How much should you be spending on your health insurance? The answer to that question is more complex than you may think. Many factors affect your monthly health insurance plan costs.
These cost-influencing factors include your age, medical needs, financial and employment status, and location. But the health insurance industry jargon makes getting the answers you seek even more confusing.
So we put together this guide to the average costs of health insurance based on these various factors.
Read on to discover what you can expect to pay for private health insurance and how to lower those costs.
Factors That Influence The Cost Of Health Insurance
The cost of health insurance can be anywhere from a little under $100 to well over $800 just for individual coverage. Three main factors influence this wide range of health insurance monthly costs – your level of coverage, the type of plan, and your location.
Level Of Coverage
The level of coverage you enjoy determines your premium to a large extent.
Health plans offer different levels of coverage. Depending on your state of health and any medical conditions, this can affect your decision, as the percentage of costs covered can range from 60 to 90% and even 100% in certain cases.
Like the level of coverage that you have, the plan you choose will also affect your monthly expenses.
Besides the tiers of Bronze through Silver, Gold, and Platinum, each with ever-increasing costs, there are also Catastrophic health insurance plans for emergency medical treatment only.
Your location is another key factor influencing the monthly cost of your health insurance premium. This is mainly because the costs of healthcare and medical procedures differ widely from state to state.
Also, different states offer health insurance from various insurance providers.
Determining How Much You Should Pay For Health Insurance
How much should you be paying for health insurance? The oft-cited rule of thumb is that it should equate to about 10% of your annual income. However, this is not a hard-and-fast rule.
Your insurance needs will depend on factors like your health status, medical conditions, and whether or not you’re single or have a family to support.
How Much Should You Pay In Your 20s And 30s?
The older Gen X and younger Millennial generations are currently in their 20s and 30s. With youth, there is a higher incidence of good health, not to mention the trend toward healthy living in recent years. With these later generations waiting longer to start families, they are also mostly single.
This combination means that younger people probably don’t need the type of coverage that older individuals do. Health insurance that covers you for emergencies only, such as injuries sustained in a car accident, is probably of more relevance.
Lower Premiums, Higher Deductibles
Catastrophic health insurance is generally a good option for those under 30. It offers limited coverage but at a low monthly premium. You’ll find plans on the federal health insurance marketplace for $200 to $300 per month. The downside is that these affordable health plans often have high deductibles, meaning your upfront costs will be higher.
But once you reach your out-of-pocket deductible, your plan covers 100% of your medical costs.
This deductible clause is usually not a deterrent for the younger generations, as they often seek medical care less than older people. But if you find yourself in an emergency and unable to pay the deductible, you may rethink your decision to go with the lower premium catastrophic plan.
In your 40s?
In your 40s, you may have children and are financially responsible for them, and possibly also a spouse or life partner. The incidence of health-related issues increases as people reach their 40s and beyond. More comprehensive family health plans are of more use to people in their 40s.
The upside of life after 40 is that you are more likely to be well-established in your career and earn a good salary. People who often seek medical care, and those who need greater healthcare and can afford higher monthly fees, often choose the Gold or Platinum Tier plans on the health insurance marketplace.
Gold and Platinum insurance plans for individuals will cost you from $600 to just over $700 per month, and cover 80 to 90% of your medical costs, respectively.
Affordable Yet Comprehensive Options For The Over 40s
By the time you reach your forties, insurance premiums will be far higher than in your youth.
However, if you are healthy and fit and don’t go to the doctor often, a bronze-tier plan can meet your individual health insurance needs for a little under $400 a month on average. The Bronze health insurance plans will cover up to 60% of your healthcare costs.
If you qualify for tax credits, you could opt for the Silver Tier health insurance plans for your individual health insurance needs. With an average premium of about $540 monthly and 70% coverage, this may be the right plan for you. Affordable family plan options are also available.
Over 40s Living On A Minimum Wage
There’s hope for 40+ US citizens who earn a minimum wage or have fallen victim to retrenchment and are unemployed. The Affordable Care Act (ACA), or Obamacare as it is more commonly known, offers affordable healthcare plans for people(even those with families to support) who can’t afford top-tier plans.
How Much Should You Pay If You’re Over 55
Over the age of 55, you may have greater medical needs than in your younger years. Your health needs are now paramount, as your dependents branch off to start their own families.
Private health insurance plans that cover a wider range of chronic health conditions are the best fit for those over 55.
If you opt for off-marketplace health plans, they will be more expensive but you’ll have several options. On average, expect to pay about $800 monthly for unsubsidized private health insurance. That may be accessible to professionals in the over-50s age group, but not every older person has this luxury.
Senior Citizens & Retirees With Limited Funds
If you’re a senior citizen and survive on a limited pension, Medicare might be your best option. Medicare provides coverage for more than 60 million beneficiaries, and the majority are seniors and retirees over the age of 65.
To be eligible for the original parts A and B Medicare coverage, you must be a US citizen over the age of 65 years. It is a surefire way to bring down the average monthly cost of health insurance for a retired couple living on limited means.
How Much Should Employees Spend On Health Insurance Premiums?
Nearly half of US citizens are covered by employer-sponsored health insurance. This takes the burden of finding a health plan off our shoulders. However, the monthly contribution can differ greatly from one employer to the next.
Your monthly premium will cover you ( and usually your spouse and dependent children), and the cost is split between you and your employer.
Where You Live And Work Affects What You Pay
Employer size and even the state you reside in will affect your monthly health insurance cost.
The average health insurance monthly cost for employer-sponsored health insurance is just over $100 for single coverage and more than $460 for family coverage. However, your state of residence largely influences your premium amount.
You may want to reconsider where you live and work because of this disparity in employer-sponsored health insurance premiums.
For example, you could expect to pay under $100 in Idaho and almost $150 in Nebraska per month for single coverage. Or, if you live in Florida, the cost of health insurance will be twice the average premiums in Hawaii.
Are There Alternatives To Health Insurance?
What do you do if you don’t have health insurance? The average US monthly premium for unsubsidized health insurance on the ACA marketplace was $313 to $450 for an individual of 21 years, depending on the Tier level. For an older person or a family, the costs can be far higher.
Government-subsidized health insurance plans seem to be the answer. Some plans are free for US citizens in low-income households who meet the eligibility criteria. But what if you don’t qualify for the plan you want, have missed the sign-up deadline for the year, or have other reasons why you can’t apply?
There are some popular alternatives to traditional health insurance plans. The most common alternatives to health insurance are medical-cost-sharing programs and care memberships. However, these programs will not count towards tax breaks if such options are available in your state.
Cost-sharing programs are based on the group collection of monthly payments into a cost-sharing pool. Each program will have its rules and regulations, but they are generally easier to apply for than traditional health insurance.
Cost-sharing programs usually don’t cover preventive healthcare and instead aim to lessen the burden of large unexpected medical bills as they arise. They are available to both families and individuals and can be quite affordable. Many of these cost-sharing programs are ministry-based.
Care memberships are another alternative to traditional health insurance plans. These are sometimes also referred to as direct primary care or concierge memberships. These memberships are also available to both individuals and families.
Care memberships operate on a monthly subscription fee, enabling participants to access exclusive medical care. This usually entails getting your medical treatments and healthcare from pre-authorized medical practitioners.
Hospital Emergency Rooms & Community Clinics
Hospital emergency rooms in the US are duty-bound to offer medical attention regardless of health insurance status. Various community clinics nationwide also offer healthcare, medical treatment, and family planning services despite the inability to pay.
However, one can’t rely solely on these facilities. For one thing, they may not offer the services you need, when you need them. This is especially true of community clinics. The other pressing concern is that they are often overcrowded, with long waiting lines.
By applying for health insurance that meets your needs and that you can afford, you will avoid the issues of overcrowded clinics and shortages of services. Living without health insurance may be possible, but it’s never advised. Doing so increases the risk of not getting the medical help you need.
If, however, you have missed the deadline for applying for government-subsidized health insurance for the year, there’s another option. Short-term insurance plans can bridge the gap until you can apply for a health insurance plan under the ACA.
Frequently Asked Questions
What’s the difference between public and private health insurance?
Public health insurance is offered by the US government to eligible citizens. You’ll have to meet the affordability criteria to qualify. Obamacare and Medicaid are examples of public health insurance. They are the best solution to obtaining affordable healthcare when living on a minimum wage.
Private health insurance, on the other hand, is more costly. It’s unsuitable for people who earn a low income or are unemployed. Private health insurance is not government sponsored or subsidized, but offers more options than public health insurance.
Can I switch from private to public health insurance?
Your circumstances may change, and along with them, your financial status, too. If you find yourself unemployed and unable to continue your private health insurance costs, you can switch to more affordable subsidized health insurance.
It is sometimes possible to continue your employer-sponsored health insurance for a time, so discuss this with your employer when you leave the company. Alternatively, look at the health plans available on the government’s health insurance marketplace for similar plans and coverage options.
Can I stay on my employer’s health insurance if I leave the company?
You can stay on your employer’s health insurance for up to 18 months through the Consolidated Omnibus Budget Reconciliation Act (COBRA). However, whereas your employer used to contribute to your premium before, you will now be 100% liable for your premiums. Therefore, you’ll lay more than you did when you were employed.
Everyone should have access to affordable health insurance. This is why systems like Medicaid and Obamacare were created. But how much you spend on health insurance boils down to several factors, including your eligibility, the type of insurance plan you need, and your household circumstances.
Regardless of your age or finances, you can find a health plan that meets your needs and your budget. Here at Enhance Health, we make it easy to find affordable health insurance for you. Contact us today for the peace of mind that comes with the right health coverage at the right price.