Pension & Benefits News Millions of employees spending large chunk of income on health care costs
Tuesday, June 11, 2019

Millions of employees spending large chunk of income on health care costs

By Pension and Benefits Editorial Staff

Nearly 24 million individuals with employer-sponsored health insurance spent large shares of their income on health care costs, including premium contributions and out-of-pocket costs, according to recent research from The Commonwealth Fund. The report, How Much U.S. Households with Employer Insurance Spend on Premiums and Out-of-Pocket Costs, found that 13.3 million spent 10 percent or more on premiums alone, 6.2 million spent 10 percent or more (or 5 percent or more if they have lower incomes) on out-of-pocket costs excluding premiums, and 4.1 million reached both of these spending thresholds, meaning they were saddled with high premiums and high out-of-pocket costs relative to their income.

The study found that the typical household spent about $2,200 annually on their health insurance premiums. Some spent nothing, while others spent $8,000 or more. Median out-of-pocket costs for families were $800 a year but families at the high end of the range spent $5,000 or more. At the national level, the spending midpoint, or median, on premium contributions and out-of-pocket costs combined was $3,700. Households at the high end of the range spent $12,080 or more.

Location. Where people live plays a role in how much they spend on health care and how much of their income goes to costs, noted The Commonwealth Fund. Health care costs and incomes vary across regions. Incomes, for example, tend to be lower in the South and West. Large shares of people in many states in those regions spend a substantial portion of their household dollars on health care. The study found the following:

  • Arkansas, Florida, Louisiana, Maine, Mississippi, Nevada, North Carolina and South Dakota had the greatest percentages of people who spent at least 10 percent of their income on premium contributions for employer plans. Alaska, the District of Columbia, Hawaii, Kansas, Oregon, Montana, Minnesota, New York, Rhode Island and Washington had the smallest shares of people whose premium contributions met that threshold.
  • Arizona, Arkansas, Idaho, Nebraska, North Carolina, Oregon, Utah, and Wyoming had the greatest shares of people who have high out-of-pocket costs other than premiums relative to income.
  • Hawaii had the lowest total median spending on premiums and out-of-pocket costs combined—$1,500 a year—while South Dakota has the highest, $5,450. In six states, median spending on these two categories of health care costs combined was more than $5,000.


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