Getty Images

News

Employee health plan costs eat up 10% of wages

The U.S. is teetering on a healthcare affordability crisis, as employee health plan premiums and deductibles represent 10% of wages and salaries stagnate.

Sara Heath
By
Published: 11 Feb 2026

The average American family spends 10.1% of their paycheck on their employer-sponsored health insurance premiums and deductibles, according to new Commonwealth Fund data, illustrating a healthcare affordability crisis that's increasingly affecting the middle class.

"Premiums and deductibles for many American workers can drain household budgets and increase the risk that people will delay care or take on medical debt," Sara Collins, Commonwealth Fund senior scholar for Health Care Coverage and Access & Tracking Health System Performance, said in an emailed press release.

Employer-sponsored health insurance is how most people get covered in the U.S., with nearly 167 million people getting their coverage from their job or their family member's job. Employers invest a lot in these plans, with the Commonwealth Fund saying employers pay an average of 70% of premium costs.

But with healthcare costs slated to continue their astronomical growth, that remaining 30% the typical employee pays into their health plan represents a growing dollar amount. For example, in 2024, family coverage premiums average out to $24,540 annually, with consumers paying $7,216.

According to the Commonwealth Fund, those rising premium costs are hitting a friction point, as employees don't see their incomes rising at the same, or greater, rate.

Insurance costs eat up employee paychecks

Using 2024 data, which is the most recent year for which the Commonwealth Fund has complete information, the researchers took premium and deductible costs in all 50 states and Washington D.C. and compared them with the state median income.

Overall, the data showed that health insurance costs are eating up a sizeable chunk of employees' paychecks, with employees in 19 states spending at least 10% of their paychecks on family plan premiums and deductibles.

Higher proportional paycheck spending on insurance premiums and deductibles was more common in the Southern half of the nation.

For example, in Louisiana, premium and deductible costs for a family plan totaled to 15.7% of a family's income. That compares to D.C., where premium and deductible costs were just 5.5% of family incomes.

Differences are likely due to the lower median household income in these areas. Fluctuations can also be credited to variable insurance costs by region and different healthcare spending by region.

Looking at premiums alone, the analysis showed that five states hit the "unaffordable" threshold set by the Affordable Care Act (ACA).

Per the ACA, if employer-sponsored insurance premiums exceeded 8.39% of a family's income, the coverage was considered unaffordable. This was the case in West Virginia (8.6%), Mississippi (8.8%), North Carolina (8.8%), Florida (9.3%) and Louisiana (10.7%).

In these cases, the employee and their family members -- or sometimes just the family members -- might qualify for premium tax credits to purchase plans on the ACA marketplaces. Of note, the ACA subsidies did lapse for the 2026 plan year.

Individual plan deductibles signal underinsurance

The researchers also examined individual health insurance plans in relation to individual incomes, finding that most individuals are, in fact, underinsured.

Although premium prices are comparatively much lower for individuals than for family plans, the team said deductibles have skyrocketed to unsustainable levels.

Notably, in 26 states, the deductibles for individual plans are at least 5% of an individual's income. The researchers said 5% is a threshold marker for underinsurance, or not having enough financial protection against healthcare costs.

"Deductibles must be paid first before health insurance starts to pay the cost for most healthcare services," the Commonwealth Fund researchers wrote in the report. "Large deductibles can lead to workers going without care due to the cost and increases the risk of taking on medical debt."

Rising consumer healthcare costs are a problem, and they pose a particular issue when income levels don't rise alongside costs, the researchers said. Getting to a solution will require action across the healthcare continuum.

"Congress, employers, insurers and healthcare providers all can play a role in lowering costs and making care more affordable, so families across the income spectrum can get the care they need," according to Collins.

For example, employers might consider tiering premium costs based on employee salary. Employees earning a lower salary would be responsible for paying less in premiums than those making a higher salary.

"Ultimately, the nation must address the underlying drivers of healthcare cost growth to improve the affordability of coverage and healthcare," the researchers concluded.

Sara Heath has reported news related to patient engagement and health equity since 2015.

Dig Deeper on Health plans and TPAs