Private health insurance can be a high cost to many individuals monthly. Most employed individuals get their health coverage from employer-sponsored health insurance plans. However, for others who aren’t covered by these plans, their only option is to hit the Health Insurance Marketplace and hunt for a program that suits your needs. Luckily, since the introduction of the Affordable Care Act (ACA) in 2010, there’s a broader range of insurance plans that can cover individuals. You may need individual coverage if you fall into one of these categories:
- Just turned 26: If an insurance holder has kids, they are covered up to 25 years of age. If they don’t have their own employer-sponsored health insurance at the end of that year, they’ll need to get a plan of their own.
- Part-Time or Self-Employed: Self-employed individuals don’t get covered since they work for themselves. Part-time employees are also usually not covered under an employer’s group plans.
- Unemployed: If you recently lost your job, and you’re not a payee into a Consolidated Omnibus Budget Reconciliation Act (COBRA) plan, then you’ll need to pay for your own private health insurance.
Factors Affecting the Monthly Cost of Individual Health Insurance Plans
Pinning down a particular number for monthly private healthcare insurance costs is a challenging prospect. The price of insurance in each state varies based on several factors. However, regardless of your state, you can get a good handle on how much you’ll be expected to pay based on several elements. Among these are:
Monthly premiums are what you pay to maintain your health insurance. Premiums can be a crucial part of determining your monthly health insurance expenses. In many cases, buyers believe that the premiums for private health insurance may be more expensive than for employer-covered plans. However, research has shown that employer-assisted insurance in 2019 averaged out at $603 per individual and $1,725 per family. The surprising results for private individual plans ($440) and private family plans (1,168) showed that the private insurance premiums might have actually cost a worker less, on average.
Deductibles and Cost-Sharing
A deductible is an amount you pay to a health facility before your insurance takes over the coverage. The average annual deductible for an individual plan in 2020 is $4,364, with family plans costing an average of $8,439 per year. These average costs can be misleading since the deductible you pay on your plan is decided by the provider, and the type of plan you choose to go with. Some deductibles may even be as low as $0.
Copayments are fixed amounts that you’re required to pay for your covered services. These may vary, but are usually a single amount, without any fluctuations. Once you’re not over your coverage limit, you’ll still have to pay the copayment for each service you access. Coinsurance is a similar type of payment, but it’s not a fixed cost. Instead, it’s a percentage of your bill, calculated after you’ve met your deductible. If you haven’t met your deductible, the coinsurance payment doesn’t apply. Again, as with deductibles, the coinsurance percentage changes depending on the plan you’re using.
Maximum Out-of-Pocket Limits
Designed to be a safety net for the most vulnerable individuals, a maximum out-of-pocket cost refers to the most that you’ll have to pay over the course of a year out of your own funding. If your healthcare expenses exceed this amount (including deductibles, copayment, and coinsurance), the insurance company agrees to cover the full amount of your treatment. For the year 2020, the maximum out-of-pocket limit on an individual plan can’t surpass $8,150. For a family plan, the limit is $16,300. Individual programs may adjust these numbers up or down, depending on the provider and the level of the plan.
The Balance of Cost to Benefits
Your monthly insurance costs will vary, and the primary reason for that variance is the premium you pay. Since a premium is calculated monthly, you can factor that into a concrete cost that you can budget for. If you access any of these healthcare services that your provider offers, you may be required to pay copays, coinsurance, and a deductible. All of these would significantly impact your monthly insurance costs. Thus, for any individual, it can be challenging to draw an average cost value. However, for premiums, there’s a reliable comparison that can be made.
Generally, the more benefits a provider offers in a particular plan, the higher the premium. A higher premium also typically translates to a lower deductible and lower copayment and coinsurance costs. There’s also a lower out-of-pocket maximum. Lower premiums tend to be the preferred option for many individual health insurance plans because it seems to limit the monthly cost. If you never take advantage of any of the covered services, your monthly fee remains the same throughout the entire year.
However, if you need to access healthcare at any time, a lower premium plan becomes a burden rather than a help. Lower premiums usually mean higher deductibles, copays/coinsurance, and a much higher maximum out-of-pocket cost. When considering the balance between spending and saving, a low premium plan is only a better option in theory. Practically, high premium plans offer better coverage and lower overall costs if you access the services. With high premium plans, you are more likely to upkeep your health, since you’re not penalized for accessing healthcare.
Determining the Right Plan
Private health insurance doesn’t have to cost an arm and a leg every month. However, your monthly costs are more than just the value of your premium. Consider the amount you’re likely to spend in deductibles and other out-of-pocket expenses as well. These can add up quickly to make your monthly cost for health insurance overwhelming. My Private Health Insurance provides a handy system for you to check up different providers and the value of their plans to make a more informed decision. Check us out today to access insurance that will help you save on your monthly insurance costs.