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Your guide to the factors that determine the cost of health insurance.
Published September 11, 2019
The "cost" of your health insurance plan can be split into two categories: your monthly premiums and your out-of-pocket expenses. Both must be taken into account when calculating the cost of your health insurance plan.
Under the Affordable Care Act, there are only five factors that go into setting your premium:
Health insurance companies are not allowed to take your gender or your current or past health history into account when setting your premium.
Out-of-pocket expenses include your deductible, your copayment, and your coinsurance. Not every plan will have all three of these expenses, but most use a combination of the three to share costs between the insurer and the consumer.
Your deductible is the amount you need to pay before your health insurance company starts to pay for any health care services.
A copayment is a fixed cost for a health care service or prescription drug.
Coinsurance is the percentage of the cost you pay for a health care service.
Health insurance plans with low monthly premiums typically have high deductibles, larger copayments, and a higher coinsurance split. This increases the overall cost of the health insurance plan for you and the amount you'll pay out-of-pocket on an annual basis. Health insurance plans with higher premiums typically have lower deductibles, lower copayments, and a lower coinsurance split.
In some cases, it may make more sense to buy a "more expensive" plan – i.e., a plan with a higher monthly premium – because it will save you money on out-of-pocket costs in the long run. This is generally the case for people who more frequently visit the doctor and use other healthcare services.
You may be able to save money on a marketplace plan if you qualify for a premium tax credit. Premium tax credits allow you to get a discount, either monthly or annually, on your health insurance premiums.
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Yes, we have to include some legalese down here. Policygenius Inc. (DBA Policygenius Insurance Services in California) (“Policygenius”), a Delaware corporation, 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 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.
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