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Ask the Health Insurance Expert

Q

My company has open enrollment right now for health insurance. Is it always cheapest to buy insurance through work?

A

Yes, workplace health insurance is usually cheaper than an individual health plan. An employer-sponsored health plan helps pay for your health costs. Federal law demands that large employers must pay at least half of health plan premiums. Businesses usually exceed that percentage.

In recent years, workplace health insurance has seen modest annual premium increases. Employer-sponsored plan premiums have increased 3 percent annually for individual plans and about 5 percent for family plans. Those increases are much more modest than what you’ll find for individual health plans most years.

The average annual premium for an employer-sponsored plan is $1,186 for an individual. Compare that to the individual market, which has an average individual premium of $7,200 annually.

Plus, workplace health insurance plans may offer other perks, such as health care savings accounts. You won’t find that with an individual health plan.

On the other hand, employer-sponsored health insurance limits your health plan options. While individual coverage may give you a dozen different plan options, your job might offer two or three. So, you’ll find better rates with your employer’s insurance, but your options are limited.

Now, we’ve gone over how employer-sponsored health plans are cheaper than individual insurance. That said, workplace plans are still more expensive than Medicaid or Medicare. If you’re eligible for Medicare or Medicaid, you should explore that option to see how much money you’d save going with a government plan.

If you’re still unsure which path to choose, check out our What’s the Best Health Insurance Option for You? We provide all possible options for your situation, descriptions about each avenue and how much you could pay for the coverage.

Last updated: Nov. 19, 2018
Ask the Insurance Expert
Penny Gusner Consumer Analyst
Penny Gusner has been working in the insurance business for more than 10 years. She researches your questions, from the routine to the bizarre, with equal enthusiasm. Read More

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