What is a health insurance premium? – Adviser to Forbes

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If you use health insurance to cover your health care costs, you probably pay a monthly premium each month. This fee entitles you to the coverage specified in your health insurance plan. Health insurance, including premiums, can be difficult to understand. Read for a comprehensive overview of health insurance premiums and how they work.

What is a health insurance premium?

The health insurance premium is the monthly amount you pay for the health insurance plan you have chosen. “Your premium is usually charged 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, income in the United States does not always keep pace with rising premiums and deductions. In fact, a study conducted by the Commonwealth Fund found that premiums and deductions in employers’ health plans consumed 11.6% of the average 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 an extensive network of providers, your monthly premium will be higher than it would be if the plan only allows you access to a handful of doctors and hospitals. says Pepa. “The price of your premium also depends on the number of dependents covered, your location, age, the specific category of the plan chosen and the use of tobacco.

Different types of health insurance premiums

Health insurance plans fall into four main categories, according to the Healthcare.gov Marketplace: bronze, silver, gold and platinum. “While Bronze plans usually have lower monthly premiums, their costs are higher,” says Pepa. “Platinum plans, on the other hand, often come with higher premiums and lower out-of-pocket costs.

Ways to reduce your health insurance premium

If you are worried about the price of your health insurance premium, here are some tips that can help you reduce costs.

Buy as early as possible

“Age is the most important factor in determining your premium,” says Chavez. “Insurance companies charge higher premiums to the elderly. 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. Some plans have higher premiums than others. You need to choose a plan that has a premium that you can afford, while providing the necessary coverage, says Chavez. “If you use your health insurance often, paying a higher premium each month will usually save you the expense you have to pay out of pocket, but if you rarely use medical care, choosing a low monthly premium with less coverage is likely to save you money. save money, ”said Dr. Brina Connor, health ambassador at NorthwestPharmacy.com.

Participate in preventive care

Benefits from preventative care services, such as blood pressure tests and cancer screening, can also help lower your premium, says Todd Ackermann, an independent agent at World Insurance Associates in Burlington, Iowa. This way, you can detect problems early before they become more serious and expensive – and potentially increase the cost of your premiums. Fortunately, most health insurance plans cover preventive care.

Lead a healthy lifestyle

Ackermann also recommends that you do your best to practice habits that can keep you healthy and reduce your premiums. Eat healthy, exercise regularly and try to sleep at least eight hours 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 give up to save money on your premium (and improve your health in the long run).

Sign up for a health savings account (HSA)

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

Sign up for a Healthcare.gov account

Even if you already have health insurance, Dr. Connor recommends that you create an account with healthcare.gov and follow the instructions to apply for insurance. This way you can find out about the potential insurance subsidies you have. As subsidies change, it is a good idea to apply again each year.

Performing an annual review

To find areas of overlap and reduce premiums, Dr. Anthony Pupopolo, chief medical officer of telex company Rex MD, says re-evaluating your needs for prescription drugs, the number of doctor visits required and tax relief options. each year.

Other main considerations for health insurance premiums

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

Your health

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

Your way of life

If you lead a risky lifestyle in which you smoke or engage in other dangerous activities, your premiums will be more expensive than someone who leads a healthier lifestyle.

Your location

The place where you live can also affect your health insurance premium. “If you live in an area with a high cost of living, you will probably pay a higher premium than someone who lives in a cheaper area,” Chavez said.

Your family history

If you have a family history of health conditions, such as heart disease or cancer, you will probably 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 hazardous conditions, you will probably pay a higher premium than someone with a sedentary job.

“You really need to consider what you need from your health insurance plan, not plan to be 100% healthy all the time, even if you’re young and healthy before,” added Dr. Connor. “Illness or injury can happen unexpectedly, so be realistic about what you need and what you can afford.

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