Household Health Spending Calculator

Many people think of their own health spending in terms of out-of-pocket costs and monthly premium contributions. However, a significant portion of health spending is not as visible to people in their everyday lives. This less direct health spending includes state and federal income taxes that fund health programs like Medicare and Medicaid, and Medicare payroll taxes paid by employers. Furthermore, people with employer-sponsored insurance receive additional compensation in the form of tax-preferred contributions to their health insurance premium.

This interactive tool combines a number of publicly available data sources to examine how much individuals and families in the United States spend on health, both directly and indirectly. Use the drop down menus to explore more scenarios and trends in household health spending.

Our analysis finds that the typical non-elderly family in the United States spends $8,200 per year (11% of their $75,025 income) on health. This includes $2,050 (3% of income) in out-of-pocket spending, $2,950  (4% of their income) in health insurance premiums, and approximately $3,200 (4% of their income) in state and federal taxes that fund health programs. 

When considering employer contributions to Medicare payroll taxes and health insurance premiums, the amount spent on behalf of a given person on healthcare is even greater. We estimate the typical single person with employer coverage pays $800 per year in out-of-pocket health costs (including deductibles, copayments, and coinsurance) and contributes $1,350 per year toward his or her premium. We estimate this person is also paying $2,650 in state and federal taxes that fund health programs, and his or her employer is contributing an additional $5,500 toward the employer-sponsored premium and $650 in Medicare payroll taxes. While the combined $2,150 premiums and out-of-pocket spending are the most visible health costs to the employee, his or her health spending including taxes totals $4,800 (10% of income). This amount increases even further to $10,950 when considering the employer’s contribution to the employee’s premium and Medicare payroll tax. Economists generally believe that employer contributions to insurance offset wages.

This interactive also demonstrates how overall health spending varies from person to person. For example, the typical individual with Medicaid coverage spends 5% of their $9,460 income on health per year (including taxes), while the typical individual with employer-sponsored coverage spends 10% of their $46,023 income on health, reflecting the Medicaid program’s aim to provide financial protection to low-income enrollees.

Even for people with the same income, health costs vary dramatically depending on the source of insurance. For instance, a single person with a $50,000 income and individual market coverage would spend 20% of his or her income on health. Meanwhile, the same person with employer coverage would spend 11% of his or her income on health (not including the employer’s contributions toward the premium or Medicare payroll tax, as that spending is in addition to the person’s salary).

Another determining factor for household health spending is health status. A family of four in good health with a $100,000 income and employer-sponsored coverage typically spends $12,400 per year (12% of their income) on health. In contrast, if that same family had at least one member in worse health, they would spend an average of $15,000 per year (15% of their income) on health. The difference is primarily attributable to a 95% increase in out-of-pocket costs for the family in worse health, but since taxes are such a considerable portion of their overall health spending the percentage of their income going towards health only increased 3 percentage points.

Make your selections
  • 1. Insurance

  • 2. Family Size

  • 3. Income

  • 4. Health Status

Please select from each of the above drop-down menus to view the chart.

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