Americans are dropping their employer healthcare coverage to save up to $1,000 a month

People are leaving their employer-based health insurance plans for cheaper coverage as costs soar.

Employees paid $6,850 on average towards coverage in 2025 – up nearly $1,300 from 2020, Bloomberg reported Wednesday.

Jessica Balcerzak, a 33-year-old nurse in Buffalo, New York, told the outlet she saved more than $10,000 a year by dropping her employer’s family health insurance coverage in favor of a low-cost alternative option.

The percentage of employees on employer-based healthcare plans fell from 64 percent in 2020 to 61 percent in 2025, healthcare research firm KFF reported last year.

This drop is also a problem for companies – they rely on healthy people with fewer claims paying into group coverage to cover the cost of sick people with more claims. It typically results in sicker policyholders paying higher premiums, according to research university Johns Hopkins in a January report.

Worries over health insurance costs aren’t limited to employer plans, either – they carry over into the Health Insurance Marketplace, the Obama-era coverage offered to those who can’t get a policy through their employer.

Those with Marketplace coverage described their insurance as “fair” or “poor” when it comes to their monthly premium and out-of-pocket costs for doctor visits, according to an April analysis by KFF.

Options for cheaper health insurance are relatively sparse for those who can’t afford employer or Marketplace coverage.

Short-term health insurance coverage can be cheaper than Marketplace plans but has drawbacks. They tend to have high deductibles, which means higher out-of-pocket costs for policyholders. They don’t have to follow Affordable Care Act coverage rules, either, which means they can deny care for people with pre-existing conditions.

Then there are cost-share cooperatives, programs which pool together premiums and use them to pay for medical costs. However, there’s often a minimum cost for coverage and pre-existing conditions may be excluded.

The problem is likely to get worse from here. A 2025 Congressional Budget Office report predicts recent policy changes to Medicaid and the Health Insurance Marketplace will lead to 14 million people going uninsured by 2034.

Yet cost-based decisions to drop health insurance could backfire on consumers. Some 59 percent of uninsured adults have problems paying medical costs, compared to 30 percent of insured adults, KFF found. Another 62 percent of uninsured adults are likely to carry medical debt compared to 44 percent of insured adults.

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