Health insurance premiums can be quite different from person to person, even for identical plans. Find out why, and how you might be able to lower your rates.
Now that the ACA has passed, health insurance is something that nearly every person has or is at least planning on getting at some point in the future. To help them make informed decisions, they will need to be prepared to look for insurers that can offer them the best rates for them. Anticipate that some factors will weigh more heavily than others when it comes to how your insurance carrier will assess you as a risk and charge you accordingly.
Insurance carriers and especially health insurers are required by law to prove that any differences in pricing for identical products can correspond to a statistically provable difference in risk. In other words, if an insurer wants to charge more for something, they are going to need the math to back it up. Even still, some practices have been discouraged despite a statistical correlation because they end up punishing people based on factors outside of their control.
To help them determine how much they are going to charge a customer, the insurer will draft a risk profile of the applicant. This risk profile will be informed by information such as the policyholder’s medical history, their current medical status and other life factors that could have a bearing on their likelihood to file a medical claim.
At the end of this process, the insurer will present the potential policyholder with a coverage offer that includes the typical premium rate. The customer can then decide whether to accept the policy terms or continue shopping around for a better deal. After all, some insurers weigh factors more heavily than others when deciding how to offset risk with premium charges.
To help you anticipate higher costs regardless of the insurer and in some cases avoid them, here are the factors that they will look at the closest when determining your policy’s rates:
Younger people file fewer medical claims and are less likely to be affected by either chronic or acute health conditions. Even someone who has a prior diagnosis or a medical history of conditions will be less expensive for the insurer than someone who is older. As a result, policyholders over the age of 60 may pay as much as three times higher premiums than someone in their 20s.
Tobacco has a huge impact on one’s health. A smoker will be far more likely to encounter issues like high blood pressure, cancer, heart disease, stroke, hearing loss and countless other wide-ranging health problems. Smoking can have the single-highest impact on your mortality rate, second only to age. Expect to pay higher premiums if you are a smoker, although insurers are only legally allowed to charge around 50 percent more.
Quitting smoking can be a great way to bring your rates down, but realize that insurers may take a while to reflect this difference in your premiums. Carriers can wait from one to five years before smoking cessation has a positive effect on premium rates. The good news is that they will help you kick the habit by paying for smoking cessation kits.
Physicians use a measurement called the body mass index (BMI) to determine if you are an appropriate weight for your height. Despite criticisms leveled at the haphazard nature of this calculation, BMI still dictates whether or not you are considered overweight, underweight or obese. BMI has also been correlated to a rise in health conditions like diabetes, heart disease, joint problems, stroke and a whole host of other problems — although body fat percentage can present a stronger correlation.
Height by itself may also dictate your insurance rates to a small degree, since above or below-average heights can be linked to an increase in the risk of certain health conditions. Do not expect this factor to influence your rates too heavily, though, and many insurers will not consider it at all.
Some professions have a higher incidence of health-related claims than others. While workers compensation should usually handle these cases, the responsibility often falls on the employee when they cannot directly prove that their condition was the result of typical workplace duties.
Employees that have high-risk jobs like logging or mining will be more likely to encounter health conditions like back pain or joint trouble as they age. Likewise, people with sedentary jobs that require them to sit in a single position for hours at a time will likely experience a rise in conditions like high blood pressure or carpal tunnel syndrome.
Getting into the personal details of one’s life is a controversial practice in the health insurance industry. Some companies are instituting policies that reward clients for regularly exercising, while others are punishing clients who engage in risky hobbies like sky diving. Many insurers do not try to seek out information regarding your private life at all, so find a carrier whose policies you are the most comfortable with, and that benefit you the most.
It may sound strange, but the part of town you live in can have a statistical impact on your risk portfolio. Some areas of town have lower access to healthy foods, exposure to environmental hazards, long commutes that create stress or just a disproportionately large number of unhealthy residents. Regulators are trying to phase out this sort of discriminatory practice since it often lends itself to racial bias given that some areas have more concentrated ethnic populations than others, but many insurers will still use location as a way to influence pricing.
One legitimate argument for this practice is that regulations can often vary based on the county you live in, as can medical support opportunities. Additionally, competition from other insurers operating in the area can drive costs down, whereas higher costs of living can push them up. Factors like these make location-based assessments a double-edged sword, so find a carrier who will not make you uncomfortable with their standards.
Married people take less risks. They also tend to live longer and take better care of their health compared to single people. Getting married can decrease insurance premiums so long as someone new is not being added to the policy.
Plans will obviously charge more for additional people receiving coverage. Whether or not this added cost is cheaper than if each person had their own plan depends on the insurer.
Coverage can vary greatly according to the type of plan you choose. Some plans only offer claims for emergency services, whereas others cover everything from preventative medicine to gym memberships. The type of policy you choose will create a different way for the carrier to assess your risk profile.
Also keep in mind that with the ACA, certain plans bought on health exchanges will cost less for people with qualifying income levels. These plans are subsidized so that people falling within certain demographics will receive premium rebates.
One of the best benefits of the ACA passing is that insurers are no longer allowed to engage in certain discriminatory practices that were deemed acceptable in the past. The biggest example is pre-existing conditions. Before the ACA, people with chronic and ongoing health problems would have been systematically denied coverage because of their condition.
For example, anyone who was diagnosed with cancer before they had acquired health insurance would basically be forced to pay for their own health care for the rest of their life. Even patients that had health care before their diagnosis may have been dropped from their coverage once they began filing medical claims for treatment. Now, thankfully, these practices are illegal — although insurers may be permitted to increase the premium rates for pre-existing conditions.
Another practice done away with because of the ACA was premium differences based on gender. Women are more likely to have yearly exams, obtain prescriptions and have hospital visits than men mostly because of their reproductive functions. Since the drafters of the ACA felt that this placed an undue burden on women, gender discrimination was abolished.
Getting married, quitting smoking, moving and losing weight are all choices you can make to lower your premium costs. Everything else places you at the mercy of your insurer. Be sure to shop around when hunting for a policy to find one that will keep your personal costs low. QuoteWizard can help by putting you in touch with insurance agents and brokers who will be able to locate the plan that works best for your lifestyle and personal needs. These brokers may also be able to assist you in applying for a plan located on a state or government health exchange, making you eligible for subsidies. Click on the link below to get started.
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