A single person in worse health with a $20,000 income and employer coverage spends $2,850 per year (14% of their income) on health.

Direct Spending on Healthcare

A single person in worse health with a $20,000 income and employer coverage spends $2,850 per year (14% of their income) on health. This includes $1,100 (6% of their income) in out-of-pocket health spending, $1,050 (5% of their income) in health insurance premiums, and approximately $700 (4% of their income) in state and federal taxes that fund health programs.

Note: Percentages for each health spending category may not add up to the total share of income spent on healthcare due to rounding.

Additional Contributions by Employers

Workers are not taxed on the contributions their employers make toward health insurance premiums. In this scenario, we estimate that the employer is contributing an additional $6,600 to health insurance premiums, as well as $300 in Medicare payroll taxes. These amounts are not shown in the chart above, but economists generally believe that they offset wages.

When combined, this person’s spending on health care and the money spent by their employer on their behalf totals $9,750.