The least and most expensive states for individual health insurance

Having a health insurance plan is an excellent way to ensure you have access to the care you need to stay happy and healthy long-term. However, depending on where you live, your health insurance—particularly an individual policy—may be more expensive than expected.

Knowing how location factors into your health plan costs can help you shop for a budget-friendly policy that will meet your medical needs. In this article, we’ll show you the least and most expensive states for individual health insurance and how a health reimbursement arrangement (HRA) from your employer can help you control your out-of-pocket medical costs.

Takeaways from this blog post:

• Individuals can purchase an individual health plan on public or private health exchanges. Premium tax credits and other cost-sharing subsidies can make plans more affordable if you qualify.
• The national average monthly premium for a benchmark ACA plan in 2024 was $477. In 2024, New Hampshire had the cheapest monthly premium at $335, whereas Vermont had the most expensive premium at $950.
• Understanding how your location affects your annual premium rate is crucial when comparing and choosing an individual health plan for you and your family.

What is individual health insurance?

Individual health insurance is a health plan that individuals buy on their own without the aid of their employer or a federal health program, such as Medicare or Medicaid. Despite what its name suggests, individual health insurance includes single coverage and family plans. The term “individual” helps to differentiate these plans from traditional employer-sponsored group health insurance.

People shopping for an individual plan can purchase one on a public or private health exchange. The most popular public exchange is the federal Health Insurance Marketplace. As of 2024, 32 states use the federal marketplace¹. However, 18 states plus the District of Columbia use state-based marketplaces, which also qualify as public exchanges.

Using a private health exchange, you can receive more personalized service and purchase an individual plan directly from a health insurance company, a licensed agent, or a broker. But, you won’t be able to take advantage of any subsidies—such as premium tax credits—that you might be eligible for if you purchase a plan on a public exchange. You also can’t guarantee that your plan complies with the Affordable Care Act (ACA). If you’re seeking dental or vision supplemental coverage, you can shop for that on either a public or private exchange.

Whether you buy your individual plan on a private or public exchange, your policy stays with you until you cancel it as long as you pay your monthly or annual premium on time.

Like traditional employer-sponsored coverage, health insurers can’t deny you coverage or charge you a higher rate for pre-existing conditions. In addition to your premium, your plan will likely have an annual deductible, copayment, coinsurance percentage, and out-of-pocket maximum. These amounts will depend on the type of plan and metal tier level.

How much does individual health insurance cost on average?

According to KFF, the national average monthly premium for a benchmark ACA plan in 2024 was $477². A benchmark plan is the second-lowest-cost silver plan available on public marketplaces.

Health insurance companies calculate your premium based on your age, location, family status, tobacco use, and metal tier plan type. The type of network you select can also impact your cost. For example, preferred provider organizations (PPOs) are more expensive health insurance plans than health maintenance organizations (HMOs).

Luckily, you can determine if you’re eligible for premium tax credits and other cost-sharing subsidies to make whatever type of health insurance plan you choose more affordable.

If purchasing a benchmark health plan costs more than 8.5% of your actual household income, you can receive premium tax credits. Due to the Inflation Reduction Act, this current income eligibility criteria will remain in effect through the end of 2025.

Only individuals who purchase their plan on a public health exchange can apply for premium tax credits to lower the cost of healthcare. If you have an HRA through your employer, you may need to account for your allowance or waive these credits entirely, depending on affordability.

The top 10 least expensive states for individual health insurance

The following chart outlines the 10 states with the lowest average monthly premiums for individual health insurance in 2024³. The rates below are for a 40-year-old nonsmoker on a benchmark plan.

The top 10 most expensive states for individual health insurance

The following chart outlines the 10 states with the most expensive monthly premiums for individual health insurance in 2024³. The rates below are for a 40-year-old nonsmoker on a benchmark plan.

How an HRA can help you control your healthcare costs

Depending on where you live, you may be concerned about the cost of health insurance. But before you reconsider enrolling in coverage altogether, you have some options. If your employer accepts input on their benefits package, you can recommend an HRA.

An HRA is a flexible and customizable benefit employers offer their employees to help them make their healthcare costs—including health insurance premiums—more affordable. With this health benefit, your employer can reimburse you tax-free for qualified out-of-pocket costs.

Unlike a health savings account (HSA), which allows for employee contributions, your employer owns and funds the HRA. They’ll give you a monthly allowance to spend on medical care. Once you incur an eligible healthcare expense, they’ll reimburse you up to your set allowance amount. While allowance amounts can roll over monthly, HRA funds stay with your employer if you leave their company.

The type of HRA that coordinates with individual health insurance is a stand-alone HRA. These HRAs are “stand-alone” because they don’t integrate with group health plans. Instead, you choose the individual health plan and medical services that are best for you. Then, you use your HRA to receive reimbursements on your premiums and other out-of-pocket costs.

The two common types of stand-alone HRAs are the qualified small employer HRA (QSEHRA) and the individual coverage HRA (ICHRA). In the sections below, we’ll go into detail about how these two health benefits can save money on your medical costs.

Qualified small employer HRA (QSEHRA)

A QSEHRA is an excellent option if your employer has fewer than 50 full-time equivalent employees (FTEs). While all full-time W-2 employees are automatically eligible to participate, you must have a health insurance policy with minimum essential coverage (MEC) to get tax-free reimbursements.

With a QSEHRA, your individual plan premiums and out-of-pocket expenses are eligible for reimbursement. Qualified expenses include prescription drugs, mental health counseling, over-the-counter medicine, doctor visits, and more. However, your employer can choose only to reimburse you for health insurance premiums.

It’s important to note that the QSEHRA has annual maximum contribution limits that the IRS sets annually. Once you hit your allowance limit, you can’t exceed it. If you run out of allowance one month, you’ll have to wait until the following month to receive more HRA funds.

Individual coverage HRA (ICHRA)

The ICHRA is another stand-alone HRA option. While it works similarly to the QSEHRA, it has added flexibility. For example, the ICHRA is for organizations of all sizes and has no maximum contribution limits. It also allows your employer to offer different allowance amounts to different classes of employees, such as hourly or salaried.

An ICHRA mirrors the QSEHRA regarding what it can reimburse, meaning health insurance premiums and qualified out-of-pocket medical expenses are eligible. Only employees with an individual health policy can participate in the benefit—if your spouse’s group health plan covers or you have an alternative form of coverage, like a healthcare sharing ministry, you won’t be able to participate.

Lastly, you can opt in or opt out of an ICHRA. You can do this based on affordability to collect premium tax credits. Simply put, you must choose between the ICHRA or your premium tax credits—you can’t have both. If your ICHRA is affordable, you must waive your credits and opt into the benefit. But, if it's not affordable, you can opt out of the ICHRA and continue receiving your credits.

Conclusion

Navigating the cost of health insurance can be challenging. While you can’t control all the factors that impact your experience with the healthcare industry, understanding how where you live affects your premium rate is a good first step when comparing and choosing affordable health insurance for you and your family.

If you live in a state with expensive individual health plan premiums, consider asking your employer to add a QSEHRA or ICHRA to your benefits package. At PeopleKeep, we can help your employer provide a personalized health benefit solution so you can have greater financial support paying for your insurance premiums and other out-of-pocket medical expenses.

This article was originally published on February 8, 2017. It was last updated on April 22, 2024.

1. https://www.cms.gov/newsroom/fact-sheets/marketplace-2024-open-enrollment-period-report-national-snapshot-0

2. https://www.kff.org/affordable-care-act/state-indicator/average-marketplace-premiums-by-metal-tier/?currentTimeframe=0&selectedRows=%7B%22wrapups%22:%7B%22united-states%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Average%20Benchmark%20Premium%22,%22sort%22:%22desc%22%7D

3. https://www.kff.org/affordable-care-act/state-indicator/average-marketplace-premiums-by-metal-tier/?currentTimeframe=0&selectedDistributions=average-benchmark-premium&sortModel=%7B%22colId%22:%22Average%20Benchmark%20Premium%22,%22sort%22:%22desc%22%7D