What is a health insurance premium? – Forbes consultant

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If you use health insurance to cover health care costs, you will likely pay a monthly premium every month. This fee entitles you to the coverage indicated in your health insurance plan. Health insurance, including premiums, can be difficult to understand. Read on for a full review of health insurance premiums and how they work.

What is a health insurance premium?

A health insurance premium is the monthly amount that you pay for the health insurance plan that you choose. “Your award is usually billed on a monthly basis as a subscription,” explains Josephine Pepa, pharmacist and CEO of Over Your Counter, an online service that aims to provide personalized guidance and education on wellness and self-care. Some plans may require quarterly or annual premium payments, adds Linda Chavez, founder and CEO of Seniors Life Insurance Finder.

Unfortunately, incomes in the United States don’t always keep up with the rising costs of premiums and deductibles. In fact, a study conducted by the Commonwealth Fund found that premium contributions and deductibles in employers’ health plans consumed 11.6% of median household income in 2020, up from 9.1% a decade earlier. .

How health insurance premiums work

There are a number of factors that affect how much you pay for your health insurance premium. “If your plan allows access to a large network of providers, your monthly premium will be higher than it would be if your plan only allowed access to a handful of doctors and hospitals.” says Pepa. “The cost of the premium also depends on the number of dependents covered, location, age, specific plan category chosen and tobacco consumption.”

Different types of health insurance premiums

According to the Marketplace Healthcare.gov, health insurance plans fall into four main categories: Bronze, Silver, Gold, and Platinum. “While Bronze plans typically have lower monthly premiums, their direct costs are higher,” says Pepa. “Platinum plans, on the other hand, often have higher premiums and lower direct costs.”

Ways to reduce your health insurance premium

If you are concerned about the cost of your health insurance premium, here are some tips that may help you reduce the cost.

Buy as soon as possible

“Age is the most important factor in determining the prize,” says Chavez. “Insurance companies charge higher premiums to seniors. Therefore, the earlier you buy health insurance, the lower your premium will be. “

Choose the right plan

There are many different types of health insurance plans available. Some plans have higher rewards than others. You should choose a plan that has a premium that you can afford while still providing the coverage you need, says Chavez. “If you use your health insurance often, paying a higher premium each month will generally save you on the expenses you have to pay out of your own pocket, but if you rarely use medical care, opting for a low monthly premium with less coverage will likely get you. save money, ”says Brynna Connor, MD, health care ambassador at NorthwestPharmacy.com.

Participate in preventive care

Leveraging preventative care services, such as blood pressure testing and cancer screening, can also help lower the premium price, says Todd Ackerman, an independent agent at World Insurance Associates in Burlington, Iowa. This way, you can spot problems early before they become more serious and expensive and potentially increase the cost of your rewards. Fortunately, most health insurance plans cover preventative care.

Lead a healthy lifestyle

Ackerman also recommends doing your best to practice habits that can keep you healthy and lower your premiums. Eat healthy, exercise regularly, and try to get at least eight hours of sleep every night.

Stop smoking

The Affordable Care Act allows insurance companies to charge smokers up to 50% more for premiums. If you smoke, Pepa encourages you to quit to save on your premium (and improve your health in the long run).

Sign up for a Health Savings Account (HSA)

A healthcare savings account is a personal savings account for healthcare expenses that you own. The money you deposit is not taxed. If possible, Pepa recommends opening an HSA to help cover premium and other health care costs.

Sign up for an account on Healthcare.gov

Even if you already have health insurance, Dr. Connor recommends creating an account on healthcare.gov and following the instructions to apply for insurance. This way, you can learn about the potential insurance benefits available to you. Since grants change, it’s a good idea to renew your application every year.

Conduct an annual review

To find areas of overlap and reduce premiums, Anthony Puopolo, MD, chief medical officer of telemedicine company Rex MD, says he re-evaluates your prescription drug needs, amount of doctor visits needed, and tax-exempt options annually. .

Other important considerations for health insurance premiums

When exploring health insurance plans and premiums, Chavez suggests considering the following factors.

Your health

Healthy people are less likely to claim their insurance policies. For this reason, you will likely pay a lower premium if you are healthy than someone who is in poor health.

Your lifestyle

If you live a risky lifestyle where you smoke or engage in other dangerous activities, your rewards will be more expensive than someone who lives a healthier lifestyle.

Your location

Where you live can also affect your health insurance premium. “If you live in an area with a high cost of living, you will likely pay a higher premium than if you live in a less expensive area,” says Chavez.

Your family history

If you have a family history of diseases, such as heart disease or cancer, you will likely pay a higher premium than someone who does not have a family history of chronic disease.

Your job

If you have a job that requires you to travel or work in dangerous conditions, you will likely pay a higher premium than someone with a sedentary job.

“You really need to consider what you need from your health insurance plan and not plan to always be 100% healthy, even if you are young and have been in good health previously,” adds Dr. Connor. “Illnesses or injuries can happen unexpectedly, so be realistic about what you need and what you can afford.”


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