Group plans cover a vast majority of Americans for their health insurance. These plans are usually employer-sponsored and have strictly defined benefits. For other Americans who aren’t covered by these group policies, there’s individual health insurance. Some options allow you to include family members on an individual plan, so while it’s still dedicated to one person’s health, those who are related to you can also benefit from your health insurance. The average cost for individual health care insurance in the US comes up to $456 per month, but these costs are given as an average. Depending on your choice of plan and taking advantage of subsidies that apply to you, you can potentially reduce that monthly cost.
The Affordable Care Act and The Insurance Marketplace
In 2010, the Obama administration signed into law the Affordable Care Act (ACA), which established the insurance marketplace or government exchange. Private insurers could then develop and sell plans directly to the individual to cater to their needs. While many insurers offer these ACA plans, they also provide personal insurance for individuals on the insurance marketplace. The government exchange usually only provides insurance plans for individuals at certain times of the year. By comparison, private insurance companies typically continue to offer their programs throughout the entire year.
ACA plans come in a variety of coverage options designed to ensure that even those who don’t have a massive amount to invest in insurance plans can still get affordable private healthcare. Prior to the ACA, insurance companies could leverage a clause known as pre-existing conditions to deny insurance coverage to those they considered risky. The ACA did away with the pre-existing condition clause and established a basis of service that each plan needs to adhere to. In all, there are four levels of ACA plans:
- Bronze: These plans offer the lowest premium but the highest out of pocket costs to the individual.
- Silver: The premiums in this plan category are still relatively low, but they still have some out of pocket costs that could be financially stressful.
- Gold: The cost of premiums for gold plans are comparably high to other plans, but the payback comes in lower out of pocket costs to the individual.
- Platinum: These offer the highest premium payments, but also the lowest out of pocket costs to the insured person.
The Cost of Your Health Insurance
We covered the average cost of private health insurance for individuals earlier, but your personal cost may be more or less than this average. The amount of money you pay for your healthcare boils down to a handful of factors. These factors are:
- Premiums: The monthly fee that you pay to your insurance company is known as the premium. As we noted in the previous section, the premium you pay usually varies based on the type of plan you choose.
- Deductibles: Before your health insurance takes over your bills, you need to meet a deductible. The deductible is an out of pocket cost that counts towards paying your healthcare bills. Copayments and coinsurance are covered in your deductible. Depending on your plan’s level, the insurance company will take over the coverage of the majority of your healthcare bills once you meet the deductible.
- Maximum Out-Of-Pocket Limits: All plans have a maximum amount that a person should spend per year on healthcare. If the amount you’re paying for your healthcare services gets to this maximum amount, then the insurance company covers 100% of your healthcare costs after that. The average maximum for individual plans in 2020 worked out to be $8,150.
How does Health Insurance Affect Your Expenses?
It’s easy to think that health insurance is there to take care of all your health expenses. On the contrary, even in the highest-coverage ACA plans, you will cover at least 10% of the cost of your healthcare. As you go down the scale of plans, you realize that the individual covers more of their healthcare costs. This increased payment for the individual means that while the premium is low, the total amount you pay works out to be much higher.
While you can usually get ACA plans on the government exchange, you aren’t limited to these plans. Many insurance companies offer better plans to individuals that can meet premium payments. If you have a decent income and are in relatively good health, there’s nothing stopping you from taking out a private health insurance plan with a company directly. However, some of these plans aren’t covered under the ACA, and you may still have to demonstrate the lack of pre-existing conditions to qualify for them.
Managing the Cost of Insurance
It’s true that you can’t possibly control when you’re sick or injured. However, you can control how much you pay in insurance premiums and other costs. There are several ways that people who depend on individual plans can try to limit their monthly fees:
- Government Subsidies: If you’re an individual health insurance client, you might qualify for a government subsidy to help you cover your insurance payments. The Advanced Premium Tax Credit subsidy can lower your premium payments, and the Cost-Sharing Reductions program can mitigate the amount you have to cover for your healthcare. These are built specifically to help those who have to take out individual insurance and are in the low-income bracket.
- Medicaid/Medicare: Both of these programs offer public assistance. Medicaid has a Children’s Health Insurance Plan (CHIP) available in every state to help low-income families with their insurance costs. Medicare caters to those over the age of 65 or to individuals that are disabled. The program helps to limit the expense of medicines and medical care to those that it covers.
Choosing the Right Health Insurance
The individual coverage market offers a lot of choices in both ACA and non-ACA plans. It’s essential for someone who’s choosing their own insurance plans to know what options are available to you. It’s a balancing act between the cost of your healthcare insurance and the benefits that the plan offers you. My Private Health Insurance has a handy tool to help anyone locate the best individual health insurance plan to fir their budget and their needs. It isn’t limited to ACA plans either, allowing you to look at the full scope of programs. Visit us today and see how our site can help you get the best value for your health insurance costs.