The days of having a job and automatically having health insurance coverage are gone. While health insurance is still essential, the ways to get it have changed considerably.
Today, you can obtain health insurance through an employer, buy it yourself and for those who qualify, obtain government coverage such as Medicare and Medicaid.
Let’s explore the employer-sponsored and individual purchased options.
Employer-Sponsored Health Insurance
Employer-sponsored health insurance is selected and purchased by your employer and offered to eligible employees and their dependents.
Employers usually share the cost of the premium with you.
Employer-sponsored plan advantages include:
- Cost-sharing, typically you don’t have to pay the entire premium
- Your employer does the leg work of choosing plan options, communicating with the insurance company and taking care of the time consuming little details
- Employer premium contributions are not federally taxed and can be made pre-tax, which lowers your taxable income
According to the Henry J Kaiser 2018 Employer Health Benefits survey, in 2018, employer-sponsored average annual premiums were $6,896 for single coverage and $19,616 for family coverage. Most eligible employees contribute to the premium cost of their insurance. On average, eligible employees contributed about 18 percent for single coverage and 29 percent for family coverage.
It is important to note that company size and location are factors in insurance costs.
For example, 27 percent of eligible employees in small companies (3-199 employees) have plans where their employer pays the entire amount for single coverage, as opposed to 6 percent in large companies (200 or more employees). However, 34 percent of eligible employees in small companies have plans that they must contribute more than 50 percent of the premium for family coverage, as opposed to 8 percent in large companies.
Premiums for eligible employees in the Northeast are higher than in other regions for both single and family coverage, while premiums in the South are relatively low.
With all these factors taken into consideration, in 2018 the average employee annual contributions were about $1,186 for single coverage and $5,547 for family coverage.
Individual Health Insurance
Individual health insurance is the health policy you purchase for yourself or your family. They are also referred to as personal health plans. There are several ways to obtain personal health insurance. You can work with an insurance agent, or shop online through federal and state marketplaces for plans.
Advantages to individual plans include:
- Choice of the insurance company, plans, and options
- You can change companies, plans, and options during the Open Enrollment Period
- Your coverage is not tied to your employer so you can change jobs without losing your insurance
- You may be eligible for federal government financial assistance to help with the cost of your insurance if your employer does not offer affordable coverage and your household income is no more than 400 percent above the federal poverty level
The reality is that the cost for healthcare varies greatly depending on where you live. In 2019, nineteen states will have lower rates, with eight having at least a 10 percent decrease. However, six states will see double-digit increases in premium costs.
Consumer Reports provide an interactive map to offer insight into each state’s 2019 average monthly premiums. The reflected amounts are based on the second-lowest-cost Silver plan for a 40-year-old nonsmoker who is not receiving financial subsidies. Remember, your personal premium depends on several factors such as age, financial status and the plan you choose, but this gives a good idea of what to expect.
For example, the average monthly premium in New York will be around $569 per month, and somewhere around $521 in Mississippi. Traveling west, those in Colorado can expect about $488 per month, and Washington residents average about a $381 monthly premium.
The truth is health insurance is costly today. No matter which route you take, it’s important to educate yourself on your options to be sure to get the most value for your hard-earned money.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.