Consider these two scenarios: you just got a new job you and are considering your employer’s health insurance coverage. Or, you’ve struck out on your own and are looking to insure yourself for the first time. You may wonder about the average health insurance cost. This article will help to give you a starting point for figuring out what you can expect to pay. There is no short answer to the average cost of health insurance because there are a number of factors that dictate what the cost for a policy may be.
First, you will need to understand the terminology used by health insurance companies.
Premium: This is a monthly fee that you pay for your health insurance. It helps to pay for your doctor visits, emergency care, and prescription medications. Depending upon your policy, this amount can vary widely.
Out-of-Pocket Expenses: This includes everything that you must pay out of pocket in addition to your monthly premium, such as a deductible, coinsurance, and copayment.
Deductible: The amount you are required to pay out of pocket each year for medical expenses before your insurance begins to pay. For example, your policy may have a $1,000 deductible. So, if you need to schedule an emergency appendix removal for a fee of $6,000, then your insurance will pay for $5,000.
Coinsurance: In addition to a deductible, your insurance may require you to pay a percentage of all medical and health-related services. For example, if your coinsurance is 20%, then that same appendix removal would cost the $1,000 deductible plus 20% of the remaining $5,000. You would pay $2,000 and your insurance would pay $4,000.
Copayment: This is a flat fee that your insurance requires you to pay before you can obtain a health related service. So, your appendix removal may cost you a $50 copay for the emergency room visit.
The national average for health care costs per person is on the rise. In 2007, the average cost was over $7,000 a year. Today, that number is approaching $9,000. Single coverage, provided by the employer, continues to rise as well, with employers spending an average of $5,000 per employee for health insurance coverage.
People who use their employer’s health insurance can contribute a portion of their paycheck to pay the premiums. This is convenient because the money comes out of your paycheck before you get it, meaning you have one less bill to worry about. On average, a person contributes over $700 toward their company’s health insurance premiums per year. Typically, employees have deductibles that range from $400 to $500, plus some minor payments for prescriptions and co-pays. This amount is low compared to what the employer is paying out of pocket to provide the insurance.
In 2014, Americans who choose to purchase their own health insurance policies were met with changes brought about by the Affordable Health Care Act. Now, the cost of your insurance is based upon your income and household size in order to lower your out-of-pocket costs such as deductibles, co-pays, and coinsurance.
As of March, researchers were able to examine how the premium rates have been affected in those states that have health insurance exchanges run by the federal government. For example, in Tennessee, a 27 year old purchasing an individual plan will pay $161 per month. A family of four in the same state will pay $584. The most expensive state to purchase a federal health insurance plan is in Wyoming. There, it will cost you $342 as an individual and $1,237 as a family.
Since health insurance is now required for every American, you face payments no matter what. If you choose to ignore the federal mandate, then you will be charged one percent of your yearly household income or $95 per person whichever is higher. Plus, if you need to go to the doctor, all the costs will come out of your pocket.
Every employer-based and independent health insurance premium includes a cost that is paid for by Medicare. Individual costs for health insurance can include out-of-pockets costs such as premium payments, deductibles, and co-payments, which can skew the average cost of health insurance because polices that have lower premium rates typically have higher deductibles and more of these out-of-pocket payments. Low premiums may seem attractive to people buying health insurance, but it is important to consider the costs and how they might affect your routine doctor visits.
The price for health insurance is dependent on these deductibles. The higher the deductible, the lower the up-front premium costs will be. For individuals seeking their own health insurance policies, the cost may be slightly higher because there are no group discounts. Individual plans may also take into account one’s existing health conditions, which also may influence the price.
For example, if you have a family of four and choose a plan with no deductible, you may have a plan with a premium as high as $12,000. However, if you choose a plan with a $10,000 deductible, then your plan may only cost you $5,000 annually. The advantage of having a higher deductible is that you are taking on the cost of medical risks yourself. You may be lucky and have only routine doctor visits during the year and not end up spending that much money out of pocket. However, if you become seriously ill, then you’ll need to pay that $10,000 deductible to doctors, hospitals, and pharmacies before your insurance plan will begin to help pay.
The average cost of health insurance is rising and the number is difficult to calculate because it depends upon so many factors. Take into consideration all of your potential or future health care costs before deciding which options are best for you. For example, if you have a chronic condition, are planning to become pregnant, etc. Each of these will affect your premium rates and the amount you pay out of pocket for services. In general, employee-offered health insurance can be easier and cheaper than individual plans, but that is not always the case. If you are looking to change health insurance coverage plans or are looking to save a dollar or two it may be a good idea to contact your local independent health insurance agent to help find ways to save some money.
Other Enhanced Insurance articles related to Healthcare:
Health Insurance (Includes Video)
Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.