years. Workers contributed $1,243, or 17 percent, of the total. According to the Kaiser Family Foundation, these plans tend to be 54 percent less expensive on average than exchange plans or on the exchanges (for example, if you aren't eligible for a subsidy or if your employer doesn't offer coverage).