Health care is expensive.
For some, the cost of health insurance and out-of-pocket medical expenses can exceed even the monthly mortgage payment or rent.
Below are typical premium rates for various types of health insurance that people buy on their own and not as part of a group plan.
This is an individual health insurance plan that a person buys on their own and is the only person covered under the plan.
While many people get group health insurance coverage through their employer, this isn’t an option for everybody. If you’re self-employed, a contractor, work part-time, or you work for a small business that doesn’t offer health insurance, you may need to get your own coverage. This is especially true if you’re 26 years of age or older. This is the age you are not legally able to be covered by your parents’ health insurance plan.
One of the goals of the Affordable Care Act (ACA) was to make health insurance more affordable for people who couldn’t get employer-sponsored coverage. Under the law, people who buy private health insurance through HealthCare.gov receive federal subsidies. The subsidy amount you receive is based largely on your income. Where you live also determines your premium cost under the ACA.
According to one study of ACA premiums nationwide, the average monthly premium for an individual policy was $456 in 2020, a 2 percent increase over 2019. That comes out to $5,472 for the year.
The data also showed that women spent $473 a month on average for health insurance through the ACA in 2020. Men paid $438 on average. The ACA prohibits charging more for health insurance based on gender. The difference in average costs is due to more women than men selecting higher-tiered plans that cost more.
Based on age, the average monthly premium paid for ACA plans in 2020 was:
- $784 for individuals age 55 to 64
- $551 for people between 45 and 54
- $411 for those aged 35 to 44
- $329 for individuals between 25 and 34
- $278 for people age 18 to 24
The same study of ACA plans showed the average monthly premium for family coverage was $1,152 in 2020. That totals $13,824 for the year.
Two-person families paid an average of $983 a month, while four-person families paid $1,437.
Keep in mind that The American Rescue Plan of 2021 increased subsidies for ACA plans for lower-income Americans, both individuals and families. It also included subsidies to higher income levels than what were previously available.
According to a White House fact sheet, a family of four making $90,000 could see their monthly premium reduced by $200 per month due to the American Rescue Plan. The new law also subsidizes premiums for continuation health coverage (COBRA).
Since health insurance rarely covers all health-related expenses, insurers offer a variety of supplemental insurance policies. These insurance plans typically provide benefits for specific health needs and are much less expensive than a regular health insurance policy. However, they are not a substitute for having health insurance.
Common types of supplemental insurance and typical premium costs include:
- Accident insurance is designed to provide a financial benefit to help cover the costs of being injured in an accident. Most policies cost between $6 and $20 a month for people who are young and healthy. It can cost up to $50 a month for older individuals.
- Cancer insurance is a supplemental insurance policy that offers benefits for expenses related to a cancer diagnosis. It can help pay for medical and non-medical costs related to living with cancer. One quote showed a 40-year-old could get a policy with a $20,000 maximum benefit for $20 a month.
- Hospital indemnity insurance helps cover the costs of a hospital admission that may not be covered by other insurance. Plans typically provide benefits to you when you are admitted to a hospital or ICU for a covered sickness or injury. There is a wide range of costs for hospital indemnity insurance. It will vary based on how much is covered, what the benefit amount will be, whether you include dependents on the policy and whether you buy an individual or group policy. It can be as affordable as $7 a month or as much as $463.
- Critical illness insurance is a type of supplemental insurance that pays a lump sum benefit if you are diagnosed with a covered illness. It is designed to help people cover the cost of treating and recovering from expensive illnesses and procedures, such as heart attacks, strokes, and cancer. If you’re young and don’t need a large benefit amount, the premium can be as low as $10 a month. But older applicants who want far more coverage can pay 10 times that amount or more.
- Dental insurance is another policy you may need to consider if you don't have an employer plan. On average, Americans pay about $360 a year, or between $15 and $50 a month, for dental insurance.
- Vision insurance is another type of supplemental coverage to consider. Premiums are fairly inexpensive, running from $5 to $25 a month on average.
- Medigap is a special type of supplemental insurance sold by private companies to people enrolled in Original Medicare. There are three types of premium pricing structures for Medigap. Depending on which type of structure you choose, a 65-year-old can expect to pay between $125 and $165 a month for coverage.
The ACA does not require companies with fewer than 50 employees to offer group health insurance to workers. About half of private companies with less than 50 employees provide access to group medical benefits.
According to the Kaiser Family Foundation, the average annual premiums for employer-sponsored health insurance were $7,470 for single coverage and $21,342 for family coverage in 2020. Small firms paid slightly more than average ($7,483) for individual coverage, but less than average ($20,438) for family coverage.
About 27 percent of covered workers in small companies have their entire health insurance premiums paid by their employer for individual coverage. Only 4 percent of large firms do this.
On the other hand, 28 percent of small-company workers pay more than half the required premium for family coverage, compared with 4 percent in large firms.
Small employers may be able to enroll in Small Business Health Options Program (SHOP) plans through an insurance company or with the assistance of a SHOP-registered agent or broker.
[ Related read: A simple guide to insurance for small business owners in 2021 ]
Joel Palmer is a freelance writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.
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