A single person with a $50,000 income and employer coverage spends $5,250 per year (10% of their income) on health.
- Out-of-pocket health costs (copays, deductibles, coinsurance)
- Health insurance premiums (annual sum of monthly payments for coverage)
- State taxes paid for health programs (Medicaid, Children’s Health Insurance Program, and Medicare Part D)
- Federal taxes paid for health programs (income taxes for Medicare, Medicaid, Marketplaces, Veteran’s Affairs/DOD, and FICA for Medicare Part A)
Direct Spending on Healthcare
A single person with a $50,000 income and employer coverage spends $5,250 per year (11% of their income) on health. This includes $800 (2% of their income) in out-of-pocket health spending, $1,400 (3% of their income) in health insurance premiums, and approximately $3,050 (6% of their income) in state and federal taxes that fund health programs.
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 $5,500 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 person’s spending on health care and the money spent by their employer on their behalf totals $11,500.