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How much does health insurance cost?

The cost of health insurance affects everyone, especially those who are changing jobs, starting their own business or getting divorced.  There are several factors which determine these costs.  There are two general categories of health insurance, Individual Health Insurance and Group Health Insurance.  Group Health is insurance supplied by your place of employment, so the factors determining this type of insurance are related to the choices made by the human resource department of the company and the people who make up the group. 

Individual Health Insurance is a contract between you and the health insurance company and is based on your individual situation.  An individual plan may include your spouse and children.  The following factors can impact your individual premiums.

• Your Insurability
• Your Health Conditions
• Your  Plan Choice
• Your Location
• Your Age and Gender

With group health insurance, the general health of the entire group is taken into consideration in order to determine the cost.  With an individual plan the specific health conditions of you and your family are evaluated.  Therefore, an application must be filled out to include the health conditions and questions for all those wish to be covered.  With an individual plan, an insurance company can choose to decline insurance to someone who has pre-existing health problems.  An important question to consider when taking out an individual health policy, is “Are you insurable?”.

Health factors such as heart disease, cancer and certain chronic diseases can all trigger a decline for an individual health insurance policy.  (You cannot be denied coverage on a group policy, although serious health conditions can affect the rates.  The costs are shared amongst the entire group, whether healthy or not.)

Your health conditions are a main ingredient of the underwriting process.  The insurance company will determine the premium that they will charge you based upon your health conditions, including height and weight and whether or not you smoke.

Upon approval, any health conditions would then be covered according to the terms of the plan chosen. 

Depending upon the insurance carrier, certain conditions may be excluded from coverage in the form of a rider. Other health exclusions could occur if you have a pre-existing health condition (excluding pregnancy), and have no creditable health insurance coverage for more than 63-days.  If applicable, you will receive a Certificate of Creditable Coverage, from your prior health insurer.  (Not all insurance is creditable.)   If you did not have health insurance for more than 63-days, you could get a temporary exclusion for existing health conditions. This temporary exclusion may last up to 12 or 18 months.   

Because smoking affects your health, people who smoke will pay an additional premium based on their smoking status.  This could be an additional 10% of premium, depending upon the company.

Maternity is generally not covered on an individual policy, unless a rider is offered.  There is an additional cost for maternity coverage.  Many plans cover complications of pregnancy even if you do not have maternity insurance. 

The plan that you choose will affect the premium you will pay.  The more risk you assume, the lower the premium. The more risk the insurance company assumes the higher the premium.  Your risk is best summed up in the term, “Out of Pocket Maximum”.  This refers to the maximum amount you would pay out of your pocket (often excluding copays).   Your “Out of Pocket Maximum” is determined by adding up your deductibles and your co-insurance amounts.

For example: if your plan has a $500 deductible with a 20% co-insurance up to $10,000, your maximum out of pocket is $500 plus 20% of 10,000 ($2,000).  Your total out of pocket would be $2500.  Once this amount was reached, an insurance company would typically pay 100% of your covered health costs.

Therefore, the plan selection has a direct impact on what health insurance will cost.  Plan options such as prescription drugs, office visits and dental will also impact a health plan.

Prescription drug costs can be embedded in the deductible or have separate co-pays outside the deductible.  For example, a drug co-pay might be $15 for generic and $45 for brand name drugs.  With an embedded drug plan, your prescription costs go toward your deductible.

Integrated into most health plans are doctor visits.  Office visit costs can go towards your deductible or you could have separate office visit copays. Office visit co-pays can be $15, $25, $35 or more depending on the plan and whether or not you are seeing a primary care physician or specialist.

Many individual plans offer dental coverage options which can run from $15 a month for an individual to $55/ month for a family.

Your Location:

Another factor which helps determine your insurance premiums is where you live.  Your county and zip code will be used to determine your premium.  The health insurance rates in some counties are more expensive than other.  Typically, the more rural counties are less expensive than urban counties.

Generally, the older you are the more expensive your health insurance will be. The reason for this is because as we get older we, statistically, have more health problems and go to the doctor more often. 

Also, younger males usually have lower premiums than females of the same age.  This is again due to statistics.  Females are more likely to go to the doctor than males at these ages.

Some Examples (based upon rates eff 3/1/2010):