What Is Family Insurance: A Complete Guide

HealthPlans of NC

As a whole, health insurance for one person can be extremely intimidating and an exhaustive process. Now imagine that pressure for a growing family who has to balance doubled premiums, deductibles, and out-of-pocket maximums.

If you’re struggling to understand the overall benefit of family insurance and why your family may benefit from it, we’re here to help. This article will answer and expand on the question, “What is family insurance?”

What Are Family Insurance Policies?

Family insurance policies, also known as a family plan, cover your family rather than you individually. Under a family plan, there’s a fixed insured sum that covers multiple holders (an individual plus dependents). This applies under the assumption that not everyone will need medical care at the same time.

Note that most family insurance plans offer cashless hospitalization facilities, and maternity benefits, and cover pre and post-hospitalization. But you may be asking, “What do insurance companies consider family?”

The majority of the time, the term “family” includes you, your spouse, and children under 26 years old.

How Does Family Health Insurance Work

A family plan can be quite different from individual health coverage. Below, we’ll discuss some ways a family insurance plan can differ from other available health plans.

Family Insurance

Family Health Plan vs Individual Health Plans

First, individual health coverage covers a single person – not a whole group. Family plans, however, can cover an entire household’s medical expenses.

With family care, a health insurance company will usually include children who are naturally born, legally adopted and fostered in certain circumstances. Also, a child over the age of 26 with a disability can remain covered under a family plan.

Family Health Plan vs Group Health Plan

To take control of your family’s health, you’ll want a plan that offers various benefits and options for all family members. You’ll also enjoy the choice to customize the payout of each benefit.

For example, if you wanted coverage for medical expenses for just hospitalization. However, that can be changed (or nullified) with a fixed benefits plan that covers hospital fees and admission.

What is Included in Family Insurance Coverage?

Just like individual care, it’s important to pay attention to what your family plan covers and can offer you. For example, in addition to paying for medical expenses, an insurance company may include in their health insurance plan daycare coverage or hospitalization. 

Below are some areas to compare plans in so that you know you’re picking the best plan for you and your family.

In-Patient Hospitalization Expenses

In-patient hospitalization expenses are any medical expenses that you incur while being hospitalized for more than 24 hours due to illness or accidental injury. Typically, an insurance company will cover these expenses under their health insurance policy.

Day Care Procedures

As previously mentioned, a health insurance plan crafted for family care will usually include daycare procedures that require hospitalization for less than 24 hours.

Hospital Ambulance Services

Emergencies happen, and sometimes they involve seeking assistance from an ambulance. While this can be a costly out-of-pocket expense, an insurance company will typically cover the charges.

Hospital Expenses

Pre and post-hospitalization expenses are medical expenses that you incur before hospitalization (testing, types of medical care, etc) and after discharge (follow-ups, etc). These are usually covered, but only up to a certain amount of days. Be sure to compare plans.

5 Factors That Affect Your Family's Insurance Coverage


Like with individual insurance, multiple factors are at play in deciding the kind of health coverage your family receives. Age, family size, medical history, and more can impact monthly premiums and the kind of medical care that an insurance company is willing to cover.

Below are five factors to keep in mind when searching the market for the best family insurance. In addition, these factors can also impact the type of health insurance plan you’re offered.

Family Medical History

Family medical history greatly influences a person’s health. Unfortunately, genes aren’t controllable and can often lead to a higher risk for insurance companies.

If you or your spouse have any history of fatal disease in your family, including terminal illnesses like cancer, you can expect higher monthly premiums. This is due to the higher risk of medical care that companies perceive.

Despite the financial risk it may cause, a family history of illness or disease is not a reason to avoid buying family health plans. In fact, it’s more of a reason to invest.


Age is another factor in determining the cost of your health insurance policy. Like a family medical history, this is all about risk.

As you get older, your body needs more medical care. This makes you a higher risk for an insurance company. That perceived risk naturally raises monthly premiums and other cost rates of your health coverage.

Type of Health Plan

The kind of health insurance plan a single person chooses determines the monthly premiums they have to pay. For example, an extended health insurance policy needs way fewer premium payouts than shorter ones.

When looking at various health plans, keep in mind their length. It may be beneficial to have one that’s on the longer end.

Policy Duration

How long do you want to pay for the premiums on your health insurance plan? The answer to that question is crucial. The longer time you spend paying, the lower costs will be. The shorter amount of time that you spend paying on your health insurance policy, the larger the sum may be.

Family Size

Last but not least is the size of your family. Monthly premiums go up when you add a spouse, and for every child you add.

In fact, the deductible and out-of-pocket maximum for a family plan is usually double of an individual plan. So if the deductible for a plan is $2,000 for a family, it's $1,000 for an individual. If the out-of-pocket maximum for an individual plan is $6,000, it will be $12,000 for a family. This is true no matter how many people the plan covers.

However, there is an exception for large families. If three or more children on a single plan are under the age of 21, then the policyholder will only pay premiums for the three oldest.

What is the Average Cost of Family Insurance Policies?

As previously stated, family health insurance can get costly for numerous reasons. However, the difference in monthly premiums can shock individuals who are used to their singular employer insurance.

A study from the Kaiser Family Foundation found that the average monthly premium for a single employer-sponsored insurance plan in 2021 was around $645. Meanwhile, it was around $1,850 for family coverage. If you were to purchase your own insurance outside of an employer-sponsored plan, the average cost of individual health insurance was $438. For families, the average monthly premium was $1,168.

In 2021, the average national cost for health insurance per year was $7,739 for single coverage and $22,221 for family coverage.

Also, the best and least expensive option for salaried employees is usually participating in your employer's insurance program if your employer has one. In 2021, the average annual premium cost in an employer-sponsored healthcare program was $7,739 for single coverage and $22,221 for a family plan. This is according to research published by the Kaiser Family Foundation.

Those numbers can vary depending on medical care, health plans, location, and more. However, the jump in price is enough to overwhelm some people. 

There is good news for those looking to close that gap as much as possible. Kaiser Family Foundation estimates that employers pick up 83% of health insurance premiums for single coverage on average and 73% of family coverage premiums. Employees pay the rest of the premium costs.

Depending on the company and the plan, an employer’s minimum contribution must pay toward an employee’s policy is 50% and 0% for dependents.

While the difference in monthly premiums is significant, it’s beneficial to speak with your employer about their health insurance options for family care. This way, you can see if you can get a better rate through your current provider.

Frequently Asked Questions About Family Health Insurance

What is the difference between individual and family deductibles?

Individual deductibles are how much a single person has to pay before insurance starts to pay a coinsurance percentage. These deductibles do not cover families.

Meanwhile, family deductibles are how much an entire family pays before an insurance company covers a coinsurance percentage of the health care for each member.

Can one person meet the entire family deductible?

There are two kinds of family deductibles: overall, and individual (also known as embedded deductibles).

Overall deductibles are when every member’s costs are added together as one large deductible. In this case, one person can meet the entire family deductible with their medical costs.

Individual deductibles, however, have both an overall family deductible and an individual deductible. With this plan, it’s difficult for one person to reach the overall family deductible on their own. But you can combine multiple maximums to reach the overall deductible.

What is family deductible vs family out-of-pocket maximum?

Family deductibles work like any other deductible. But, it’s just for an entire group rather than an individual. With a deductible, you must pay a certain amount for the services provided before your insurance covers their agreed amount.

Like individual out-of-pocket maximums, family out-of-pocket maximums cover any expense (besides premiums) that the family pays from their own wallet. Every year, there is an agreed amount that the family must pay up to (the maximum) before their insurance pays all covered services.

How are deductibles determined in family plans?

In family plans, deductibles are determined by the individual deductible. Typically, the overall deductible is twice the amount of the policyholder.

How much will my insurance go up if I add my daughter?

Age, the number of people on a plain, and everyone’s medical needs determine how much your insurance rises per dependent. 

If you have more than three children on your policy, you won’t have to pay for those additional dependents under the age of 21. Also, your plan may have restrictions that could impact your child’s care. Therefore, make sure that your current plan is still the best option for your family’s needs.

Need Assistance Finding the Best Health Plan?

Choosing insurance for your family can be exhausting, and the price change can be overwhelming. But there are benefits to having it, especially if you have multiple children under your roof.

Remember that everyone in your household needs insurance to lessen the financial burden of medical bills. Using one insurance plan to cover the entire family may be more beneficial than having separate plans.

If you’re finding it hard to navigate insurance shopping and what plan options work best for you, speak with a licensed agent. You can receive a free quote and clear up any concerns you may have.

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