How Affordable Is Job-Based Health Coverage for Workers?

Employer-sponsored insurance (ESI) — that is, health insurance people get through their jobs — is the primary source of health insurance coverage in the United States. ESI covered about 178 million people in the United States in 2023, including 63 percent of working-age adults ages 19 to 64 and 54 percent of young people under age 19. However, the costs of ESI paid by employees — premium contributions, deductibles, and copayments and coinsurance — can pose a considerable financial burden on U.S. households, particularly in those with low and moderate incomes.

To assess the affordability of health insurance costs for workers, we compared employee premium contributions and deductibles, relative to state median income, using federal survey data in all 50 states and the District of Columbia. We found that income growth helped improve the affordability of workers’ coverage between 2022 and 2023 overall, but there is significant variation in the affordability of premiums and deductibles across the country.

Total annual premiums for single coverage ranged from an average of $7,243 in Mississippi to $9,662 in New Jersey in 2023 (Appendix Table 5). Across the states, employers pay for 65 percent to 85 percent of health insurance premiums and workers contribute the balance. The average annual dollar amount workers contributed to their premiums for single-person coverage ranged from $1,060 in Hawaii to $2,145 in Vermont. Relative to income, worker contributions for single coverage ranged from 2 percent of the state median income in D.C. to over 5 percent in Mississippi. While the average premium contribution for single coverage in Mississippi was near the national average, the lower median income makes Mississippi one of the least affordable states in the country for workers enrolled in ESI.

For family coverage, workers spent an average of $4,142 in Oregon to $8,232 in Maryland on annual premium contributions. In terms of state median income, workers spent an average of 3.4 percent of their household income on premium contributions in D.C. for family coverage, while workers in Louisiana spent an average of 10.3 percent. Under Affordable Care Act (ACA) regulations, employer coverage that requires premium contributions equal to or greater than 9.02 percent of household income in 2025 is considered unaffordable, potentially qualifying an employee for marketplace premium tax credits.

Before health insurance will cover the cost of most health care services, people must pay their deductibles. In 2023, the average annual deductible for single coverage was lowest in Hawaii at $1,059 and highest in South Dakota at $2,616. These deductibles were equivalent to 1.7 percent of median annual income in D.C. and up to nearly 7 percent in Mississippi. The Commonwealth Fund considers a deductible equal to 5 percent or more of household income to be an indicator of underinsurance, meaning that coverage does not adequately protect workers from health care costs. In 24 states, deductible costs for single coverage exceeded 5 percent of state median income.

The share of median household income consumed by combined premium contributions and deductibles for family coverage nationally was 10.1 percent in 2023. This figure was 10.8 percent for families in 2020 (Appendix Table 2). The lower figure in 2023 is largely accounted for by income growth that has exceeded recent growth in deductible costs. The median household income nationally in 2023 was $80,610, a 4 percent increase from 2022, and ranged from $49,600 for single-person households to $102,800 for families.

Despite this improvement in affordability, premium contributions and deductibles for family coverage together still amounted to 10 percent or more of median income in 22 states in 2023. This does not account for additional out-of-pocket costs that employees and their families may spend, such as copayments and coinsurance. And the costs associated with health care are also only one part of typical household spending. In 2023, housing costs accounted for 33 percent of total consumer expenditures; another 13 percent was spent on food.

What can be done to improve the affordability of health insurance for employees and their families?

• Make it easier for employees who are offered unaffordable employer-sponsored plans to become eligible for lower premiums and cost-sharing reductions in the marketplace. Congress could adjust the thresholds that allow workers with unaffordable premiums or high deductibles to qualify for marketplace premium tax credits.
• Permanently extend enhanced marketplace premium tax credits. These enhanced tax credits, which significantly reduce the cost of premiums for marketplace plans, will expire at the end of 2025 unless Congress acts.
• Inform employees of their options to enroll in Medicaid. Workers with incomes below 138 percent of the federal poverty level ($21,597 for an individual in 2025) are eligible for Medicaid in the 40 states plus D.C. that have expanded Medicaid eligibility, regardless of an offer of employer coverage.
• States that regulate their fully insured employer markets could explore policy options to improve employer coverage in those plans. For example, Rhode Island limited growth in premiums and cost sharing through rate regulation.