How much does family health insurance cost on average?
It is a question that most families ask and seek an answer for. Americans pay different monthly or annual premiums for health insurance across the United States.
After the Affordable Care Act or Obamacare, the premiums are no more determined by gender and pre-existing health conditions. However, there are other factors that impact the insurance rates you pay. This article explores some of those factors and determines the average cost of health insurance for family coverage.
The total cost of healthcare
In order to calculate your total annual costs of healthcare, you will need an estimate for the medical services that you will require during the year. While it is impossible to calculate the exact amount, you can estimate the average amount that you usually spend or expect to spend.
After getting an estimated figure, you can compare various insurance plans at HealthCare.gov and pick the one that satisfies your family’s needs. Before you select a plan, you’ll get an option to keep the expected medical cost of each family member as low, medium, or high.
After viewing different plans, you will see an estimated insurance cost, including the premiums and out of pocket costs. According to the Health Insurance Index Report, the average monthly health insurance cost for a family of four under the ACA plan was $1,430 per month in 2019. Although the exact amount may vary because of factors like family members, location, and subsidies, the average figure still gives an idea of the plan’s impact on your budget.
How are insurance premiums decided?
The Affordable Care Act (ACA) ensures that health insurance providers do not discriminate on the basis of gender, medical history, or current medical status. Below, we present some factors that can significantly impact your insurance premiums.
A primary factor that affects your monthly/yearly premiums is your location. This is because health insurance varies depending on the state or county where you reside. The prices can also differ due to competition in a particular region.
Regions of the country with one or two insurance companies have low competition. Hence, the prices for these residents there tend to be higher compared to densely populated areas.
Some states, including New York and Vermont, don’t use age as a determining factor for health insurance premiums. However, it is a major factor for many states. Insurance companies use 21 as a base age and increase their prices for those in the 30s, 40s, and more. Adults over the age of 50 pay the highest premiums, with rates that may reach three times higher compared to younger people.
The use of tobacco also affects the insurance costs you pay per month. In some cases, the premiums can be 50 percent over non-smokers. The average insurance costs for a family health coverage will considerably depend on the number of smokers in the family.
The choice of the plan also influences the average insurance costs per month. Insurance plans are divided into metal tiers: bronze, silver, gold, platinum, and catastrophic. Each plan carries different premiums depending on the percentage of healthcare costs they cover.
Additional family health insurance costs
Beyond the monthly premiums, health insurance costs are also affected by the plan’s deductibles and out-of-pocket costs. Here is a summary of the additional costs that you have to pay in addition to the premiums.
- Deductible: It is the amount of money you spend on covered healthcare before your insurance kicks in.
- Copayment: It is a fixed amount paid for using a covered service. It can be paid before or after you reach your deductible.
- Coinsurance: The amount you pay for a covered medical service after reaching your deductible is called coinsurance.
- Out-of-pocket maximums: The limit on how much you can spend on covered medical services in a year constitutes the out-of-pocket maximums. Once you reach this limit, the insurance company will pay 100 percent for covered benefits. Out-of-pocket maximums can significantly reduce healthcare costs, especially for large families.
Depending on your annual household income, you may qualify for assistance to lower your insurance premiums. These include ACA subsidies that offer tax credits for people below the federal poverty line and face difficulties affording health insurance. Generally, large families with lower household incomes benefit the most from ACA subsidies.
Families with children can also qualify for the Children Health Insurance Program (CHIP). It is a federal-state initiative to ensure inexpensive healthcare coverage for families with children. There are other state and federal assistance programs for families with a hard time affording their health insurance. In general, you should qualify for assistance if you have a family of four and earn less than $99,000 per year.
Health insurance costs have increased drastically over the years, and there seems to be no possibility of bringing the costs down. Proper research and exploring different plans will help you find the best level of coverage for your family at the most reasonable price.