By: Jared Gross, Executive Vice President & Chief Financial Officer
Health care costs continue to rise, and premiums reflect that reality. In 2025, the KKF reported that the average annual premium for family coverage reached nearly $27,000–about 6% higher than the year before– with costs expected to increase in 2026. With that in mind, it’s only fair to ask: where does your premium dollar go?
At Independent Health, the answer is straightforward. About 90 cents of every premium dollar goes directly to health care, while 10 cents supports administration and operations that make coverage work. Since more than 90 cents of every premium dollar is used to pay for our members’ medical and prescription costs, increases to premiums are a direct result of health care cost increases; it’s the “cause-and-effect principle.” Understanding how those dollars are used can help bring clarity to a system that often feels anything but simple.
How your premium dollar is spent
Most of every premium dollar supports the care and services members depend on every day. Looking more closely at how those dollars are used helps show how coverage supports health across every stage of life.
Prescription drugs, especially specialty medications and biologic pharmaceuticals, make up the largest share, reflecting their growing role in managing chronic conditions, preventing complications, and supporting everyday health needs. Hospital care is another significant portion, with premiums supporting both inpatient services—such as surgeries and overnight stays—and outpatient services like same-day procedures, emergency visits, and other treatments that don’t require hospitalization.
Primary care also plays a central role by supporting preventive care, routine checkups, and early treatment—care that can often help prevent more serious and costly issues down the road. Specialist care ensures access to experts when conditions are complex or ongoing. Other services, like imaging, home health, and ambulance care, support members as their needs change.
Together, these services reflect how your premium supports care from prevention and diagnosis through treatment and recovery.
Administrative costs and taxes
Not every dollar goes directly to medical care. A portion of each premium supports the behind-the-scenes work required to provide coverage. This includes things like customer service, claims processing, care management, and the systems that help members and providers navigate benefits and treatment.
Although Independent Health is a not-for-profit health plan, we also pay federal and state taxes, which help fund broader programs such as medical education, care for uninsured individuals, and community health programs. These responsibilities are part of keeping the health care system functioning for everyone.
How Independent Health works to control costs
Rising health care costs are a shared challenge across the industry. At Independent Health, we focus on using premium dollars responsibly while continuing to invest in quality care.
We work closely with primary care providers to identify gaps in care, encourage preventive services, and support better health outcomes. Our results-oriented value-based care and reimbursement models promote evidence-based and best-practice standards. We also take steps to manage prescription drug costs while maintaining access to necessary treatments. In addition, community-based programs like Fitness in the Parks promote healthier lifestyles, which can help reduce the need for more intensive care over time.
These efforts are all designed to support members’ health while making smart use of every premium dollar.
What members can do
Members play an important role in getting the most value from their health coverage. Staying current on routine checkups, screenings, and vaccines can help catch issues early or prevent them altogether. Understanding care options like outpatient care or lower-cost medications can also help manage out-of-pocket costs. Taking medications as prescribed and following care plans can reduce the risk of complications and avoid more serious and costly health issues in the future.
Making every premium dollar count
Every premium dollar is spent with members in mind. The goal is to support health, provide access to quality care, and deliver value from your coverage. Independent Health remains committed to transparency, responsible stewardship of premium dollars, and supporting the communities we serve.
Understanding how your coverage works empowers members to make informed decisions—and to get the most from your health plan.
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