With Covid-19 lingering over us, the fear and rise in cases has really shone a light on the importance of health insurance and pre-existing conditions. Previously, health insurance companies were able to use a lot of information about you to determine the costs of your monthly premium. Now, thanks to the ACA, health insurance companies can only use five factors when deciding how much your premiums will be:
- Age and Gender
It’s no surprise your insurance premiums rise as you get older. Although it may seem unfair, charging older people a higher premium usually stems from the fact that older people tend to use more health care services that younger people. Insurers could also take gender into account while deciding premiums. In some cases, premiums could be higher for men than women. Drinking and smoking are other factors that expose men to higher chances of heart ailments compared to women. Nowadays, the ACA prohibits charging more for health insurance based on a person’s sex.
- Geographical Location
What part of the country you live in also plays an important factor in your health insurance premium. If you love in a metro city, you could be paying a higher premium compared to someone living in a smaller, less congested area. Just like rent, a person living in San Francisco or New York is likely to pay more than someone living in Kansas City or Memphis. The rules of your state also affects premiums, as well as the amount of competition in the area. If many health insurance companies are competing for business, better premiums are usually available compared to living in an area where there’s only one option.
- Who’s Covered by the Plan
The more people your health insurance plan covers, the higher your premiums are. However, it may be more cost effective to purchase a family plan than have each member purchase a plan on their own.
- Tobacco Use / Family Medical History
If you smoke, use tobacco, or have used tobacco within the last twelve months, an insurance company may increase your premium. Depending on the company the surcharge can be up to 50% (yikes) of the cost of the premium. In other cases, individual or family medical history could also play a factor on insurance premiums. Premiums are higher for those who have pre-existing conditions because those individuals are more likely to get hospitalized and file a claim. However, because of the ACA and standardized products, pre-existing diseases may not have a significant impact because by default some policies will have to cover such diseases after the waiting period. Thank goodness the ACA affirms your medical history doesn’t affect your premiums!
- The Health Insurance Plan You Choose
When choosing a health insurance plant here are typically several categories available. Generally, the less you pay out of pocked for health care services, the higher your premium. Under the ACA, there are four categories of health insurance plans: Bronze, Silver, Gold, and Platinum. Bronze plans have the lowest monthly premiums and the highest out-of-pocket expenses, while the Platinum Plans have the highest premiums but lowest deductibles and out-of-pocket expenses. A fifth category — catastrophic plans — exists, but it’s only available to people under the age of 30 or someone with a documented financial hardship. These plans have the lowest monthly premiums and the highest deductibles.
Premiums costs matter, but they aren’t the only thing to keep in mind when choosing your plan. It’s also important to make sure your plan meets your coverage and health care needs — and that’s where we come in! Let us help you find the right plan for you and your family. Questions? Give us a call — our agents are ready and waiting to help!