Budget for two numbers, not one: what you pay every month, and what a bad year would cost you.
The usual advice is a percentage of income, which is not very useful because it ignores the thing insurance actually exists for. A better approach uses two numbers.
Number one: the monthly premium
This is the predictable part. Treat it like rent — a fixed cost you can plan around. Households commonly land somewhere between 5% and 10% of gross income here, but that is a description of what people do, not a rule.
Number two: your worst realistic year
Add the premium for twelve months to the plan's out-of-pocket maximum. That total is what a genuinely bad year costs you. Ask whether you could absorb it — from savings, from credit, from anywhere. If the answer is no, a plan with a lower premium and a higher maximum is not actually the cheaper plan, it is the riskier one.
Working the trade-off
- Healthy, stable income, real savings — a higher deductible and lower premium usually wins
- Ongoing prescriptions or regular care — pay more monthly for a lower deductible and real copays
- Thin savings — prioritize a low out-of-pocket maximum above everything else
- A qualifying high-deductible plan plus an HSA can give you the low premium and build the fund at the same time
And before any of this: check whether you qualify for a subsidy or Medicaid. That check changes the whole calculation more than any plan choice will.
