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It seems like the U.S.’s healthcare crisis will continue throughout 2018, as Congress and the current administration have yet to decide whether to repeal or replace the Affordable Care Act. Recently, the Trump administration had threatened to withhold payments to health insurance companies. Reuters noted that health insurance premium fees may increase by 20 percent in 2018 if this plan follows through. If payments are terminated, it is expected that 5 percent of Americans will be living in places that have no insurer in the individual market.
As it is, people are already dealing with expensive premiums. The U.S. Department of Health and Human Services detailed the rising premium costs, citing that the average individual market premiums have more than doubled since 2013. From $2,784 per year in 2013, it soared to $5,712 in 2017, which is a 105 percent increase.
With these alarming costs, it can be helpful to examine how health premiums are typically calculated. The Balance summarized how the costs are determined, stating that it boils down to five essential factors: age, income, family size, location, and the type of health plan.
Health insurance plans under Obamacare fall into four categories: Bronze plan, which offers the lowest premiums but covers the least percentage of health care costs (60 percent; Silver plan, which covers 70 percent but has higher premiums; Gold plan, which pays 80 percent and has premiums higher than Silver, and; Platinum plan, which has the most expensive premiums but accounts for 90 percent of health care expenses. These provide a skeleton on the price range of your premiums.
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Age is then considered, and insurance companies charge higher initial premiums for older people. A person’s initial pricing will be based on the time the plan is issued. The premiums may decrease as you age.
Health insurers also take note of where the person lives because they have to take the cost of living into consideration. Healthcare costs may be higher in some cities than in others because of the average wealth.
The fourth factor insurers analyze is the person’s household or family size, since this helps them determine how much subsidies he or she should receive. Furthermore, some companies offer deals for couples to take plans from the same provider. Others meanwhile, give discounts if the person lives with other people over the age of 18.
Then of course, there’s income. If a person earns significantly less than the federal poverty level, he or she is qualified for expanded healthcare, meaning he or she won’t pay for any health costs.
Aside from these factors, other external factors come into play. The soaring prices of prescription drugs and medical treatment for example, may force insurers to increase their premiums. The provider network is also worth evaluating. When doctors, nurses, clinicians and other practitioners charge lower rates, the premiums may also follow suit. Interestingly, the mode of payment also influences the pricing of premiums. Some companies prefer electronic funds transfer, and will provide discounts to those who use this method.
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There are some health insurers that take unconventional routes in determining premiums. Their approach may be considered rewards-based, as the patient benefits from the policies. For instance, innovative startup Health IQ veer away from the traditional, and often outdated route of assessing family history before deciding on insurance premium rates. They believe in a more data-driven approach that focuses on the lifestyle the applicant leads as they feel this ultimately impacts their life. This also enables people who live a healthy lifestyle the chance of getting lower insurance rates because they eat clean, have lower health risks and can therefore reduce the chances of incurring medical expenses. On the other hand, insurance companies may also charge higher premiums for those who smoke regularly or have chronic conditions.
As the aforementioned indicators go to show, you can save a lot of money in the long run if you invest in a healthy lifestyle. It may be intimidating at first, because people perceive eating healthily to be quite expensive. But that’s a myth, because there’s always a way to stay frugal while going making a lifestyle choice. In case you need tips, The Frugal Lifestyle previously discussed how to buy organic food while saving money.
With so many aspects to consider, some people decide to remain uninsured. However, it’s still best to find a health plan that can offset the unbelievable costs of healthcare in case the unexpected happens. The important thing is to look for an insurer that suits your needs and preference.
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