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The base level price of health coverage depends on your plan and other personal factors.
If you have health insurance, every month you will pay a premium to keep your plan active
The premium is the cost you pay to maintain health insurance coverage, but it’s not the only cost
Premium amounts are based on different factors and vary greatly
Lower premium plans have high deductibles; higher premium plans have low deductibles
Your premium is the amount you pay for your health insurance every month. You might make payments on your own, or it might be deducted from your payroll if you get health insurance coverage through work. The premium just gives you access to the plan; you may still have to pay deductibles, copays, and coinsurance. Choosing the plan with the lowest premium does not necessarily mean choosing the plan with the lowest overall costs.
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In any type of insurance, including health insurance, the premium is the amount you pay to your provider every month. The premium is usually the first cost involved in a health plan.
You may also have to pay a deductible. The deductible is the amount you need to spend in out-of-pocket expenses before insurance actually starts to share the cost of eligible expenses. A lower deductible is ideal because it means you’ll pay less for medical expenses on your own before your plan starts to cover them. However, a lower deductible usually comes with a higher premium, and a higher premium usually comes with a lower deductible.
For example, you might pay a $150 monthly premium for a health plan with a $3,000 deductible. Or you could pay $350 a month for a health plan with a $750 deductible.
Many people, especially healthy people, will save money by choosing a low-premium high-deductible plan. However, while you may save money throughout the year, a single medical emergency could wipe out those savings since you’ll be paying out of pocket due to the high deductible. It’s important to consider your health history and how often you seek medical care
Under the Affordable Care Act, there are only five factors that go into setting your premium for marketplace plans:
Health insurance companies are not allowed to take your gender or your current or past health history into account when setting your premium. That means if you’re suffering from a pre-existing condition, you won’t pay a higher premium. Prior to Obamacare, the insurers could raise rates because of pre-existing condition.
Typically, older individuals and tobacco users have a higher premium. Unlike an individual plan, a family plan covers more than one person so the premium is naturally higher. Where you live also greatly affects the premium, since insurance providers might not offer the same coverage in every state. (That’s why relocating gives you the opportunity to buy a new health plan outside of Open Enrollment.)
Marketplace health plans often come in different categories or tiers. Within the tiered system, lower tiers are more affordable but offer more basic coverage, while higher tiers (Gold and Platinum) have more health care benefits and options, but also higher premiums. It’s not uncommon for premium prices between tiers to vary by a few hundred dollars.
If you have coverage through your workplace, then your employer pays part of the health insurance premium, effectively subsidizing the costs for you. Premiums for group health insurance are much lower than premiums for a marketplace plan.
You might be able to sign up for a health plan through your college or university if you’re a student. This type of health coverage is often more affordable than insurance coverage obtained on the marketplace.
Because of the factors mentioned above that go into determining the health insurance premium, the average monthly cost of a marketplace plan can vary greatly. You can expect, in general, a premium anywhere from $150 to $600 per month for an individual. Family plans are much higher.
You can find an estimate using this calculator created by the Kaiser Family Foundation.
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If you have employer-sponsored health plan, it’s likely that your premium payment comes directly through a payroll deduction. You can check your paystub to confirm.
If you bought an individual plan on the Obamacare marketplace, you will make your payment to the insurer according to their terms. Each health insurance company has different guidelines regarding your payment options.
Your policy will be cancelled if you miss a premium payment. However the insurance company might extend you a grace period before they terminate it. The grace period is typically a month, but can be p tup 90 days if you receive subsidies to help pay for your plan. Check with your insurer so you know exactly how much time you have to repay a missed premium before your coverage is terminated.
Losing coverage because of your failure to pay will not open up a Special Enrollment period for you to buy a new plan — you’ll have to wait until the next Open Enrollment period to purchase new health insurance coverage. If you believe your coverage was wrongly terminated, you can appeal to the insurance company.
Your health plan isn’t beneficial to you if you can’t afford it. However, there may be ways to get more affordable coverage.
You might qualify for you a premium tax credit, if your household income — 100% to 400% of the federal poverty guidelines — and meet eligibility criteria.
This premium subsidy can be used to pay the insurance company, resulting in a reduction in your monthly payment. This is called the advance premium tax credit (APTC).
If you qualify for a premium tax credit and don’t use it, you can receive a refundable credit when you file your tax return at the end of the year. On the other hand, if your income changes and you claim a credit that you don’t qualify for, you might owe taxes when you file your tax return.
A premium tax credit can only be claimed when you apply for and buy a health plan on the health insurance marketplace at healthcare.gov.
But you can still claim a tax deduction if your medical expenses, including premiums, exceeds 7.5% of your adjusted gross income.
All of the health coverage we’ve been discussing applies to private health insurance, meaning coverage not provided by the government. On the other hand, a public health insurance program like Medicaid can get affordable care to low-income households. Some states have have low premiums for Medicaid based on your income and federal poverty guidelines, while others might not have premiums at all.
You can read our state-by-state guide to Medicaid to see if you qualify.
Health insurance and life insurance work together to offer financial protection.
Health insurance can pay your medical expenses. Life insurance keeps your loved ones whole after you die.
Policygenius’ editorial content is not written by a certified financial planner or advisor. It’s intended for informational purposes only and should not be considered legal, financial, or investment advice. Consult a professional to learn what financial products are right for you.
This post contains references to products or services from one or more of Policygenius' advertisers or partners. While these codes earn us a small fee at no additional cost to you, they do not influence editorial content and we only refer products we love.
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Yes, we have to include some legalese down here. Read it larger on our legal page. Policygenius Inc. (“Policygenius”) is a licensed independent insurance broker. Policygenius does not underwrite any insurance policy described on this website. The information provided on this site has been developed by Policygenius for general informational and educational purposes. We do our best efforts to ensure that this information is up-to-date and accurate. Any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application. Savings are estimated by comparing the highest and lowest price for a shopper in a given health class. For example: for a 30-year old non-smoker male in South Carolina with excellent health and a preferred plus health class, comparing quotes for a $500,000, 20-year term life policy, the price difference between the lowest and highest quotes is 60%. For that same shopper in New York, the price difference is 40%. Rates are subject to change and are valid as of 2/17/17.
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