Your Health Insurance Premiums Are Probably Going Up — Here's Why

Ever wonder why your health insurance bill seems so high? The United States spends more on healthcare than most developed countries, and it can be a major expense for individuals and families alike.

The good news is that some factors that may have influenced your health insurance premiums in the past no longer apply. 

Let's explore what really impacts your costs and debunk some common myths to help you keep more money in your bank account.

According to Healthcare.gov, only the following five factors can influence the price of your health insurance premium. Insurance companies know that older people are more likely to die, and they adjust premiums accordingly. 

Regulations from the Department of Health and Human Services allow insurance companies to charge adults 64 and older up to three times as much as they charge for a 21-year-old.

Any smoker will tell you that tobacco is expensive, but it can cost you much more than your daily pack of smokes or can of chew. Insurers can charge up to 50% more for tobacco users than for those who don’t.

If you’re only paying health care premiums for yourself, insurance will be cheaper than if you’re including your spouse and children on your plan. Dependent children can stay on your plan until they reach the age of 26 whether they are married or unmarried.

Health care costs vary considerably from state to state and even between cities. If you’re in a state with high costs like New York or Alaska, your premium may be higher than in cheaper states like Utah or Nevada.

Plans come in different levels of coverage, copays due, and deductibles, all of which affect the premium. Your employer may only offer a few choices in coverage levels, but the Affordable Care Act (ACA) Marketplace offers many more. 

These are typically marketed as gold, silver, and bronze level plans, with gold offering the most coverage and the highest premiums.

Some people believe that these factors affect the price of your health insurance premium, but these notions are myths.

Life insurance companies commonly ask about your family history of certain diseases or disorders, like cancer and diabetes. However, your family’s health conditions do not factor into your health insurance premiums.

Prior to the ACA of 2014 (colloquially referred to as “Obamacare”), health insurance companies commonly denied care to patients with known, pre-existing health conditions. 

This is no longer the case. Your insurer cannot deny you care based on a condition you had before coverage started.

The ACA also prohibits insurers from charging more or less based on your gender. Before this legislation, a 40-year-old female non-smoker was paying higher premiums than a 40-year-old male smoker. The total disparity was over $1 billion in 2012.

ACA legislation also required that pregnancy and maternity care be covered on all insurance plans, rather than as an add-on feature. Before 2014, pregnant women couldn’t get new health insurance at all in 45 of the 50 states.

Life insurance policies commonly ask for your height and weight to determine your body mass index (BMI). Despite this metric’s limitations, it's commonly used to determine whether a patient has excess body fat and therefore pose additional health risks. 

However, health care insurers do not use height, weight, or BMI in their underwriting.

Understanding factors like your expected healthcare use and residence can help you navigate plan options and potentially lower your premiums. 

The good news is that the Affordable Care Act has made coverage more accessible, regardless of pre-existing conditions. 

Remember, health insurance is just one piece of your financial well-being, so be sure to compare plans carefully and become a smart healthcare consumer.