Understanding the Cost of Health Insurance in America
The cost of health insurance in America is high, 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, age, and tobacco use.
Discover the world's top
health insurers.
Compare quotes with
a click of the button.
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 $15,296 annually for an individual premium, and $34,152 annually for a family premium. America has the world’s most expensive average health insurance, with Hong Kong following second at $8,339 annually for an individual premium.
America does not have universal healthcare. Healthcare is provided through mostly private health insurance and a few government programs. Health insurance isn’t required in America, it’s highly recommended due to the cost of healthcare in the country.
Premiums are high in America because of several different factors, but one key reason is that insurers raise premiums to mitigate the risks associated with mandatory pre-existing condition coverage.
Because the country requires insurers to cover pre-existing conditions for policyholders, this can drive up the costs of health insurance in America. 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 state you live in can affect the cost of your health insurance premium, with states like Alaska, Wyoming, West Virginia, and New York being the most expensive. Some of the least expensive states for health insurance are Maryland, Michigan, 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, which are more likely to require medical intervention.
Health insurance plans that follow 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 find their premiums 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 that use tobacco versus those that don’t. Tobacco products include not only cigarettes and chewing tobacco but also e-cigarettes and vapor products.
American insurance companies can’t deny coverage to tobacco users, but they will raise their premiums instead. This is because of the severe health risks that are associated with tobacco use, and the costs that are associated with the treatment of these health risks.
Health Insurance Cost Factors: The Type of Plan
The cost of your health insurance will vary depending on what type of plan you choose and the level of coverage it entails. Typically health insurance plans are offered in varying tiers of coverage, with the more comprehensive plans offering the best benefits but the highest premiums.
Most insurers offer more affordable plans as well, with options to lower premiums further by choosing a high deductible or copay. The deductible is the amount you will pay before your insurance begins paying for your care, and your copay is the amount you will pay with every visit to a doctor or provider.
In addition to coverage limits and benefits, plans can also differ by the specific kind of plan they are. Health insurance plans in America commonly come in these 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 as it does not require policyholders to select a primary care provider and referrals are not needed to see a specialist. It 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 a 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 $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 that can cause premiums to be higher due to pre-existing condition coverage. The ACA is aimed at improving health insurance affordability and accessibility, but it can raise premiums for some.
The ACA requires insurers to accept health insurance applicants regardless of pre-existing conditions. While this requirement increases healthcare access, it can drive up premiums 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 to lower the uninsured rate and increase the affordability of health insurance for the American people. This law requires that insurers must cover pre-existing conditions, among other mandates.
Some other things that the ACA mandates are:
- Young adults can remain on their parent’s 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 as a way 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 amongst 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 can keep you from needing expensive care down the road.
- Utilize Telehealth: For non-emergency care, try using telehealth. Telehealth appointments can 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 low, as most plans will either charge you more for being out-of-network.
Frequently Asked Questions
Why is the cost of health insurance in America so expensive?
Health insurance in America is expensive because the cost of healthcare in America is among the highest in the world. Insurance providers in the United States keep their premiums high to cover the cost of expensive healthcare treatments and mandatory pre-existing condition coverage.
How much is health insurance in America on average?
As of 2024, an individual health insurance plan averages $15,296 annually for an individual premium, and $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.
Who qualifies for Medicaid in America?
Low-income individuals, children, pregnant women, and people with disabilities can qualify for Medicaid in America. The exact eligibility of the Medicaid program will vary across states.
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 20 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!
Serena earned her Bachelor’s Degree in Psychology from the University of British Columbia, Canada. As such, she is an avid advocate of mental health and is fascinated by all things psychology (especially if it’s cognitive psychology!).
Her previous work experience includes teaching toddlers to read, writing for a travel/wellness online magazine, and then a business news blog. These combined experiences give her the skills and insights she needs to explain complex ideas in a succinct way. Being the daughter of an immigrant and a traveler herself, she is passionate about educating expats and digital nomads on travel and international health insurance.
- Health Insurance Options for H-1B Visa Holders in the U.S. - June 14, 2025
- Dubai Healthcare Rankings: Global Standing, Costs, and Medical Tourism - June 13, 2025
- Can Expats Get Maternity Insurance in Singapore While Pregnant? - June 13, 2025
Comments
2 Comments
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.
Ask a Question
We'll notify you
when our team replies!