You choose your health insurance plan each year. You might have noticed that the premiums get higher or lower sometimes. Why do you think that happens? What is the reason behind some expensive and some cheaper health insurance plans?
After the ObamaCare or ACA was implied, the cost-determining factors of the insurance companies have been changed. Before you choose your insurance plan, you can find out if you can control the monthly premiums or not and what will be the cost of the premium next year.
There are many options to get your health insurance, but there are a few important factors that will determine the cost that you will have to pay.
These premiums have to be paid even if you don’t avail any of the health benefits. In the past, insurance companies got information about your medical history, body mass index, family history and other things to determine the cost of your premiums. But now, after the Affordable Care Act was passed, there are only 5 factors that can determine how much you will have to pay for your health insurance premiums.
Age of the Policyholder
As time passes and your age increases, your premiums also go higher. This is a major factor and old people have to pay way more money than a young adult. This ratio is often 3 is to one because old people are more likely to get sick and visit the doctor.
This might not seem fair to most of you but it is right from the economic point of view as the older you get the more visits to the hospital you’ll need. Many chronic diseases seem to develop as you age. But, if you are 60-year old and you are healthy, you would feel disgruntled for paying so much for the insurance policy.
The Location of the Policyholder
Just like the rent costs in different areas, the premium cost also varies. The competition of insurance companies can affect the cost. The more companies there are, the lesser you will have to pay. In case you only have 2 or 3 options, you will have to pay higher premiums.
Individual or Group Plan
The more people are covered in the plan, the costly it gets. If you want your family to be covered, you will have to pay more premiums compared to just paying for yourself. But, if you plan to buy individual plans for each member, you will have to pay more, so decide wisely what type of plan you need.
Your premiums can be increased if you are a smoker or you use tobacco in another way. You can claim that you have left smoking but your premiums can only be decreased in case you have not smoked for at least a year.
The Type of Plan
The type of plan you choose for yourself can highly affect the premium cost. There are several options including platinum, gold, silver and bronze policies that have different coverage and different payment options.