About 23 percent of working-age adults in the United States are underinsured, meaning they have health insurance that doesn’t actually protect them from high medical costs. That’s roughly one in four adults with a card in their wallet that falls short when they need it most. While much of the national conversation focuses on the uninsured, the underinsured population is enormous and growing, driven largely by rising deductibles and out-of-pocket costs that outpace wage growth.
What “Underinsured” Actually Means
Being underinsured isn’t a vague concept. The Commonwealth Fund, which tracks this population through biennial surveys, uses specific financial thresholds. You’re considered underinsured if you have insurance all year but meet any one of these criteria:
- Your out-of-pocket medical costs (not counting premiums) equal 10 percent or more of your household income.
- Your out-of-pocket costs equal 5 percent or more of your household income if you earn less than 200 percent of the federal poverty level (roughly $31,000 for an individual or $64,000 for a family of four in 2024).
- Your plan’s deductible alone equals 5 percent or more of your household income.
In practical terms, a family earning $60,000 a year with a $3,000 deductible meets that last threshold. That’s not an unusual plan. It’s an increasingly common one.
The Rise of High-Deductible Plans
The single biggest driver of underinsurance is the spread of high-deductible health plans. In 2015, 38 percent of private-sector workers had access to a high-deductible plan. By 2024, that figure reached 50 percent. In service industries, it climbed to 51 percent. The median annual deductible for workers enrolled in these plans was $2,750 in 2024, according to the Bureau of Labor Statistics.
That $2,750 is what you pay before your insurance starts covering most services. For someone earning $40,000, that deductible alone represents nearly 7 percent of their income, clearing the underinsured threshold before they pay a single copay or coinsurance charge. Many people choose these plans because the monthly premiums are lower, but the tradeoff is a large upfront cost that can deter them from seeking care at all.
Federal rules cap total out-of-pocket spending on Marketplace plans at $9,200 for an individual and $18,400 for a family in 2025. Those caps rise to $10,600 and $21,200 in 2026. While these limits prevent truly catastrophic billing, they still represent enormous sums for middle-income and lower-income households. A family that hits the $18,400 cap has effectively spent more than 30 percent of a $60,000 income on medical costs alone, not counting premiums.
How Underinsurance Changes Behavior
People with inadequate coverage don’t use health care the way people with comprehensive plans do. They delay, skip, and ration. The patterns look strikingly similar to those of people with no insurance at all. Three-quarters of uninsured adults report skipping or postponing needed care because of cost, and underinsured adults fall somewhere between the fully insured and the uninsured in their willingness to seek treatment.
Prescription medications are where rationing becomes most visible. Among uninsured adults under 65, 46 percent have substituted an over-the-counter drug for a prescribed one to save money. Thirty-nine percent have left a prescription unfilled entirely. A quarter have cut pills in half or skipped doses. Overall, 58 percent have done at least one of these things. Underinsured adults face the same cost pressures, particularly when their plans require high copays or don’t cover certain drugs until the deductible is met.
This isn’t just an inconvenience. Skipping blood pressure medication, rationing insulin, or delaying a diagnostic test can turn a manageable condition into an emergency. The irony is that underinsured people have insurance. They’re paying premiums every month. But the gap between what they pay for coverage and what coverage actually covers creates a zone where people make medical decisions based on their bank balance rather than their symptoms.
The Medical Debt Connection
Underinsurance is one of the clearest pathways to medical debt. Census Bureau data shows that 30.8 percent of households that lacked full insurance coverage for the year carried medical debt, compared to 16.2 percent of households where everyone was fully covered all year. The debt was also larger: households without full coverage had a median medical debt of $3,000, versus $2,000 for fully insured households.
Perhaps more telling is the rate of high medical debt burden, meaning debt that significantly strains a household’s finances. Among households without full coverage, 8.5 percent reported a high burden, nearly three times the 2.9 percent rate among fully insured households. These aren’t people who forgot to pay a bill. They’re people whose insurance left too large a gap between the cost of care and what the plan covered.
Who Is Most Affected
Underinsurance hits hardest at the intersection of two factors: lower income and employer-sponsored plans with high deductibles. If your employer offers a plan with a $3,000 deductible and your household income is $50,000, you’re underinsured by definition. You didn’t choose to be. The plan your job offers simply doesn’t match your financial reality.
Workers in goods-producing industries (manufacturing, construction, agriculture) saw high-deductible plan availability rise from 37 percent to 46 percent between 2015 and 2024. Service-sector workers saw even steeper growth, from 38 percent to 51 percent. In many workplaces, the high-deductible option is the only option, or the only affordable one after premiums are factored in. The result is that millions of working Americans carry insurance cards attached to plans that leave them exposed to thousands of dollars in potential costs each year.
Lower-income households face a double bind. The Commonwealth Fund’s definition recognizes this by using a lower threshold (5 percent of income rather than 10 percent) for people earning below 200 percent of the poverty level. Even relatively modest medical expenses can qualify a low-income household as underinsured, because the financial impact of a $1,500 bill is radically different at $30,000 a year than at $100,000.
Why the Number Keeps Growing
The Affordable Care Act succeeded in reducing the number of uninsured Americans, but it did not solve underinsurance. In fact, the 23 percent underinsured rate in 2024 reflects a problem that has persisted and grown even as coverage expanded. The core issue is structural: health care costs rise faster than wages, and insurance plan designs have shifted more of those costs onto patients through higher deductibles, broader coinsurance requirements, and narrower provider networks that lead to unexpected out-of-network charges.
Employers, facing their own rising costs, have increasingly adopted plan designs that keep premiums visible and low while pushing cost exposure into deductibles and out-of-pocket maximums that employees don’t think about until they need care. The monthly premium feels manageable. The $4,000 bill after a procedure does not. This gap between the promise of insurance and the reality of using it is what underinsurance measures, and by that measure, the U.S. health system is leaving nearly a quarter of its working-age adults underprotected.