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How much does health insurance cost?

Understanding how much you will pay for health insurance is essential when shopping for the right health plan — one that works for your health needs and your budget.

What variables affect the cost of an individual health insurance plan?

Several factors can affect how much you’ll pay in premiums each month for a health plan. They can include your age, household income, whether you use tobacco or not, and the type of plan you choose. Note: Your health, medical history, or gender can't affect your premium.

Age

Monthly premiums can be higher for older people and lower for younger people.

Household income

Your household income may affect how much you’ll pay for coverage and which plans are available to you. When you apply for coverage, you’ll need to provide your expected household income for the year you want coverage.

Tobacco use

Monthly premiums can be higher for tobacco users than for those who don’t use tobacco.

Type of plan

While all health plans must cover the same essential health benefits, they differ in the monthly premium, deductible, copay, and coinsurance amounts.

There is more to health insurance costs than monthly premiums

In addition to the monthly premium, health plans also have out-of-pocket costs — deductibles, copays, and coinsurance — that members must pay when they receive certain services.

Deductible

The deductible is the amount you pay each year before your health plan starts paying for covered services. For example, if your plan has a $1,000 deductible, you will pay the first $1,000 of the costs for the care you receive. After that, your insurance pays a portion or all of your costs, depending on the plan.

Copay

The copay is the fee you pay each time you receive care — for example, $20 to see a doctor or $100 to go to the emergency room.

Coinsurance

Coinsurance is the percentage you pay for some of your covered services. If your coinsurance is 20 percent, then your insurance company pays 80 percent of the cost for a covered service, and you pay the remaining 20 percent.

Out-of-pocket maximum

The out-of-pocket maximum is the limit on how much you will pay out-of-pocket for covered health services each year. No matter what, you will not pay more than this amount.

Plan types

Health plans come in all shapes and sizes. Some of the more familiar types include Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), and Exclusive Provider Organizations (EPO). To help ensure that everyone has coverage for the services they need, the Affordable Care Act (ACA) requires that all health plans for individuals — no matter the type — cover ten Essential Health Benefits. Learn more about your plan options: Read What is an HMO? and What is a PPO?

Metallic categories

Every health plan is assigned a metallic category: Bronze, Silver, or Gold. The categories can help you compare your plan options based on how much you will pay towards your monthly premium and out-of-pocket costs when you receive care. In general:

  • Bronze plans have lower monthly payments, but higher out-of-pocket costs.
  • Silver plans have monthly payments that are lower than a Gold plan, but higher than Bronze. Out-of-pocket costs will be lower than a Bronze plan, but higher than a Gold plan.
  • Gold plans have higher monthly payments, but lower out-of-pocket costs.

Compare cost and coverage by category.

Why does health insurance cost what it does?

There is no one reason why health care costs as much as it does. It is instead the result of a lot of contributing factors, such as:

  • Chronic conditions. It has been estimated that 86 percent of health care spending is due to chronic conditions.1 While some conditions are genetic, many can be prevented by making better lifestyle choices, such as eating healthy, exercising, limiting alcohol consumption, and not using tobacco.
  • Advances in medical technology. Finding new and better ways to treat illness and injury is good, but the research and equipment can be costly.
  • Prescription drugs. The research and development of new drugs and treatments can be costly. And even when a more affordable generic equivalent exists, many people still opt for the more expensive brand-name version.
  • Aging population. As we get older, we need more medical attention. Philadelphia County, in particular, has a high population of older adults, with 15 percent ages 65 or older.2
  • Uninsured population. Hospitals and doctors are required to treat those without insurance, which means those with insurance end up footing the bill.
  • Medicare and Medicaid payments. When payments to doctors and hospitals drop below the actual cost of the care, health insurers are usually required to pay the difference.
  • Provider cost increases. While doctors and hospitals need to receive fair and competitive compensation, sometimes their cost increases exceed the rate of inflation.
  • Fraud and abuse. Health care fraud and abuse not only threaten the quality and safety of care, but it's estimated they waste billions of dollars each year.3 The National Health Care Anti-Fraud Association estimates conservatively that health care fraud costs the nation tens of billions of dollars annually.
  • Fear of malpractice suits. Some doctors and hospitals use more intensive diagnostic testing to confirm diagnoses and lower their risk for malpractice liability.

A health plan for you

Despite the rising cost of health care, Independence remains committed to offering plans that work for everyone.

If you have questions, please call one of our Independence Blue Cross representatives or refer to our Frequently Asked Questions (FAQ).