When you are shopping for health insurance for the first time, you will invariably ask, “how much does health insurance cost?” This is a perfectly reasonable question. When you buy a car, television, or any other major purchase you want to know how much it is going to cost. And just like those things, there are a lot of variables that go into the cost of a health insurance plan.
Health Insurance Trend
One of the biggest factors that affect the cost of health insurance is medical trend. Trend is the percent increase in health care costs. Here is a good explanation of what causes medical trend. A good estimation of trend is extremely important in determining how much health insurance costs. If the trend estimation is off, premiums will be too high or too low.
The benefit design of an insurance plan plays a large part in how much it costs. Just like with car insurance, a plan with a high deductible will have a lower premium than a plan with a low deductible. The more financial risk you take upon yourself, the less you will pay in fixed monthly cost. The same goes with a medical insurance plan. The higher the deductible, copay, and out of pocket limits, the lower your premiums.
Age of the Individual
The age of an individual plays a big part in the cost of a health insurance plan, but not as much as it used to play. Younger people need less health care than older people, so younger people pay less for claims. The Patient Protection and Affordable Care Act (PPACA), or as many people know it, Obamacare, puts a cap on how much more an older person can be charged for an insurance plan than a younger person.
Government Programs and Subsidies
Government programs and legislation provides methods to reduce the cost of health insurance for young adults. The two big ones are Medicaid and the health insurance exchanges.
Medicaid is a program administered by the states that provides some low income earners with assistance in paying for health care. Eligibility varies by state, so check with your state’s Medicaid office for details.
If someone makes just enough to not be eligible for Medicaid, but still needs to find a way to cover their children, the Children’s Health Insurance Program (CHIP) can at least help pay for the cost of a young person’s children.
Health Insurance Exchanges
PPACA tried to simplify the answer to “how much does health insurance cost” by setting up health insurance exchanges. Exchanges are online marketplaces where people can shop for health insurance plans side by side on an apples to apples basis. Plan designs and premiums are plainly displayed.
However, for certain people, the premiums will not actually be what health insurance costs because of subsidies that are available to people that earn less than 4 times the poverty level. If you fall into that category, you can receive assistance in paying for your health insurance premiums.
How much does health insurance cost is a question that people are always asking. It is possible to find low cost health insurance. With the exchanges and easy to use online tools, it can be easy to find out how much you owe for a medical insurance plan.