The Average Healthcare Premium Paid A Year In America

Every two years, the Bureau of Labor Statistics comes out with a fascinating amount of data bout the U.S. consumer. For the latest data that came out in 2019, the average expenditure per consumer unit for 2017 was $60,060, a 4.8% increase from 2016 levels.

Out of the $60,060 average consumer expenditure, healthcare expenditure was a reasonable $4,928, or 8.1% of total expenditure.

Take a look at the BLS data below and we'll go through most of the line items in more detail.

The Average Consumer Expenditure For All Income Units In America

The Average Healthcare Expenditure In America

Although the average healthcare expenditure per year is only $4,928, it's important to know that employers subsidize the large majority of healthcare insurance.

It is estimated that the the average total non-subsidized healthcare expenditure in America per employee is almost $20,000 a year according to the Kaiser Family Foundation's calculations.

Average healthcare premiums 2018
Average healthcare premiums are nearly $20,000 for a family

As you can see from the chart above, the average worker contribution was $5,547 for 2018, and the average employer contribution was $14,069. The average work contribution of $5,547 is pretty close to the BLS data of $4,928 for 2017.

The Average Future Healthcare Expenditure Per Year

The BLS data shows that healthcare premiums rose 6.9% in 2017 and 6.2% in 2016. At an average annual growth rate of 6%, the average healthcare premium will double in just 12 short years.

We can easily estimate that the average healthcare expenditure will rise to the following levels based on a 6% annual increase when the data comes out:

2018: $5,223

2019: $5,537

2020: $5,870

2021: $6,221

2022: $6,594

2023: $6,990

2024: $7,409

2025: $7,854

2026: $8,325

2027: $8,826

2028: $9,354

2029: $10,000

2030: $10,610 (double 2017 levels)

Inflation only averages roughly 2% a year, which is why there is such a huge concern regarding the cost of healthcare in America.

It is imperative that you increase your earnings and your net worth faster than the rate of inflation to increase your real income and real net worth. Ideally, you want to at least grow your earnings and net worth by at least the rate of healthcare and other important expense.

The average income in 2017 was a healthy $73,537, but was down 1.5%, which means Americans are getting squeezed.

Everybody should diligently track their finances with a free financial tool like Personal Capital. I've used them for free since 2012 and have seen my net worth grow by 5X because I've been better able to optimize my investments, reduce my investment fees, and plan for my retirement.

Get The Best Healthcare Possible

The Average Healthcare Premium Paid In America

Health is more important than wealth. Everybody needs to at least get a high deductible health plan, sometimes known as “disaster insurance.” Although deductibles are high, your health plan will cover the costs of major illnesses and accidents that could run in the hundreds of thousands of dollars.

As you get older and wealthier, a low- or no-deductible plan might be right for you if:

  • You are pregnant, planning to become pregnant, or have small children.
  • You have a chronic condition or need to see a doctor frequently.
  • You’re considering a reparative surgery, such as a knee or hip replacement.
  • You take several prescription medications.
  • You or your children play sports, especially those with high risk of injury.
  • You like to partake in high risk activities such as mountain climbing, scuba diving, sky diving, skiing/snowboarding, and more.

The next most important type of insurance to get is term life insurance, especially if you have dependents. Check out PolicyGenius for the best free term life insurance quotes. They are an unbiased marketplace that aggregates the most relevant term life insurance quotes based on your situation so you don't have to search each carrier one-by-one.

About the Author: Sam worked in investing banking at Goldman Sachs and Credit Suisse for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.

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