Do Vermonters Really Pay the Most for Health Insurance?

If you live in Vermont, you’ve probably seen ads in the local papers claiming that Vermonters pay the highest health insurance premiums in the country. Being the local myself, and somewhat of a geek, I decided to research this and find out whether this is indeed true.

So, I did what any self-respecting money geek would do… I opened my laptop, set up some parameters and conducted the research. What I have uncovered shocked me!

The Set Up

First, a little context.

That ad caught my attention because I see how much healthcare premiums affect everyone, especially entrepreneurs and self-employed folks who buy coverage on the marketplace. It’s one of those line items that can quietly eat a substantial amount each month and going without it, especially in the U.S. is taking a huge risk.

So, I wanted to know: is Vermont really that expensive, or is there more to the story?

I decided to pick five states to compare:

• Vermont (VT) — home turf, the suspect

• California (CA) — known for high taxes and high cost of living

• New York (NY) — same reputation as CA

• Rhode Island (RI) — small, Northeastern neighbor that I recently left

• Texas (TX) — a no-income-tax state

Then, I built a simple test case:

• Single adult, no dependents

• Early 40 year old in good health

• Adjusted Gross Income (AGI): $75,000

• Plan tier: Bronze (lowest premium available)

No fancy modeling, no deductibles or network analysis, just a search of what would you pay per month for the cheapest marketplace plan given the information provided.

Test Number One: $75K Income

Set up took a hot second, but information was insightly. When the numbers came in, I was shocked!

At an income level of $75,000 per year, here is how the states stacked up. CA had the lowest premium, followed closely by NY and RI, they were all in about $300 per month range. TX was the fourth most expensive option in the low $400 per month. And then came in Vermont, by far the most expensive option at a whopping $824 per month!

Let me say that again: California, one of the highest-tax states in the country came in as the cheapest. Meanwhile, my beautiful state of Vermont was charging more than double everyone else.

Same person, same bronze plan, same income, but hugely varried cost of insurance.

I guess the ad was right: Vermonters really do pay a lot!

But something bugged me. You see, I run these numbers on regular basis and last year (prior to the subsidies going away), I found that Vermont had a rather reasonable cost, so much so that I ended up calling every single client to say, please run this for yourself, just in case I did something wrong. And guess what?! Each one of them reported that they were able to find affordable healtcare coverage. So, something was missing and I wanted to find out what that was!

Round Two: Strategic Planning

As I pondered what I have uncovered and reflecting on the year prior, I realized that each scenario where I talked to my client, we actually worked on their plan and were very strategic about the income and impact on AGI. So, I decided to run it again, but this time I dropped the AGI from $75,000 to $55,000, keeping everything else identical.

Same person. Same age. Same health. Same goal: find the lowest cost option, which is typically the Bronze plan.

I was yet again shocked by the resutls. The most expensive in this case scenario was TX. Their premium remained unadjusted in the low $400 per month range. CA, NY, and RI also remained more or less unchanged - there was a small drop, but nothing drastic. And then VT. The premium for the lowest cost option went from a whopping $824 per month to $0.33 per month.

That’s not a typo. It was thirty-three cents per month y'all and only because the AGI was lowered by $20K.

I did not expect to see this at all. I did know that VT can be supper affordable at the right income level, but I trully expected that other states would follow suit. That did not happen, and in instances where it did, it wasn't nearly as dramatic of a change.

While I didn't know what the results would actually be, I felt redeamed to prove the ad wrong!

Wait, How Is That Possible?

Here’s where things get fascinating.

The Affordable Care Act (ACA) uses your Modified Adjusted Gross Income (MAGI) to calculate premium subsidies. The lower your MAGI (within certain ranges), the larger your subsidy, meaning the government (federal and state) provides a greater financial assistance towards your monthly premium.

But every state’s marketplace behaves a little differently. Vermont, for instance, has relatively high base premiums because we have a small population and fewer carriers. However, the subsidy formula is fairly standardized, so when income drops, the percentage of income you’re expected to pay for coverage plummets just as fast, once you hit a certain AGI threshold.

At $75K, there was zero subsidy for 2026, even though there were some for 2025. At $55K, because the threshold was met and then some, the subsidy kicked in and in Vermont’s case, it nearly paid for the premium entirely, except for that $0.33.

The AGI Story and Why It Matters

This whole experiment reminded me how wildly sensitive many things are to AGI, including healthcare premium costs.

AGI drives so many things in our financial lives, but very few people understand how or what impacts it. Most folks believe that it's what you earn that really matters. While sort of true, the type of income matters a lot more. Deductions that you can take matter even more and where those deductions are taken (above or below the line, as they are called) really, really matters.

Depending on your income and deductions you take, you have some or a lot of control of how much income shows up on that line (the AGI line).

For example, if you contribute towards your retirement that will lower your AGI. If you decide to invest outside the retirement plan, that's lovely but it has zero impact on your AGI.

Other things that are impacted by AGI are student loan payments under income-driven plans, whether you can contribute to IRA or Roth IRA and how much, what your SAI will be on FAFSA, tax credits or savings programs eligibility, etc.

It’s all connected. And it all matters.

And if all of this went above your head, I get it, took me years to connect all the dots myself. Just know this: AGI matters a lot in the world of money and with proper and timely planning you have some (or in certain circumstances, a lot) of ability to impact it with proper financial and tax planning.

The Takeaway: The Ad Was Right… and Wrong

So, do Vermonters pay the most for health insurance?
Yes and also no.

If you’re earning higher income and not eligible for subsidies, Vermont healthcare coverage can be really expensive. But if you can lower your AGI to certain levels, the state’s generous subsidy calculation turns it into one of the cheapest in the country.

That’s why it’s dangerous to judge these things in isolation. “State cost” is only half the story. The other half lives in your own tax return.

Your Adjusted Gross Income is one of the most powerful levers in personal finance, and most people don’t realize it.

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