A lot of Americans have questions about their health insurance premiums. Photo source: Storyblocks.
With a plethora of public and private coverage options, constant federal reform underway, and a large number of confusing concepts to parse through, insurance is a tricky topic no matter which way you slice it. Health insurance premiums are one of the things most Americans are consistently curious about. In order to remedy confusion and provide clarity, we’ve put together a Q&A article that will address seven of the most asked questions about premiums.
What Is a Health Insurance Premium?
In health insurance, your premium is what you pay every month to keep your plan active. We like to think of it as a monthly subscription service rather than a bill payment. With bills, you pay periodically to stay in your current abode and keep the garbage truck coming for pick-ups—you’re mostly paying for something inert. With a subscription, you pay to USE the service in question. Your premium is the key that gives you access to many different things you can use to make your life healthier, like a covered doctor’s network, a gym membership, or discounted medications. Just like how you pay to open up your Netflix app and watch what you want on-demand, you can implement your plan in your life as little or as much as you want. As long as you pay for it, it’s yours to use.
What Is the Average Health Insurance Premium for 2024-2025?
For individuals, the average health insurance premium is all over the map. If you qualify for government assistance and have insurance through the Marketplace (Healthcare.gov), you could pay a cheery $0 for your plan. Without federal help, factoring in where you live, how healthy you are, etc., you will likely pay a few hundred dollars a month for your health insurance in 2025. For instance, the average individual health plan in Maryland for 2024 is $346, but it’s $889 in Alaska. It truly depends.
What Factors Determine the Cost of Health Insurance Premiums?
There are a lot of different factors that providers take into account when pricing their policies. Because it’s less expensive to treat people who are young, healthy, and fostering good habits, things like your age and whether you use tobacco products can influence how much you pay in health insurance premiums. For instance, if you’re a regular smoker, insurance companies may hike your premiums to protect themselves against the cost of your smoking-related doctor’s appointments and hospital visits.
Other things that can influence your premium are where you live, what type of plan you have, how many people are on your plan, who is on your plan with you, what your medical history looks like, whether you are overweight, medical inflation, government regulations, increased demand, and more.
How Can I Anticipate and Manage Potential Premium Hikes?
One of the most effective ways to stay on top of any changes to your policy is to pay attention to your mailbox, be it physical or digital. Legally, insurance carriers must notify their clients when changes occur to their insurance policies, including premium hikes. It is also important to pay attention to the news. Healthcare reforms are constantly in motion, and you never know when a newly passed law will impact your coverage. Suppose you prefer a real human’s proactive advice on how to anticipate and manage potential premium increases, then find an insurance agent that you can trust. A quality agent will have their finger on the pulse of the insurance industry and should be able to give you more information on any incoming adjustments, rate-related or not.
Along With Premiums, What Else Should I Look for When Choosing a Plan?
There are six crucial characteristics to examine when choosing a plan to cover all your bases for the right price.
- Premium. The premium is a set fee that you will pay each month for your plan.
- Deductible. The deductible is the amount of money you need to pay into your plan (premiums do not count) BEFORE you receive any financial help from your insurance company.
- Maximum Out-of-Pocket. This feature is the absolute highest amount of money you will pay in a year for your healthcare outside your premiums (again, premiums do not count toward meeting this price ceiling). This feature and your deductible will reset periodically, so be aware of what time of the year (or times of the year) the reset takes place.
- Copay/Coinsurance. Your copay and coinsurance (usually either a flat amount or percentage) will determine how much money you pay to a doctor when you utilize their services. If you have a $30 copay, you must pay $30 when you’re done seeing a doctor. If you have 50% coinsurance, you will have to pay 50% of whatever your doctor’s fees are for your visit.
- Prescription Formulary. Every insurance plan has a list of medicines they cover at certain rates. It’s important to read over every plan’s formulary before you purchase, so you know that your medications (or medications you predict using in the future) will be in-budget.
- Summary of Benefits. Each plan will come with a summary of benefits, which is a brochure or a packet that outlines everything you’re paying for when you buy a plan. It is super important not just to read this cover-to-cover, but to understand each point before saying yes. If you need help deciphering a plan’s benefit summary, reach out to an insurance agent for help.
How Do I Apply for Government Programs (like Medicaid or ACA Marketplace Assistance) to Help Cover the Cost of My Health Insurance Premiums?
Inputting your household and income information into Healthcare.gov will automatically calculate what assistance you qualify for. If you earn below a certain threshold, you will be directed to sign up for Medicaid, and if you qualify for subsidized (cheaper) health insurance through the ACA Marketplace, those discounts will be applied as you shop. The government streamlines the entire process to be as simple and seamless as possible. However, if you are at all worried about messing up an application or getting yourself signed up for something you do not need, it is always a good idea to have an insurance agent on hand who can walk you through each step and answer questions as you go.
What Should I Do if I Can No Longer Afford My Premiums?
If your premiums have increased beyond your budget, pay a visit to Healthcare.gov to see if you qualify for government assistance. Additionally, you can simply reach out to your insurance agent and tell them what’s up. They should be able to help you switch to something within your price range. PLEASE BE AWARE that if you have health insurance through the federal Marketplace, there are set periods during the year when you can disenroll in a current plan and enroll in a new plan. Outside of those dates, you may have to wait before you can switch or see if you qualify for special permission.
Have Health Insurance Questions?
We hope that this information on health insurance premiums has been helpful for you.
Insurance is oftentimes overwhelming and we want to shed light on the industry by answering your questions. Comment below and your question may be the topic of our next post!
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