How much does Health Insurance Cost?

Last Updated on December 27, 2023
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

Many people don’t even think about health insurance because they instantly think it’s too expensive for them. That isn’t always true. So how much does health insurance really cost?

In most cases, health insurance will vary greatly from person to person. However,  you can figure out what will be the cost range of your insurance premium by figuring out some things.

So instead of immediately thinking that health insurance is just too much for you or spending a lot of time asking yourself how much health insurance costs, here are some things to help you figure out the actual cost.

How much does Private Health Insurance Cost?

Most people know private health insurance as either the Affordable Care Act coverage or individual health insurance. But, regardless of its name, the costs found on this page will be the same. As long as you’re not under a government-backed plan like Medicaid or Medicare, you are surely buying private health insurance.

The average national monthly cost of private health insurance for a silver plan for a 40-year-old will be $560, which takes the average annual cost of health insurance somewhere around $6,800.

Depending on several factors, one of the most important being how you buy the plan, the average cost of private health insurance will vary. If you choose to buy private health insurance through federal or state exchange, you might be eligible for subsidies that can help with monthly plan expenses or other costs related to your insurance.

Most people choose to buy private health insurance right from insurance companies, through brokers or agents. These include both Affordable Care Act plans or short-term medical insurance plans and are usually called “off-exchange” policies. These off-exchange plans won’t qualify for any cost-saving subsidies. Of course, it would be a great idea to compare the off-exchange plans to the on-exchange ones before you buy, to know which is the best option for you in terms of health care costs.

The average cost of health insurance

Among the most important factors to influence the cost of individual health insurance is your location. The price will be impacted by both the state and the county where you live.

The monthly cost of health insurance by state

Average health insurance rates by plan type

Another factor that will affect the rates you will pay will be the type of network you use for your plan.

The plan can be based on a point of service (POS), an exclusive provider organization (EPO), a preferred provider organization (PPO), or a health maintenance organization (HMO). Depending on this, access to healthcare providers will be made in different ways.

For example, HMOs are known to be very restrictive when it comes to the doctors you can see and the requirements you will have to consider when you want to see them. This means that while you will have to pay lower premiums, the insurers will also save on your cost of care.

Monthly health insurance cost by plan type

The insurance rate is influenced by these factors:

• Age – As you get older you will have to pay more and more for the same health insurance plan. To get an idea imagine that a 55-year-old will spend close to $235 for cheaper insurance with partial coverage, while a 19-year-old will only pay close to $182 for the same insurance.
• Health – Health insurance is a lot more expensive for people with poor health. So don’t wait to get sick before you actually get your health insurance because you might end up paying a lot more. Usually, people that suffer from chronic illnesses or from any other condition, might have to pay twice as much as healthy people will for the same insurance.

There have been cases where people suffering from some diseases were even denied coverage by some companies and had to look for other ones just to get insurance.

• Where you live: The cost of coverage and the set of policies that are offered will be determined by health insurance companies depending on the state live and the county in which you live.
• Employment – You could find cheaper insurance through your employer, even if they don’t outright provide it through your employment contract. Ask your employer for any special discounted price from a health insurance company they work with and you might be surprised by the results.
• Smoking/tobacco use: People that smoke pay higher rates for health insurance. And the increase is nothing to ignore, as smokers can end up paying even 50% more, depending on the maximum increase approved their state.
• Number of people insured: The cost of your health plan will also depend on the number of people you want to cover. As you’d expect, a plan for an individual will be considerably cheaper than one designed as a family coverage for two adults and their child.

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Look for recent surveys and studies that will give you some statistics to work with, but do expect rates to vary from person to person.

Most people that already have a medical insurance plan notice an increase of 9.5% in price, annually. These are just some of the figures you should take into account when trying to find the best health insurance for you.

Before buying health insurance, remember these facts: 

New laws require everyone to have health insurance, so it slowly becomes an important part of our lives.

You will need insurance that will cover a big part of what you feel you’ll need, but at a normal price, so find a balance between the two. Your medical insurance is similar to anything major in your life, so do your research and don’t go for the first insurance plan you stumble upon.

Do some research regarding the insurance company as well, before signing with them, to be sure that the coverage will be exactly what you need.

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Having proper health insurance could be the difference between life and death, so do the necessary research before you sign, even if it may seem time-consuming and expensive.

Having proper health insurance will help you get over any illness without having to worry about doctor or medication costs.

Is having health insurance too expensive for the average working Joe? Usually not. Do your research properly, ask your employer for discounts from the insurance company they work with and you will find the best health insurance plan for you.