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FAQ - How Much Does Individual Health Insurance Cost?

November 7, 2018
How much does individual health insurance cost?

Many people assume that individual health insurance, which is insurance you
purchase on your own, is more expensive than group health insurance, which is a policy an employee gets through their company.

So how much does individual health insurance cost? How does it stack up against company-based group health insurance? Data shows that individual health insurance is, on average, more affordable than group coverage. Furthermore, a third health insurance option for small businesses to offer their employees exists that can help businesses fix their health benefit costs.

Learn more about how individual health insurance stacks up against group in our free report, The QSEHRA: Annual Report 2019. 

How Much Does Company-Based (Group) Health Insurance Cost?

Published by the Kaiser Family Foundation, the 2018 Employer Health Benefits Survey provides key insights into group health insurance trends and costs.

  • Average monthly premiums for self-only coverage in 2018: $574
  • Average monthly premiums for family coverage in 2018: $1,634

The cost of the average family premium increased by 5 percent compared to 2017, while the cost of the average premium for single coverage increased by 3%.

How Much Does an Individual Health Insurance Policy Cost?

Now let’s take a look at the cost of individual health insurance. On average, the national cost in 2018 is $440/month for single coverage.

While the cost of individual health insurance has increased by 123 percent for single coverage since 2008 (and 174 percent for family coverage), individual health insurance remains more affordable on average than group coverage through a company.

According to data gathered by eHealth, the average health insurance cost for single coverage premiums in 2018 is $440 per month. For family coverage, the cost for premiums in 2018 is $1,168 per month.

Group Health Insurance Cost vs. Individual Health Insurance Cost

When you put them side by side, it’s easy to see that individual health insurance tends to be cheaper than a company-based policy—particularly for single coverage.

 

Individual Health Insurance

Group Health Insurance

Self Only

$440/month

$574/month

Family

$1,168/month

$1,634/month

Individual Health Insurance Cost and HRAs

Group-based and individual health insurance plans are popular choices, but there is a third option that can benefit employees and small businesses alike: a health reimbursement arrangement (HRA).

Created in the 1970s, HRAs allow businesses to reimburse employees tax-free for health care, including individual health insurance policies. With an HRA, businesses can set their own budgets by offering a set allowance amount for each employee. This helps businesses control their budget while employees receive insurance tailored to their specific needs through the individual market.

In 2019, there is one HRA available for businesses looking to offer health benefits to multiple employees: the qualified small employer HRA (QSEHRA).

With a QSEHRA, employees purchase their own health insurance and get reimbursed for medical expenses, health insurance premiums, and other qualified costs with tax-free dollars by their company. To qualify, a company must have fewer than 50 full-time employees and can’t offer a group health insurance policy to any employee.

Whereas individual and group health insurance premium and deductible amounts typically vary from year to year, the QSEHRA sets annual company reimbursement amount limits at $5,150 for self-only coverage and $10,450 for family coverage in 2019.

Beginning January 2020, businesses will also be able to offer the individual coverage HRA (ICHRA). With this HRA, businesses of any size can offer employees an HRA without maximum reimbursement limits. The HRA also allows businesses to set eligibility guidelines and offer different allowance amounts to different employees based on nine different employee classes.

Conclusion

Individual health insurance health policies are by far the fastest growing form of U.S. health insurance. As employers see the cost-savings and benefits of modern individual health insurance, they are using individual health insurance—not group health insurance—with an HRA as the basis of employee health benefits.

Editor's Note: This post was originally published in February 2012 and has been updated with the most current health insurance cost information. 

Do you have questions about how much individual health insurance costs? Join the conversation in the comment section below.

Want to offer benefits while controlling costs?
See how much it cost for small businesses to provide health benefits through a QSEHRA in 2017.
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