Family Health Insurance: How to Cover Everyone Without Breaking the Budget

Family health insurance is one of the largest household expenses in America - averaging over $18,000/year when you combine premiums and out-of-pocket costs. For many families, it's more than their mortgage payment. But there are more options than most families realize, and the right strategy can save thousands annually.

Option 1: Employer-Sponsored Family Plan

If either spouse has access to employer coverage that extends to the family, this is typically the cheapest option. The average employer covers 73% of family premiums, meaning the employee pays about $548/month ($6,575/year). Compare both spouses' employer options if available - the better plan isn't always at the higher-paying job.

Watch for the "family glitch." If an employer offers "affordable" self-only coverage (under 8.39% of household income in 2026), the family may be ineligible for marketplace subsidies - even if the family plan is unaffordable. However, the IRS fixed this in 2023: affordability is now based on the family plan cost, not just self-only. If your employer's family plan exceeds 8.39% of household income, family members (not the employee) may qualify for subsidized marketplace coverage.

Option 2: ACA Marketplace Family Plan

For families without affordable employer coverage, marketplace plans with subsidies can be very competitive. A family of four earning $60,000 might qualify for $800+/month in premium tax credits, reducing a $1,400/month plan to $600/month. At lower incomes, the savings are even more dramatic.

Silver plans with cost-sharing reductions are especially valuable for families: a family at 150% FPL can get a Silver plan with a deductible under $500 and maximum out-of-pocket costs under $3,000 - coverage that would cost $1,000+/month at full price.

Option 3: CHIP (Children's Health Insurance Program)

CHIP provides free or low-cost health coverage for children in families that earn too much for Medicaid but can't afford private insurance. Income limits vary by state but generally extend to 200-300% of FPL. CHIP premiums are typically $0-$50/month per child with very low copays. Even families with employer coverage should check CHIP eligibility - covering kids through CHIP and adults through an employer plan can be cheaper than an employer family plan.

Option 4: Split Strategy

Many families save money by not putting everyone on the same plan. Common combinations include one spouse on employer insurance and the other spouse plus kids on a marketplace plan with subsidies. Another approach is both parents on employer plans and children on CHIP. Some families do one parent on an employer HDHP (with HSA) and the family on a marketplace Silver plan. Running the numbers on multiple scenarios takes time but can yield savings of $2,000-$5,000/year. Use Healthcare.gov's plan comparison tool and your employer's benefits calculator to model different combinations.

Cost-Saving Strategies for Families

Use preventive care aggressively. All ACA plans cover children's preventive visits, immunizations, developmental screenings, and well-child visits at $0 copay. These aren't just free - they catch issues early when treatment is cheaper and more effective.

Choose a family deductible plan wisely. Family plans have individual deductibles and family deductibles. On a plan with a $3,000 individual / $6,000 family deductible, once any one person hits $3,000, their costs are covered. Once the family collectively hits $6,000, everyone is covered. If one family member has high medical needs, the individual deductible matters more.

Don't over-insure healthy kids. Children are generally healthy and primarily need preventive care and occasional sick visits. If your kids are healthy and your adults have higher healthcare needs, consider a Bronze or HDHP for the family (maximizing the adults' coverage value) rather than an expensive Gold plan that provides low copays the kids rarely use.