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How Much Does Health Insurance Cost?

How much does health insurance cost? Across the United States, Americans pay wildly different premiums monthly for medical coverage. Though these premiums are not determined by gender or pre-existing health conditions thanks to the Affordable Care Act, a number of other factors impact what you pay. We explore those factors below to help you understand how much you might pay for health insurance and why.


  • Many factors contribute to the price of health insurance premiums, including state and federal laws, where you live, whether you get insurance through your employer, and which type of plan you choose.
  • In 2020, annual premiums for health coverage for a family of four averaged $21,342, but employers picked up 73% of that cost.
  • The rise in employer health costs may be one reason wages haven't risen much over the past two decades.
  • The highest-benchmark plan premium for a 27-year-old in 2020 was Wyoming's, at $648; the lowest was New Hampshire's, at $273.
  • Deductibles can vary according to the size of the firm you work for or the type of plan you buy on a federal or state government exchange.

10 Factors That Affect Premiums

Many factors that affect how much you pay for health insurance are not within your control. Nonetheless, it's good to have an understanding of what they are. Here are 10 key factors that affect how much health insurance premiums cost.

  1. State and federal laws dictate what health insurance must cover and how much insurers can charge
  2. Whether you are insured an employer's group plan or buy it on your own
  3. Your income. Low-wage workers tend to pay more through employers but may pay less through a federal or state exchange due to subsidies
  4. Your employer's size. Insurance is usually cheaper at large companies
  5. The state in which you reside
  6. Where you live. Premiums tend to be lower in urban areas versus rural areas
  7. The county in which you reside. Some counties have only one plan, while others have more competition, which can help reduce prices
  8. The type of plan you choose. Preferred provider organizations (PPOs) and platinum plans through the federal health insurance marketplace tend to cost the most
  9. Your age. Older individuals may pay up to three times more
  10. Your tobacco use. Premiums for tobacco users cost up to 50% more
  11. The coverage offered by employers contributes to several of the biggest factors that determine how much your coverage costs and how comprehensive it is. Let’s take a closer look.

    Employee Health Insurance Premiums

    If you work for a large company, health insurance might cost as much as a new car, according to the 2020 Employer Health Benefits Survey from the Kaiser Family Foundation. Kaiser found that average annual premiums for family coverage were $21,342 in 2020,2 which was nearly identical to the base manufacturer's suggested retail price of a 2022 Honda Civic—$22,715.3

    Workers contributed an average of $5,588 toward the annual cost, which means employers picked up 73% of the premium bill. For a single worker in 2020, the average premium was $7,470. Of that, workers paid $1,243, or 17%.2

    Kaiser included health maintenance organizations (HMOs)PPOspoint-of-service plans (POS), and high-deductible health plans with savings options (HDHP/SOs) in arriving at the average premium figures. It found that PPOs were the most common plan type, insuring 47% of covered employees. High-deductible health plans with savings options covered 31% of insured workers.2

    Average Employee Premiums in 2020
    Employee Share FamilyIndividual
    Per Year$5,588$1,243
    Per Month$466$104

    Source: Kaiser Family Foundation 4

    Of course, whatever employers spend on their workers' health insurance leaves less money for wages and salaries. So workers are actually shouldering more of their premiums than these numbers show. In fact, one reason wages may not have risen much over the past two decades is because health costs have risen so much .

  12. At the same time, because employees get to pay health insurance premiums with pretax dollars, their burden can be less than that of people who buy their own insurance through the federal health insurance marketplace or their state's health insurance exchange. (For the purposes of this article, "marketplace" and "exchange" are synonyms.)

    Which type of plan employees choose affects their premiums, deductibles, choice of healthcare providers and hospitals, and whether they can have a health savings account (HSA), among many choices.

    For families in which both spouses are offered employer health insurance, it's critical to compare carefully—one plan may be a much better deal. The partner whose plan is not used can pocket the part of their paycheck that isn't withheld for medical coverage. Or a couple with no children may decide that each should opt for their own company's plan as individuals (coverage for couples rarely involves any sort of discount—it's basically just a doubling of the individual rates).


    Percentage of firms offering employer health coverage to at least some workers in 2020.2

    Individual Health Insurance Premiums on the Exchanges

    The federal insurance plan marketplace at, aka Obamacare, is alive and well in 2021, despite years of its political foes' efforts to kill it. It offers plans from about 175 companies. Some 12 states and the District of Columbia operate their own health exchanges, which basically mirror the federal site but focus on plans available to their residents. People in these areas sign up through their state, rather than the federal exchange.

  13. Each of the available plans is offered in four levels of coverage, each with its own price. In order of price, they are labeled platinum, gold, silver, and bronze. The benchmark plan is the second-lowest-cost silver plan available through the health insurance exchange in a given area, and it can vary even within the state where you live. It's called the benchmark plan because it's the plan the government uses—along with your income—to determine your premium subsidy, if any.

    The good news is, prices are going down a bit. According to the Centers for Medicare & Medicaid Services (CMS), the average premium for the second-lowest-cost silver plan decreased by 4% on from 2019 to 2020 for a 27-year-old. Six states experienced double-digit percentage declines in average second-lowest-cost silver plan premiums for 27-year-olds, including Delaware (20%), Nebraska (15%), North Dakota (15%), Montana (14%), Oklahoma (14%), and Utah (10%).6

    And from 2020 to 2021, the average second-lowest-cost silver plan decreased 3% for a 27-year-old. Four states (Iowa, Maine, New Hampshire, and Wyoming) have average benchmark plan premiums decreasing by 10% or more.7

    The American Rescue Plan Act of 2021 also instituted a special enrollment period (SEP) for marketplace plans from Feb. 15 to July 31, 2021. For new consumers selecting plans through during this time, the average monthly plan premium fell 27%, from $117 to $85, thanks to the expanded subsidies. It also helped to lower out-of-pocket costs: Deductibles fell almost 90%, from $450 to $50.8

    Digging deeper for pricing information

    However, it's not universally good news. For more details, we consulted the CMS' 2020 Health Insurance Exchange Premium Landscape Issue Brief. It indicates that 27-year-olds buying silver plans saw their premiums increase by 10% or more in Indiana, Louisiana, and New Jersey.9

    More importantly, it reveals that the percentage changes don't tell us much about what people are actually paying: "Some of the states with the largest decreases still have relatively high premiums and vice versa," the brief states. "For example, while Nebraska’s benchmark plan premium decreased 15% from PY19 [plan year 2019] to PY20, the average 27-year-old PY20 benchmark plan premium is $583. On the other hand, while Indiana’s average PY20 benchmark plan premium increased 13% from PY19, the average 27-year-old PY20 benchmark plan premium is $314."10

    In 2021, that trend continues. The 2021 edition of the CMS Brief notes that, for example, while Wyoming’s average benchmark plan premium decreased 10% from PY20 to PY21, the average 27-year-old PY21 benchmark plan premium is $648—the highest in the U.S. How many 27-year-olds can afford that kind of monthly premium? By contrast, New Hampshire's benchmark plan premium for a 27-year-old is the lowest in the nation at $273.7

    All of these numbers apply only to the 36 states whose residents buy plans through the federal exchange at Residents of California, Colorado, Connecticut, Idaho, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Washington, and Washington, D.C. buy insurance through their state's exchange.5