A family of four with at least one member in worse health and a $50,000 income on employer coverage spends $10,250 per year (20% of their $51,841 after tax income) on health.
Direct Spending on Healthcare
A family of four with at least one member in worse health and a $50,000 income on employer coverage spends $10,250 per year (20% of their $51,841 after tax income) on health. This includes $3,850 (7% of their income) in out-of-pocket health spending, $4,900 (9% of their income) in health insurance premiums, and approximately $1,500 (3% of their income) in state and federal taxes that fund health programs.
Note: In this scenario, the family has a $50,000 income, but accounting for negative federal tax liability, their income would be approximately $51,841.
Additional Contributions by Employers
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 $14,550 to health insurance premiums, as well as $750 in Medicare payroll taxes. These amounts are not shown in the chart above, but economists generally believe that they offset wages. When combined, this family’s spending on health care and the money spent by their employer on their behalf totals $25,550.