You Won't Believe What the Typical Worker Pays for Health Insurance

Health insurance coverage is something everyone needs. Without it, you might end up owing thousands of dollars in medical bills following a single injury or illness. To put it another way, not having health insurance could force you to deplete your savings account and upend your finances.

Now, the good news is that many employers offer subsidized health insurance as a workplace benefit. So those seeking coverage don't necessarily have to cover 100% of the cost of their premiums themselves.

But recent data from the Kaiser Family Foundation finds that the typical worker with employer-sponsored family health coverage is paying a whopping $6,575 per year for their share of their premium costs. That's almost a $500 increase from last year.

Meanwhile, for individual health coverage, the typical worker is spending a little more than $1,400 per year. That's about $75 more than a year ago.

If you're buckling under the weight of health insurance premiums, the good news is that there may be steps you can take to pay less. You might also be able to offset your costs by signing up for tax-advantaged health spending accounts.

Consider a high-deductible plan

In the world of health insurance, premiums and deductibles tend to have an inverse relationship. So if you're willing to go onto a high-deductible health insurance plan, which may be an option through your employer, then you might save some money on your premiums.

This strategy, however, is best for people who don't tend to see the doctor a lot during the year. If you're part of a family with kids, it may not result in much savings.

But if you're single and only tend to go to the doctor once or twice a year, then it may be worth it to raise your deductible by, say, $1,200 if it means saving $1,000 on your premiums. If you're only forced to pay $400 toward your deductible, you're still coming out ahead by $600.

Save for healthcare in the right accounts

Opening a health savings account (HSA) or flexible spending account (FSA) could help you save on taxes when paying for healthcare expenses like copays and medications. Both accounts let you contribute pre-tax dollars, so you're protecting a portion of your earnings from the IRS.

With an HSA, you can invest funds you don't need right away to grow your balance and enjoy tax-free gains and withdrawals. You also don't have a deadline to use up your balance. With an FSA, you must use up your funds by the end of your plan year, and you can't invest the money you have in that account.

HSA eligibility hinges on being enrolled in a high-deductible health insurance plan. In 2024, that means an individual deductible of $1,600 or a family deductible of $3,200.

You should also know that you generally cannot have an HSA and FSA at the same time, though some employers offer a limited-purpose FSA in conjunction with an HSA. If you have one of these accounts, you may be able to use it for specific expenses, like dental care.

It's unfortunate that health insurance is so costly these days, even when you're getting your premiums subsidized by an employer. But the amount you're forced to spend on medical care might well exceed your premium costs if you decide to go without insurance. So no matter what you do, don't make the mistake of forgoing coverage altogether.