Why are Health Insurance Premiums so Variable Depending on the Person?

If you’ve ever shopped for health insurance, or talked to your neighbors about it, you’ve probably noticed that premiums can vary a lot from person to person, even for the same plan. Understanding why that happens can make it easier to choose a plan that actually fits your needs and budget, especially during the Open Enrollment Period (OEP).

Your health insurance premium is the amount you pay each month to keep your coverage active, whether or not you use any medical services. Premiums are just one part of your total healthcare costs, so it’s important to know what goes into them before deciding which plan makes sense for you.

Here are the main factors that impact what you’ll pay:

• Age: Older adults usually pay more because healthcare costs tend to rise with age.

• Income: For ACA marketplace plans you can get a tax credit based on income to lower your monthly premium.

• Location: Costs vary by state and even by zip code because of local healthcare prices and competition.

• Tobacco Use: Smokers can be charged more for their premiums sometimes due to the inherent risk involved in smoking.

• Plan Category: Bronze, Silver, Gold, and Platinum plans each balance premiums, deductibles, and copays differently.

• Household Size: Adding a spouse or children will increase your monthly premium compared to an individual plan. This actually works the opposite way on the ACA marketplace as the more people you have on the plan, the higher the tax credit, which in turns lowers your monthly premium. So for ACA marketplace plans, more people on the plan means lower premiums. Counterintuitive, I know.

  
  

It’s also important to look at how the premium fits with the plan’s deductible, copays, and out-of-pocket maximums. Sometimes paying a slightly higher premium can save you thousands if you need care. Sometimes it may be the opposite and make more sense for you to pay a lower premium and carry a higher deductible, coinsurance, copays etc.

If this feels confusing, that’s where I come in. I’m your local health insurance broker and I help people every day compare plans, figure out what subsidies they qualify for, and pick the right coverage for their needs and budget. My help is free, and using a broker like me does not increase your premium. Though it does give you confidence in your decision and you get my ongoing support.

If you want someone to help make this simple and make sure you get the best plan for your situation, call me at 615-579-7592 or email joel@wellnessinsurance.info.