You won’t believe what the typical worker pays for health insurance

Health insurance coverage is something that everyone needs. Without it, you could find yourself owing thousands of dollars in medical bills from a single injury or illness. In other words, not having health insurance could force you to deplete your savings account and wreak havoc on your finances.

The good news is that many employers offer subsidized health insurance as a work benefit. Those seeking coverage therefore do not necessarily have to pay 100% of the cost of their premiums themselves.

But recent data from the Kaiser Family Foundation reveals that the typical worker with employer-sponsored family health coverage pays a whopping $6,575 a year for their share of the cost of their premiums. This represents an increase of almost $500 from last year.

Meanwhile, for individual health coverage, the typical worker spends just over $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 you can take steps to pay less. You may also be able to offset your costs by enrolling in 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 sign up for a high-deductible health insurance plan, which may be an option offered by your employer, then you could save money on your premiums.

However, this strategy is best suited to people who do not tend to visit the doctor a lot during the year. If you are part of a family with children, this may not save you much money.

But if you’re single and only tend to see the doctor once or twice a year, it might be worth raising your deductible by, say, $1,200 if it allows you to save $1,000 on your premiums. If you only have to pay $400 toward your deductible, you still make $600.

Save for healthcare in the right accounts

Opening a Health Savings Account (HSA) or Flexible Spending Account (FSA) could help you save taxes when paying for healthcare expenses such as co-pays and medications. Both accounts allow you to contribute pre-tax dollars, protecting a portion of your income from the IRS.

With an HSA, you can invest funds you don’t need immediately to grow your balance and enjoy tax-free earnings and withdrawals. You also don’t have a deadline to use your balance. With an FSA, you must use your funds before the end of your plan year and you cannot invest the money you have in that account.

HSA eligibility depends on enrollment 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 an FSA at the same time, although some employers offer a limited-use 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 expensive these days, even when your premiums are subsidized by an employer. But the amount you’re forced to spend on medical care could well exceed the cost of your premiums if you decide to go without insurance. So whatever you do, don’t make the mistake of forgoing your coverage altogether.

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