How Much Does Health Insurance Cost?

What you pay for health coverage depends on many factors. Find out how much health insurance costs and how you can pay less!

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Most people want to know two things above all else while shopping for health insurance or otherwise weighing their coverage options.

One is what a plan covers. The other is what it costs.

Figuring out which medical treatments, services, and costs a health plan covers usually is easy enough to do. You review whatever documentation the insurance company sends your way. You look over its Summary of Benefits and Coverage. You check out its coverage agreement. And if all that doesn't do the trick, you pick up the phone, open an online chat window, or send an email and ask the insurer for more information.

Figuring out how much a health plan costs isn't always so simple. Sure, its premium--the amount you pay your insurance company every month--should be pretty obvious. The same is true of its deductible, which is how much you have to spend before the insurer begins to pay for anything. Those two costs don't provide a full picture of how much you'll pay for coverage, however. For that, you need to look at a few other components, too.

For instance, you also have to consider:

Copayments (or copays)--These are fixed amounts you pay for allowed healthcare services after you've reached your deductible. A typical example is the $10 or $20 many people pay per doctor visit after they've hit their deductible.

Co-insurance--This is another amount you pay each time you go in for a medical treatment or service (after you reach your deductible). When it comes to co-insurance costs, though, you usually pay a percentage, such as 20 percent, of the resulting bill rather than a fixed or set fee. So, if you have a treatment done that costs $10,000 and your deductible is $3,000, you might have to pay 20 percent of the remaining $7,000. (That is, if your plan's co-insurance amount is 20 percent.)

Out-of-pocket maximum--This is the most you have to spend on allowed care during a given plan year. Once you hit your out-of-pocket maximum or limit, your insurer picks up the full bill for all covered services.

All individual health plans sold on or off the marketplace or exchange set up by the Affordable Care Act (aka the ACA or Obamacare) must have annual out-of-pocket limits. Also, that amount can be no higher than $7,350 per person--or $14,700 per family--in 2018.

Even knowing a plan's premium, deductible, copays, co-insurance costs, and out-of-pocket maximum won't tell you exactly how much you or your family will pay for it, unfortunately.

Why? One reason is that some employers pay for a portion--or even all--of their employees' health insurance premiums. Another is that your income may make you eligible for "cost-sharing reductions" if you buy a plan through the marketplace or exchange.

You have to consider your health and the health of your spouse or children, too. If you need a lot of care, you'll spend more than you would if you had few medical needs. This is why it's important to estimate your yearly healthcare expenses while shopping for health insurance or weighing your plan options. (To do this, look at what you spent on medical care in each of the last few years. That will give you at least an idea of what you could spend in the next 12 months or more.)

Read our article, "How to Pick a Health Plan," to learn more about which type of health insurance might be best for you. Also, check out "What’s Covered? What Isn’t Covered?" for more information on medical services and treatments that typically are--and aren't--covered by health plans.

Employer-Sponsored Health Insurance Costs in 2018

Given all of the above, it's not possible to tell you how much you'll personally pay for health insurance coverage you get through a job, the marketplace, or directly from an insurance company in 2018 or beyond.

It is possible to give you at least an idea, however--thanks to a number of reports, surveys, and studies.

For example, the Kaiser Family Foundation's most recent Employer Health Benefits Survey points out that the average annual premiums for job-based health plans in 2017 were $6,690 for single coverage and $18,764 for family coverage.

These are just averages, of course. Some job-based plans have premiums that are far lower, or higher, than $6,690 for single coverage and $18,764 for family coverage. In fact, the Kaiser Family Foundation (KFF) survey found that 17 percent of covered Americans are in plans where the family premium is $22,517 or more. And 21 percent are in plans where that premium is less than $15,011.

Also, the figures shared here don't necessarily represent how much you'll spend if you get health coverage from an employer. Most employers pay at least part of their employees' premiums.

Don't take my word for it. The same KFF survey mentioned earlier reports that, on average, covered Americans contribute 18 percent of the premium for single coverage. And they contribute 31 percent of the premium for family coverage.

Heads up if you work for a small employer. Smaller firms' employees usually pay more toward their health plans' premiums than their counterparts at large companies.

Specifically, KFF found that Americans with health plans sponsored by small employers paid, on average, $1,550 more per year for family coverage than those who get coverage from large employers. Also, more than a third of employees at small companies pay most of the premiums for family coverage. Only 8 percent do so at large companies.

People working for companies with a lot of lower-wage employees also tend to pay more toward their health plans' premiums than those at larger companies.

It's possible, though, you'll be among the lucky ones and you won't have to pay any part of your job-based health plan's premium. That describes the situation of 14 percent of covered Americans, after all. (Or at least it describes 14 percent of those with single coverage.)

More likely, you'll be among the 60 percent who have to pay 25 percent or less of their employer-sponsored health plan's premium.

In the end, by the way, KFF found that Americans with employer-sponsored health plans paid an average of $1,213 toward single-coverage premiums and $5,714 toward family-coverage premiums in 2017. Both amounts are a far cry from the $6,690 and $18,764 highlighted earlier.

Marketplace Health Insurance Costs in 2018

How about health insurance bought from the so-called marketplace or exchange? Again, it's hard to say exactly how much you'll pay for one of these plans now or in the near future.

That's mainly because people shopping for a marketplace health plan usually have a lot of options.

For starters, there are the four "metal" categories. (More on those in a second.)

Then there are coverage differences among plans--even among plans of the same category. For instance, depending on how many plans are offered in your area, you might be able to choose between a number of network types. A few examples: Health Maintenance Organization (HMO), Point of Service (POS), and Preferred Provider Organization (PPO). (To learn more about these types of plans, read our article, "HMO vs. PPO: What do those letters mean?")

Also, what someone pays for a "silver" marketplace plan in California is sure to be quite different from what someone in Florida pays for similar coverage.

Still, something that can be said about marketplace or exchange health plans in general is they cost more now than they did last year or the year before.

This doesn't mean you'll pay more for one, though.

Yes, marketplace plan premiums increased quite a bit between last year and this year. In particular, the Kaiser Family Foundation reports the premium for the lowest-cost bronze plan rose an average of 17 percent in that time. The lowest-cost silver plan's premium rose an average of 32 percent, and the lowest-cost gold plan's premium rose an average of 18 percent.

But those figures don't account for the cost-sharing reductions or premium tax credits a lot of Americans receive when they buy a marketplace plan. (Eighty-four percent of marketplace enrollees benefited from these subsidies in 2017, to be exact.) With those rolled in, many people pay less for one of these plans than they did in 2017. That's true even of gold-level plans. In fact, according to KFF, the lowest-cost gold premium is cheaper than the lowest-cost silver premium in 478 U.S. counties.

Besides that information, here are a few details that will help you figure out the overall cost of a marketplace plan while you shop for one. (They'll also help you get the most bang for your buck, assuming that's important to you.)

The first thing you need to know: the "metal" plans with higher premiums--gold and platinum--pay for more of your care. The plans with lower premiums--bronze and silver--pay for less of your care.

Confused? Another way to explain it is that with gold and platinum marketplace plans, what you spend on monthly premiums may be high, but your out-of-pocket costs should be a lot lower. The opposite is true, in general, of silver and bronze plans. With those, you spend less on monthly premiums, but more on out-of-pocket expenses.

Still not sure which type of plan is right for you? Consider the following advice from  healthcare.gov:

Bronze plans

Bronze plans are best for people who don't need a lot of medical care and don't take a lot of prescription drugs.

Silver plans

Silver plans are best for people who qualify for cost-sharing reductions or premium tax credits. They can help you save a lot of money on your healthcare costs. What if you aren't eligible for these savings? Check out the gold plans available in your area, too. One of them actually may be a better--and cheaper--option for you.

Gold and platinum plans

Gold and platinum plans are best for people who see the doctor a lot or otherwise need a lot of medical care. They're also good for people who have to take a lot of medications. You'll spend more on monthly premiums, but you'll also hit your deductible faster. After that, you'll pay a lot less for covered services and treatments than you would if you went with a bronze or silver plan.

One more option for Americans under the age of 30: catastrophic plans. Again, these are best for people who don't need much medical care. Monthly premiums are low--lower than those tied to most bronze plans, actually. But you'll pay when you do go to a physician's office, lab, or hospital thanks to the sky-high deductibles.

If you still need help figuring out how much a particular marketplace plan might cost you, check out the Kaiser Family Foundation's Health Insurance Marketplace Calculator. After you enter your age, income, and family size, it'll tell you how much you could spend on a marketplace plan. It'll also tell you if you qualify for a premium tax credit. And it'll estimate your eligibility for Medicaid, too.

To learn more about all of your marketplace options, see our article, "Which Type of Obamacare Plan is Right for You?"

Off-Marketplace or Private Health Insurance Costs in 2018

Most of what's said in the section above holds true when it comes to health insurance bought directly from an insurance company.

The main difference is that when you buy an "off-marketplace" plan, you can't benefit from the premium tax credits that make some marketplace plans a lot more affordable.

Still, there are times when getting coverage directly from an insurer makes sense--and cents. In some areas of the U.S., marketplace options are limited or overly expensive. (Or both.) Off-marketplace plans may be more plentiful in those situations. They may be cheaper, too, depending on your coverage and medical needs.

The key here is, as always, to do your homework. Carefully review whatever information you can find about any plan you consider. And ask questions if the costs or coverage amounts aren't clear.

COBRA Coverage Costs

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. That law, passed in 1985, lets people keep their employer-sponsored health coverage after they leave or lose their jobs. It also helps people who lose that coverage due to divorce, death, or "aging out" of a parent's job-based health plan.

COBRA only covers you for a limited amount of time--usually no longer than 18 months. Which may be for the best, as COBRA coverage often is expensive.

How expensive depends on how much your employer (or your spouse's employer) paid for that coverage. Basically, when you sign up for COBRA coverage, you pay for your plan's premium all by yourself. You also pay a small administrative fee on top of that.

Keep in mind that most employers cover a portion of their employees' premiums. Some pay for the whole thing. In other words, don't assume that what you paid before you enrolled in COBRA is what you'll pay now. In most cases, you'll pay a lot more.

If you go this route, make sure you're clear on how much it'll cost before you sign on the dotted line. For many Americans, buying health insurance from the marketplace or directly from an insurer will be much cheaper. Also, if you choose COBRA and soon after decide it's too expensive, you'll have to wait until the next annual open enrollment period to get coverage elsewhere.

To learn more about this kind of coverage, read this article: "COBRA Insurance: What You Need to Know."

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