Understanding the Cost of Health Insurance in the U.S. in 2026
The cost of health insurance in America is the highest in the world, reflecting the high cost of healthcare in the country. Several factors can affect how much your health insurance will cost in America, such as where you live, your age, tobacco use, and family size. .
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Do you live in America and want to understand the high cost of health insurance? Perhaps you’re an expat moving to the country and want to understand your health insurance options. This guide from Pacific Prime will help you understand health insurance in America.
We will explain why health insurance is expensive, which factors can affect costs, and more. If you’d like to begin comparing health insurance quotes for America on your own, use our free quote tool here!
Average Health Insurance Costs in America
The average cost of health insurance in America is USD $15,296 annually for an individual premium and USD $34,152 annually for a family premium. These numbers are the highest in the world, with Hong Kong following second at $8,339 annually for an individual premium.
While health insurance is not required in America, it is strongly recommended because the country lacks universal healthcare, and healthcare costs are high. Medical care is provided mostly through private health insurance and a few government programs.
Health insurance premiums in America are expensive due to several factors, with one key reason being the requirement for insurers to cover pre-existing conditions for policyholders. This increases costs to offset the risks associated with this mandatory coverage.
Below, we will discuss more factors that affect health insurance in America.
Factors Influencing Health Insurance Costs in America
Factors affecting health insurance costs in America include where you live, your age, tobacco use, the type of plan, and whether you have any dependents you are enrolling. We will explain these factors in more detail in the following sections.
Health Insurance Cost Factors: Where You Live
The cost of your health insurance premium can change depending on where you live. For example, Vermont, Alaska, Wyoming, West Virginia, and New York are the most expensive states. Some of the least expensive states for health insurance are Maryland, New Hampshire, and Virginia.
Health insurance costs vary across states because of different factors like the demographic composition of the population, state and federal policies, and economic conditions.
Health Insurance Cost Factors: Age
Age affects health insurance costs in America because health insurance companies raise premiums as the policyholder ages. This is done to mitigate the risk of insuring those older in age, who are more likely to require medical intervention.
Health insurance plans that follow the Affordable Care Act (ACA) guidelines in America generally calculate and set premiums in three tiers:
- Children aged 0 to 20
- Adults aged 21 to 63
- Adults 64 and older
Premiums for adults 64 years and older will generally be around 3 times more expensive than they were at 21.
Health Insurance Cost Factors: Tobacco Use
Insurers can charge up to 50% more for policyholders who use tobacco compared to those who don’t. Tobacco products include not only cigarettes and chewing tobacco but also e-cigarettes and vapor products.
American insurance companies cannot deny coverage to tobacco users, but they can raise their premiums instead. This is due to the serious health risks associated with tobacco use, as well as the high costs associated with its treatment.
Health Insurance Cost Factors: Plan Type
The cost of your health insurance varies depending on the plan you select and the level of coverage. The more comprehensive plans will provide the best benefits, but at a higher premium.
Most insurers offer more affordable plans, with options to lower premiums by choosing a high deductible or copayment rates. The deductible is the amount you pay before your insurance kicks in, and the copayment is the amount you will pay per visit to a doctor or medical provider.
In addition to coverage limits and benefits, health insurance plans in America commonly come in three different categories:
- Health Maintenance Organization (HMO) Plan: An HMO plan generally offers the lowest monthly premiums. This plan requires policyholders to select a primary care provider, and referrals are required to see any specialists. Only in-network providers and emergency visits are covered.
- Exclusive Provider Organization (EPO) Plan: An EPO plan differs from an HMO plan in that its networks of doctors and hospitals are larger, but is similar to HMOs in the way that only in-network providers and emergency visits are covered.
- Preferred Provider Organization (PPO) Plan: A PPO plan generally has the highest monthly premiums of these three plan categories. It does not require primary care provider or specialist referrals and covers out-of-network care, but at a higher cost.
Health Insurance Cost Factors: Dependents
Health insurance will cost more if you are enrolling your spouse and/or dependents with you in a family plan. The price of premiums will increase with the number of dependents you are enrolling. The cost of family plans in America is high, with the average for 2024 being USD $34,152.
Does the Affordable Care Act Affect Health Insurance Costs?
The Affordable Care Act (ACA) is a law passed by the United States Government, which affects premium rates as it mandates pre-existing condition coverage. According to the ACA, insurers must accept health insurance applicants regardless of pre-existing conditions.
While aiming to improve health insurance affordability and accessibility, this results in higher premiums for some individuals, as insurers will try to mitigate the cost of pre-existing condition coverage.
Understanding the Affordable Care Act in America
The Affordable Care Act was enacted in 2010 with the aim of lowering the uninsured rate and increasing the affordability of health insurance for U.S. citizens. Some requirements from the ACA include:
- Young adults can remain on their parents’ plan until age 26
- Insurers are prohibited from charging higher premiums for pre-existing conditions
- ACA-compliant plans must cover essential healthcare services like maternity care, mental health care, and preventative care
Companies that employ more than 50 people are required to provide ACA-compliant health insurance to at least 95% of full-time employees and their dependents. Americans can also secure an ACA-compliant plan on their own through the ACA Marketplace.
Initially, the ACA mandated that all individuals had to have ACA-compliant coverage under penalty of a fee, but that was repealed in 2019.
Health Insurance Government Programs in America
America offers government programs like Medicaid and Medicare to its low-income or elderly citizens to help with healthcare access. There is also the Affordable Care Act (ACA) Marketplace, a platform that helps Americans find ACA-compliant health insurance plans.
We will discuss more about these government programs below.
Medicaid
Medicaid is a federal and state social healthcare program that provides support to those with low income, children, pregnant women, seniors, and people with disabilities. Medicaid programs have federal rules, but each state runs its own program with varying eligibility requirements and benefits.
Medicaid typically covers most medical expenses, from inpatient to outpatient services, and will make payments directly to healthcare providers. Small copayments may be required for some items or services.
Medicaid currently covers around 1 in 5 people living in America and covers almost half of all adults in poverty. You can find out if you are eligible for Medicaid through your state’s Department of Health.
Medicare
Medicare is a federal social insurance program that covers individuals over 65 years old and other select groups. People under the age of 65 who receive Social Security Disability Insurance (SSDI) payments can qualify for Medicare after a two-year waiting period.
Those with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS) can qualify for Medicare with no waiting period.
Medicare is divided into four different parts, which cover specific healthcare services:
- Medicare Part A: This coverage includes hospitalizations, nursing facility care, hospice care, and some home healthcare services. Those who paid Medicare payroll taxes for 10 years during their working years are eligible for premium-free Part A Medicare.
- Medicare Part B: This coverage includes doctor visits, preventative services, and other outpatient care services. Part B requires a monthly premium, which can be deducted from Social Security benefits.
- Medicare Part C: More commonly referred to as the Medicare Advantage program, Part C allows beneficiaries to enroll in a private plan through private insurance companies approved by Medicare. Medicare Advantage plans combine Part A and Part B coverage and can include Part D benefits.
- Medicare Part D: Part D coverage is offered through private insurance plans that contract with Medicare and cover the cost of prescription drugs.
ACA Marketplace
The ACA Marketplace is an online platform where individuals, families, and small businesses can purchase health insurance plans that are ACA-compliant. This platform was created to make health insurance more accessible for Americans who don’t have health insurance through their employer.
Health insurance plans in the ACA Marketplace vary based on price, coverage, and provider networks. The plans are categorized into four different coverage tiers: Bronze, Silver, Gold, and Platinum.
To help lower costs further, many people qualify for premium tax credits or cost-sharing reductions. This may depend on their income and household size.
Private Health Insurance for Expats in America
Private health insurance is available for expats in America through local or international providers. International providers offer the benefits of global portability and a worldwide provider network, making them a popular choice among expats and travelers.
Be aware that some international health insurance providers may charge higher premiums for coverage in America due to the high costs of healthcare. To begin comparing health insurance plans for America, use our free quote tool here.
Tips for Managing Health Insurance Costs in America
Some tips for managing health insurance costs in America include using preventative care, exploring cost-saving measures like telehealth and generic medications, and more. We will discuss these tips in further detail below:
- Use Preventative Care: Seeing your doctor regularly for check-ups, keeping up on flu shots and other vaccinations, and other preventative care services keep you from needing expensive care down the road.
- Utilize Telehealth: Try using telehealth for non-emergency care. Telehealth appointments typically cost less than in-person visits.
- Utilize Generic Medications: Choosing the generic version instead of a name-brand version of a medication can help keep your health insurance costs lower.
- Open a Health Savings Account (HSA): HSA accounts allow you to set aside pre-tax earnings to use specifically for medical expenses. These accounts are especially valuable if you have a high-deductible plan and can help you save on medical expenses.
- Stay In-Network: Staying within your network when seeing a provider can help keep your health insurance costs and out-of-pocket expenses lower, as most plans will charge you more for being out-of-network.
Frequently Asked Questions
Why is health insurance in America so expensive?
Health insurance in America is expensive because healthcare costs in the country are among the highest in the world. Insurance providers in the United States keep their premiums high to cover the expensive healthcare treatments and mandatory pre-existing condition coverage.
What is the cost of health insurance in the USA?
According to Pacific Prime’s Cost of Health Insurance Report 2024, an individual health insurance plan averages USD $15,296 annually for an individual premium and USD $34,152 annually for a family premium.
Does shopping on the ACA marketplace help with health insurance costs?
Shopping on the ACA marketplace can help with health insurance costs because of the subsidies it offers and the various plan coverage tiers. Consumers can choose a Bronze or Silver plan to keep premiums low and apply for any subsidies they may qualify for.
What is the best age to buy health insurance?
The best age to buy health insurance is under 30. Premiums are lower, medical checkups are easier to pass, and you’re less likely to face exclusions. Buying early also helps you complete waiting periods sooner, so you’re fully covered when you need it.
Conclusion
Health insurance in America is expensive because of the high healthcare costs in the country and the various factors that play into health insurance premiums. Though health insurance may be a large expense, coverage is crucial to avoid paying for expensive treatments out-of-pocket.
If you’re an expat looking for adequate healthcare coverage in the United States, the insurance experts at Pacific Prime have you covered. We can help you compare plans to find the right fit for your needs and your budget.
With over 25 years of experience in the insurance market, we are confident we can help you with your insurance journey. Contact us today for free and unbiased advice, or use our free quote tool to begin comparing plans on your own today!
With her background as an avid traveler and as an exchange student in Spain, Palida values the benefits of insurance and understands the frustrations that may come with making the best decisions for your health and safety in an unknown environment. Here at Pacific Prime, she aspires to create content that will help expats and travelers understand international health insurance with ease.
In her spare time, Palida enjoys reading short stories as much as binging on sitcoms. She is also a self-proclaimed "foodie" with the goal of trying as many cuisines from all over the world as possible. Combining her passion for writing with her love for food, she is an aspiring Google Local Guide reviewer.
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What strategies can expats use to navigate unexpected out-of-pocket healthcare costs in the US? Are there financial tools or resources specifically designed to help expatriates manage these expenses?
Expats in the US can navigate unexpected out-of-pocket healthcare costs by securing comprehensive international health insurance plans that include high coverage limits, deductible options, and co-payment flexibility. Additionally, financial tools like Health Savings Accounts (HSAs) and online expense trackers can help manage and plan for medical expenses, while negotiating payment plans with providers can reduce immediate financial burdens. For tailored advice on selecting the right insurance plan to cover these costs, visit our Contact Us page to speak with a Pacific Prime advisor.
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