How Much Does Health Insurance Cost: Compare Here
Last updated on 2021/7/20
Health insurance costs can vary thanks to many different factors. While many people get health insurance through an employer, there are those that need to purchase private individual health insurance. Answering how much does health insurance cost is going to depend on several variables.
Depending on your needs, private health insurance could be more affordable than employer-sponsored plans. In 2023, the average monthly cost for health insurance is $560 for an individual and for a family that cost is $1,400.
Factors That Determine How Much Does Health Insurance Cost
There are a number of factors that go into determining how much does health insurance cost.
Personal Details
Age: A few states, including Hawaii, New Hampshire, and New York, won’t factor in your age when determining health insurance rates. However, a majority of the states do. The older you are, the more you are going to pay for health insurance
Smoking: Being a smoker can be a large factor in how much your health insurance costs. If you are a smoker, it means you are at a greater risk of health issues. Insurers may charge up to 50% more for health insurance if you smoke
Location: Premiums can vary by location but this is usually not as important as some other factors. Your age and whether or not you are a smoker will have a larger influencer on your premiums, instead of where you live
Type of Plan
There are some personal details that determine how much health insurance costs but then there is also the type of plan, including the level of coverage.
Individual or Family: It makes sense that if you are just insuring yourself, you will be paying a lot less than if you are insuring your whole family. Each person you are insuring will also cost differently depending on his or her age, as well as tobacco use.
Plan Type: There are a lot of different plan types. You can choose from PPO, HMO, POS, and EPO, which all have different costs.
Level of Coverage
Once you decide on a plan then you also need to choose your level of coverage. Bronze coverage will allow you to pay a lower monthly cost but then there are more out-of-pocket costs. The Silver plan is the middle ground and there are lower deductibles so you pay more in premiums every month but have some lower out-of-pocket costs as well. Gold plans have higher monthly premiums but lower out-of-pockets costs. Platinum will give you the highest monthly premiums but the lowest out-of-pocket costs. Lower deductibles mean that the plans will start paying for your care much faster than some of the other plans.
A catastrophic plan will have low premiums but high annual deductibles. These will pay for preventative care, regardless of the deductible. These plans are more suitable for healthy and young people. In order to qualify for this type of plan, you need to be under 30 or have a hardship exemption.
Understanding Different Plan Types
Since the plan types affect how much health insurance costs, each plan comes with its own benefits and disadvantages.
Why You Need Health Insurance?
Since health insurance costs can be expensive you may be wondering why you need health insurance. There is no longer a fee for not having health insurance but you don’t know when an accident will happen and you need medical attention. Just a small broken bone will have negative consequences if you don’t have insurance. Medical care can be very expensive without any coverage. While individual plans may not give you the same kind of coverage an employer would for the costs, any amount of coverage is going to be better than being uninsured. In the event of an accident or the beginning of a long-term illness, you want to be prepared and health insurance can help you do that.
HMO
A health maintenance organization plan comes from a company where the organizational structure allows them to give health coverage to subscribers through a specific network of healthcare providers. Premiums are typically lower for these types of plans since health providers have patients given to them. The disadvantage is that you are limited to only accessing a network of providers and doctors who are already contracted with the HMO.
PPO
A preferred provider organization is a type of plan where facilities and medical professionals give services to subscribed clients at reduces rates. Providers that are part of the network are called in-network providers or preferred providers. You can also see healthcare providers that aren’t in your network but the rates are going to be more expensive.
EPO
An exclusive provider organization is a mix between a PPO and HMO plan. You can only get services that are from providers of the certain network but exceptions can be made for any emergency care. A characteristic of this plan is that you are required to pick a primary care physician that will give you preventative care and treat you for some minor illnesses. You won’t usually need a referral to see a specialist.
HDHP
A high deductible health plan has some different characteristics. It will have a higher deductible than many other plans. This is a good plan for those that don’t expect a lot of healthcare services, unless in an unexpected accident or medical emergency.
CDHP
A consumer driven health plan is a type of high deductible plan. A portion of the services is paid for with pre-tax dollars. Since there is a high deductible you will pay lower premiums.
POS
A point of service plan gives different benefits to you based on whether or not you use preferred providers that are in the network or providers that are out of this preferred network. It includes features of both PPO and HMO plans.
Short Term Insurance Policies
These plans are insurance coverage that is only meant to last a short period of time, usually for three months. The term lengths can vary by state. In some states, a short-term plan can last up to 12 months. These plans can also be called term or temporary health insurance. It’s a temporary solution to fill in the gaps of your coverage. For example, if you are waiting for other coverage to begin, are between jobs, or are waiting to be eligible for Medicare coverage, you can use this plan. Under this type of plan, your eligible dependents, such as spouse and children, can also be covered. However, pre-existing conditions may disqualify you from this coverage.
Understanding Healthcare Costs
You are able to get a reliable estimate of your costs if you understand the deductibles, premiums, and out-of-pocket expenses when you compare health insurance companies.
Premiums: The monthly premium is what you pay to the insurer in exchange for healthcare costs.
Deductible or Cost-Sharing Expenses: A deductible is the amount you are going to be paying out of pocket for healthcare services every year before your health insurance kicks in and pays a portion of the covered services. On health insurance plans, the deductible can vary. Coinsurance and co-payments are cost-sharing payments that you will make every time you get a service, even after you reach your deductible. Co-pays are fixed amounts you pay for covered healthcare services. Coinsurance is a percentage of the healthcare costs you pay for covered services, even after you have met your deductible.
Maximum Out-of-Pocket Limits: The maximum out-of-pocket limit on your policy acts as a financial safety net. This will be the most you have to spend for services in a year. After you reach this amount then the company pays 100% for covered services. Your co-payments, coinsurance, and deductible will all count toward this limit. Many plans offer lower out-of-pocket limits that you may want to consider.
These all work together. Typically, the more benefits your plan pays for you then the more you will pay in a premium. This means medical expenses for care are going to be lower for you.
Different Types of Health Insurance Deductibles
You will see the word deductible a lot when searching for health insurance plans and there are actually different types of deductibles.
Comprehensive Deductible
When you have a comprehensive deductible, it applies to and includes all of the medical coverages in your plan. Once you meet this then coinsurance takes effect.
Non-Comprehensive Deductible
This type of deductible will mean that not all of your medical coverages in your plan have a deductible that is applied to them. Your plan may give you some health services without you going into your deductible. Check to see if the coverage that doesn’t use your deductible is going to be beneficial for you.
Out-of-Network and In-Network Deductibles
There can be a separate deductible for services you get from providers outside or inside the network. Any out-of-network providers you use are going to cost more so the deductible is going to be higher than an in-network provider.
Prescription Drug Deductible
You may have a separate deductible in order to cover prescription drugs. You then first need to meet this deductible when you pick up any prescriptions before your insurance company pays anything toward medications.
Family or Individual Deductibles
Each individual family member could have an individual deductible or the plan could have one large family deductible. If it’s a family deductible then it can be met by just one family member. Once you meet the deductible then your coinsurance kicks in, even if it’s for a family member who hasn’t needed care until that point.
How to Save Money on Health Insurance
If you are hoping to save money on health insurance costs, you can do a few things.
It helps to know all your options. Work options may be cheaper but you won’t know if you don’t know about the benefits your workplace offers. There are some advantages to employer-based plans. Your employer will share in the premiums with you, your premium contributions are made pre-tax, which means you get savings come tax time, and your employer chooses the company and plan options for you to make it easier in your search.
There are also some advantages to individual plans and it doesn’t mean that you are going to be spending a lot more. With individual plans, you are able to change jobs without losing any coverage and can pick the right company and plan that works for you.
Knowing how the different plans work will allow you to pick the right plan for your medical needs while still saving on health insurance costs.
Even if you are buying your own health insurance, you could still get help paying for it with a government assistance program. For example, the Advanced Premium Tax Credit subsidy will help lower your monthly premium. The Cost Sharing Reductions program can help lower the cost share amount you are paying for medical care. Both programs are designed to help those with lower incomes.
Medicaid provides coverage to low-income families and individuals. You should contact your Department of Insurance in your state to see if you are eligible to enroll in a program. You could be eligible for Medicare if you are older than 65 or are any age and disabled. The standard monthly premium is much lower than average healthcare costs for those that are on Medicare.
An HSA will allow you to contribute money to a savings account that will only be dedicated to healthcare costs and have that money be tax free. It can also be a way to save money on the health insurance costs if you have one available to you. You are able to take advantage of tax-free contributions, lower your monthly premiums, and your contributions roll over from year to year. You may also be able to invest your funds so they can grow in the long term. When using your HSA, you get the benefit of tax-free contributions and withdrawals but you can also be eligible for a tax deduction.
A policy with higher deductibles may seem scary but when you have money in your HSA that you know can cover it then it’s not a problem and you can choose the higher deductible, lower premium plan. Having an HSA is also great if you are generally healthy since you can have the lower monthly payments and use tax-free savings to cover your out-of-pocket costs.
In most circumstances, your health insurance costs are going to be cheaper when you use clinics, physicians, and hospitals that are in your plan’s network. Depending on the plan you have, the costs for out-of-network care can vary. Keep in mind that you are responsible for knowing whether or not your provider is in the network. Just because a physician accepts your insurance doesn’t mean that they are in-network. You want to always call your insurance and check.
A health insurance broker can help you find the right plan for your family’s needs and budget. Understanding health insurance can be complicated so it’s best to partner with an expert. An insurance professional can help you review and compare your options, show you how deductibles and co-pays affect overall costs, and show you if an HSA is right for you. They can also help you navigate complicated situations if you encounter unforeseen costs.
Factors in Choosing a Plan
Even though health insurance costs can be a big factor in choosing a plan, there are other factors that you need to consider. Do you have a plan that gives you access to the doctors you are currently using in-network? Does your plan offer discounted or free services for preventive care services, such as your annual check up? Many plans should provide coverage for these services but catastrophic coverage or short-term insurance may not. What hospitals are included in your plan?
Are these in a convenient location or would you have to drive pretty far to access hospital care? Does your plan cover specialty services that you may use, such as acupuncture, chiropractic, or physical therapy? What are the costs of out-of-network services should you need or want these services? Are you able to afford these services?
Think about your current and future healthcare needs when choosing a plan, as well as the overall costs.
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In Conclusion
When figuring out how much does health insurance cost, there are different factors to consider. Average costs can vary depending on personal details, such as age and whether or not you smoke, but costs will also vary depending on which plan you choose. There are a number of different plans that will give you different premium and out-of-pocket costs. Understanding the out-of-pocket costs can be an important way to make a decision on which plan is affordable to you. Even after looking over the costs, there are still some other factors you want to consider when choosing a plan.