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What Are the Average Rates for Health Insurance?

Health Insurance Rates

For many, health insurance can be a costly expense. To make sure that you are getting the best coverage for your needs and budget, it’s essential to know what factors will affect the cost of your premiums each month.

The average individual premium in 2021 is $452 per month, as reported by Aetna. However, this number may vary depending on where you live or how much coverage options such as dental care, vision care, among others, might interest you. Learn about the cost of health insurance, health insurance plan tiers, the factors that affect the price, and more in our article below. 

How Much Will I Pay for Health Insurance? 

As of 2021, it’s been reported the average health insurance benchmark premium is $452 per month – a significant decrease from 2020’s cost of $462. Not only that, but data has shown reductions going back over the last three years, dropping from a rate of $481 in 2018 and $478 in 2019. 

The cost of health insurance is vastly different depending on whether you live in a state that’s known to have higher or lower monthly premiums, deductibles, and copays. 

Do you know the state with some of the cheapest health insurance? Rhode Island offers a Bronze plan for only $231 per month. This is thanks to their statewide reinsurance program, designed to help reduce insurers’ costs and keep people healthy in this affordable way. Wyoming, however, is a state that has lacked in Medicaid expansion, which has made health insurance very expensive. The Bronze plan can cost up to $519 a month. Because the state’s uninsured rate was affected, health insurance costs increased for everyone across the board. 

How the Cost Will Be Affected By Your Health Insurance Plan Tier 

Looking at health insurance plans under ACA, better known as “Obamacare,” there are four tier options. The Bronze, Silver, Gold, and Platinum tiers are based on a plan’s actuarial value. The actuarial value refers to the percentage of your costs each tier covers. 

Bronze Plan

With a monthly rate of $342, this tier covers 60%, leaving you to cover the remaining 40%. While it’s the least expensive tier option, you will have higher out-of-pocket costs than every other one. Your best off with a Bronze plan if you don’t need to see a doctor frequently or aren’t on any prescription medicines. 

Silver Plan

A Silver plan’s monthly rate is $495 and covers up to 70% of your costs. If you qualify for cost reductions and tax credits toward health coverage, this is a quality option. If not, the higher tiers are often worth it to help decrease healthcare costs in general.

Gold Plan 

This tier will cost $503 monthly and cover 80% of your costs. Gold plans are designed for people who need a lot of medical care or those that have been to the doctor more than once. These types of members will be more likely to hit their deductible limit and end up paying less for covered services than with Bronze or Silver tier plans in the long run.

Platinum Plan

Platinum tier plans offer the best actuarial value/out-of-pocket cost ratio of all insurance providers. Despite this, they’re not always popular because their premiums are too high for most people to afford them. Platinum tier plans offer 90% of your medical claims before deductibles. They have high premiums because they payout 10%. 

Catastrophic Health Insurance Plans

Catastrophic plans are a more affordable option for young adults who don’t need many services, but this insurance may not be the best idea because of high deductibles, which as of 2021 are $$8,550. This type of plan can provide coverage in case something catastrophic were to happen while you’re uninsured.

What Types of Factors Affect the Cost of Health Insurance?

What is the cost of a health insurance plan? The price depends on what limits are included in your policy, as well as a few other factors which include: 

Your Premium 

Your healthcare premium will be a monthly or annual cost that can vary significantly depending on what type of coverage plan you decide to go with.

Deductible

The role of the deductible is to protect you from having your money taken out as soon as a health insurance claim occurs. As such, it can be an important part of determining whether or not your policy will cover what costs are incurred. Studies found that families with employer-sponsored health paid a deductible on average of $1,644 in 2020, which may seem high but did prevent them from spending more than they needed on premiums if their plan didn’t provide enough coverage at first glance.

Coinsurance

Coinsurance is a percentage you pay for your medical treatment after the patient has met their deductible. Instead of a fixed fee, this amount is a percentage. This means that if they have a $10,000 treatment with a $3,000 deductible with a 20% insurance rate, they will pay only 20% of the $7,000 that remains after hitting the deductible. 

Copayment 

The average copayment costs often come in at $10 to $20 per visit. This is a fixed amount the policyholder has agreed to pay for before receiving medical treatment.

Out-of-Pocket Maximum  

The maximum amount you can pay for health services in a year is the out-of-pocket limit. Once this amount has been met, your insurance company pays all covered medical expenses until the end of that particular year. Deductible costs and coinsurance fees are what will go towards hitting your cap on payments.

All plans under the Affordable Care Act marketplace for 2021 have out-of-pocket maximums costing individuals $8,550 and families $17,100. Other factors you should consider that will play a part in health insurance costs include your age, annual income, the amount of coverage you require, and how many family members you include on your policy. 

The Costs of Different Health Insurance Options 

Out of the many marketplace insurance plans, there are other health coverage options you should be aware of. You can purchase private insurance from a company or your employer’s plan if you’re employed and even find ways to keep it if you lose your job.

Private Health Insurance

Most people think about health insurance and the Affordable Care Act (ACA) as interchangeable. But there is still private coverage available to you for those of us who are not purchasing ACA-regulated healthcare. Private health insurance plans might be more appropriate if you are not eligible for the ACA marketplace. Private insurers offer a wide variety of benefits that may appeal to your needs, like shorter wait times or elective surgeries. If you’re still searching for a wider variety of health care providers, consider going through an insurance brokerage which tends to find more options. 

Although there are some benefits to non-ACA health insurance plans, they come at a cost. You could qualify for savings such as tax credits or other income-based discounts not seen in private medical insurers. You can use these health care tax credits to lower your insurance costs by either paying part of your premium or providing a refund at the end of the year.

Insurance rates vary considerably by state, making it difficult to pinpoint an average cost. Make sure to compare quotes from multiple providers to see what private insurers offer in your area. 

Employer-Based Health Insurance

The Kaiser Family Foundation released in its annual survey that as of 2020, your employer pays $7,470 for single coverage, and they pay on average a whopping $21,342 per year for family coverage. If you are enrolled in Preferred Provider Organization (PPO) plans, you better start saving up because 2020 premiums increased 4% over 2019 rates, with singles averaging annually at 7,880 while families averaged $22,248 yearly.

COBRA Health Insurance

COBRA insurance will maintain your health care coverage if you lose employment-based healthcare. The COBRA fee is calculated based on your employer’s cost, plus an additional 2%.

COBRA insurance tends to be more expensive than ACA marketplace plans. COBRA covers dependents under certain conditions, like death or divorce, and is best suited for those who have good insurance through their job and can afford the price. Additionally, COBRA coverage usually has a limited activity time- typically 18 to 36 months at most- so make sure that you’re aware before signing up.

What Does the American Recovery Plan Act Do For Health Insurance Costs?

In light of COVID-19 the new $1.9 trillion stimulus package signed into law on March 11, 2021, is projected to significantly impact the healthcare premiums of millions currently unemployed.

The American Rescue Plan Act is expected to reduce healthcare premiums on some plans by as much as 20%. Americans will have access to healthcare for hundreds of dollars less than they did before. 

The stimulus plan expands tax credits on many healthcare plans, which can reduce your health care costs. Just for a frame of reference, a 45-year-old making $58,000 received no aid under the Affordable Care Act, but now they will receive a $1,250 tax credit. A 64-year-old making $19,300 paid $800 before the stimulus but now will pay $0 on a standard plan. 

It’s estimated by the Congressional Budget Office that an additional 1.3 million Americans who were previously without health insurance will now be covered, which means they’ll have a better opportunity of seeing their physician and receiving preventative care.

The U.S.’s uninsured population has historically had a w2ide variance from state to state, while COVID-19 has stalked the nation. In Ohio, for example, almost 50% of people without healthcare have disappeared in just a year – while North Dakota saw an increase of 54%.

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