The Average Cost of Health Insurance for Employees

You might not think about your health insurance coverage until you need it, but if you're on an employer-sponsored plan, the premium that pays for it comes out of every paycheck. The premiums can vary widely, even among your company's options, but if you're paying close to the national average, they can take quite a bite.

Identification

• Health insurance helps pay your medical expenses when you're sick or injured. Some policies also offer coverage for preventative care, such as annual physicals and vaccines. The premiums charged and coverage details are different from company to company and plan to plan, with some plans requiring that a high deductible be met before coverage begins or that you seek care within a specific network of doctors or hospitals.

Average Costs

• Most Americans get their health-care insurance through employer-sponsored plans, and the employers pay a significant portion of the premiums. According to a 2008 survey by the Henry J. Kaiser Family Foundation, the average premium for a family of four that's covered by an employer-sponsored plan was almost $13,000 a year. Typically, the employee was responsible for about 30 percent, or about $3,900, of that premium.

  In February 2008, the Congressional Budget Office predicted that the insurance costs for that family of four could approach $25,000 a year by 2018.

Tax Deduction

• Health care premiums are a tax-deductible expense, which means the IRS allows you to subtract them from your income before calculating the tax you owe. If you're on an employer-sponsored plan, your premium payments are made pre-tax, so you get the tax break upfront on each check. You can deduct health care premiums on your income tax return only if you have private insurance and pay the premiums yourself.

Rising Costs

• Costs associated with health insurance are employers' most rapidly increasing expenses. Health insurance premiums for employer-sponsored plans rose 119 percent in the past 10 years, and the Congressional Budget Office projects that they will double again in the next 10 years. Employees' shares of those premiums have increased at about the same rate in that time.

Effects

• A study in the May 2009 issue of the American Journal of Medicine reported that 62 percent of all bankruptcies filed in 2007 were linked to medical expenses, and almost 80 percent of the people involved in those bankruptcies had health insurance. And according to "Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures," by Christopher T. Robertson of Harvard Law School, half of all foreclosures are linked to medical issues. The report estimated that medical crises put 1.5 million Americans in jeopardy of losing their homes in 2007.