Health insurance is a contract that requires an insurer to pay some or all of a person's healthcare costs in exchange for a premium. More specifically, health insurance typically pays for medical, surgical, prescription drug, and sometimes dental expenses incurred by the insured. In addition, health insurance can reimburse the insured for expenses incurred from illness or injury or pay the care provider directly.
Some of the significant factors affecting health insurance premiums are:
- State and federal laws: State legislation dictates what health insurance must cover and how much insurers can charge. This can vary between states.
- The type of insurance: Whether you are insured by an employer's group plan or buy it on your own is a factor in how much you'll pay.
- Income level: Your nature of work and the amount of risk you're exposed to at work affect the premium charges. Due to subsidies, low-wage workers tend to pay more through employers but may pay less through a federal or state exchange.
- Employer size: If your employer sponsors your health insurance, its premium may vary accordingly. Insurance is usually cheaper at large companies.
- State of residence: State and county laws regulating brokers and other related policies also have a hand in determining premiums and affordability.
- Who is added to your plan: Individual plans are more affordable than plans that cover your spouse or dependents, but you should still purchase a separate policy for everyone in your family.
- Plan type: Preferred provider organizations (PPOs) and platinum plans through the federal Health Insurance Marketplace tend to cost the most.
- Age: Health insurance premiums are generally more affordable when you're younger. The rates increase as a policyholder ages, with the largest increase after age 55.
- Tobacco use: You'll typically pay more for health insurance if you use tobacco. In many states, premiums could be up to 50% higher than those paid by someone who doesn't smoke, according to the Kaiser Family Foundation.
Most of us may require medical treatment at some point in life. Hence, it is essential to have a good health insurance plan that caters to rising medical expenses. Health insurance can also help offset the costs of minor or major medical issues, including surgeries or treatment for life-threatening illnesses. It is crucial to have comprehensive health insurance coverage, to meet these expenses and avail quality healthcare facilities. It can also keep you from incurring medical bills you can't afford to pay out of pocket.
