Health care benefits costs
Workers with lower pay spend a higher share of their income on health premiums and out-of-pocket expenses than those with higher incomes.
“While many employers pay a significant portion of health insurance premiums, some workers face relatively high contributions to enroll in coverage, particularly when enrolling dependents,” according to a new report from Peterson-KFF Health System Tracker. “Employer health plans can then expose low- and moderate-income families to thousands of dollars for premium contributions and cost-sharing, which can lead to medical debt. Many Americans, even those with private health insurance, do not have enough liquid assets to meet deductibles or out-of-pocket maximums.”
Individuals in families with employer coverage spend 2.4% of their income on the worker contribution to enroll and another 1.4% on out-of-pocket expenses. Overall, almost 4% of a family’s income goes to health insurance costs.
The share of family incomes spent on health insurance premium contributions and payments for medical care vary considerably by income for families with employer-based coverage:
- For those in families with incomes at 199% of the federal poverty level and below, the average family payments for health insurance premiums and medical care is 9.6% of family income. A substantial share (about two-thirds) of that spending is for premium contributions.
- Families with incomes between 200% and 399% of the poverty level spend an average of 6.2% on insurance premiums and medical care.
- Those in families with incomes at or above 400% of the federal poverty level pay about 3.4% of their family income on premium contributions and medical expenses.
The study also found that living with someone in fair or poor health adds significantly to family health care spending, even for people with employer-based coverage. Families with all members in better health spend 3.7% of their income on premium contributions and out-of-pocket medical expenses, compared to 5.9% in households with at least one member in fair or poor health. However, this differs by family income. Families with incomes between 200% and 399% of the federal poverty level spent 8.5% of their income on health insurance if they had a family member in fair or poor health, compared to only 6% in a family without significant health problems.
The rising cost of employer-provided coverage has exacerbated the challenge for lower-income workers.
“Over time, as the total cost of employer coverage has risen, the share of people with employer-based coverage has fallen among those with lower and moderate incomes but has remained fairly stable for people with incomes above 400% of poverty,” the study said. “Prohibitively high costs to enroll in employer coverage or afford medical expenses creates access barriers to enrolling in coverage and affording medical care or prescription drugs, putting Americans at risk of financial instability and medical debt.”
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