Direct Spending on Healthcare
The typical non-elderly single person in better health with employer coverage spends $4,550 per year (10% of their $46,023 income) on health. This includes $650 (1% of their income) in out-of-pocket health spending, $1,250 (3% of their income) in health insurance premiums, and approximately $2,650 (6% of their income) in state and federal taxes that fund health programs.
Additional Contributions by Employer
Workers are not taxed on the contributions their employers make toward health insurance premiums. Economists generally believe that employer contributions offset wages. In this scenario, we estimate that the employer is contributing an additional $5,500 to health insurance premiums, as well as $650 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 $10,700.