Premium

A premium is the amount paid to an insurance carrier, usually monthly, to keep a health plan in force. On an employer plan the premium is split between the employer and the employee; the employee's share is what comes out of the paycheck. The premium is owed whether or not anyone uses the plan.

For 2024, the average annual premium for employer family coverage was about $25,600, with employees paying roughly $6,300 of that through payroll. Single coverage averaged about $8,900. What people forget is that the premium is only the first cost of coverage. The deductible, copays, and coinsurance are the second, and a plan with a low premium and a $7,000 deductible can cost a family more in a year with one surgery than a plan with a higher premium. On a self-funded plan there is no premium in the insurance sense; the employer sets an equivalent rate to fund the plan, and the employee contribution is set against that.

The takeaway: compare plans on total expected cost, not premium alone: twelve months of premium plus what you'd realistically pay in deductible and coinsurance for the care you know is coming.