How Much Does Private Health Insurance Cost?

Private health insurance costs vary. The only way to find out how much private health insurance will cost you, as an individual, is to get a quote. But before you do, you may want to learn how insurance companies plan your rates.

Some US plans are more affordable. Others are expensive but provide wider coverage for your healthcare needs. And there are many factors a health insurer will consider before offering a price quote, including your age, location, and tobacco use. We will cover all of them today.

But first, it’s important to know that health insurance plans in the US are standardized. This is a rather recent development in the history of health insurance in the US. And it affects your buying decision directly.

Let’s take a closer look.

US Health Insurance Plans Standardized

President Obama signs Patient Protection and Affordable Care Act (ACA) in 2010, came into force in 2014.

The purposes of this law are to:

  • Make health insurance more affordable for low-income individuals and families
  • Improve patient privacy
  • Develop a uniform “standard” plan – so consumers can compare “apples to apples” when comparing coverage
  • Make sure that all Americans can afford health insurance – even if they have one pre-existing conditions such as asthma, or pregnancy

To achieve this goal, all US health insurers must offer everyone the same plan options. This plan is given the name “level” metal.

Metal Grades of US Health Insurance

Named for the precious metal, US health insurance must offer these plans:

  • Bronze
  • Silver
  • Gold
  • Platinum
  • (And then, the Disaster plan was added to this list)

So, to shop for health insurance smartly, consumers must understand that the Bronze plan with Company A is almost identical to the Bronze plan with Company B, C, and D. The same is true for all other tiers.

Private Health Insurance Fees: Metal Grades

PlanMonthly PremiumDeductibleIdeal Customer
Bronze$$$$$Young, healthy individuals with no health problems
Silver$$$$$A healthy family that needs regular care once in a while
Gold$$$$$Someone who needs regular maintenance every month
Platinum$$$$$This highest-priced plan covers most healthcare costs, is great for someone with several known health problems, and significant healthcare costs
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The metal grades above are determined at actuarial value (AV) of each plan. The Bronze Plan should pay about 60% of your annual medical expenses, leaving 40% of the bill to the customer. The Silver Plan will pay for about 70%, the Gold 80%, and the Platinum Package will pay for about 90% of your medical expenses.

  • No matter which plan you choose, there will always be costs associated with medical care.

Each package, regardless of metal grade, must provide coverage for standard healthcare needs.

10 Essential Health Benefits

Per Healthcare.gov The ten important health benefits are:

  • Outpatient (outpatient) care after hospital visit
  • Emergency services
  • Hospitalization (for surgery or overnight treatment)
  • Pregnancy, childbirth and newborn care
  • Mental health disorders, addiction and substance abuse
  • Prescription drugs
  • Rehabilitative services such as physical therapy
  • laboratory service
  • Preventive and health visits (such as immunizations)
  • Pediatric services, which may include oral and vision care for children but not adults

The plans may be nearly identical from one insurer to the next, but the price is not.

Private Health Insurance Costs Varies, Despite Standardized Plans.

The next important point that consumers should understand is that local markets, regions and networks affect the cost of your personal health insurance.

Let’s imagine a national health insurance provider, we’ll call it US Health. US Health operates in 48 states, and supplies all Bronze, Silver, Gold, and Platinum plans.

Their Bronze plans are more expensive in Los Angeles, Houston, New York City, and Miami – around $150 per month. But in Nebraska, their Bronze pack only costs $90.

It all comes down to the local cost of living, the average health of the local community, the competition between hospitals and healthcare providers, the distance a person may need to travel to reach emergency health care and many other factors.

Health insurance companies keep track of all this data and use it to make their premiums.

As for how much does health insurance cost, eHealth data shows that in 2020 the average cost of national premiums without taking into account subsidies is as follows:

  • Individual health insurance costs $456 per month;
  • The cost of family health insurance is $1,152.
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Who Decides How Much Private Health Insurance Costs?

Health insurance companies never guess at random premiums.

  • Insurers maintain a very detailed database of health care costs and health risks (more on this in a moment).
  • They share this information with each other.

The people hired by insurance companies to do this research, look for patterns and ultimately set the price for your personal health insurance, are called actuary. It’s a great job if you’re math-minded, and it usually pays well over $50/hour.

Now, sometimes certain regions or communities will have trends for certain health conditions. Eighty years ago, for example, steelworkers and shipbuilders on the East Coast were known to have mesothelioma or other lung conditions related to their work.

A more modern example is Flint Water Crisis in Michigan. While we don’t fully understand the future health implications for communities with unhealthy water, insurance companies do know that people in certain communities are more likely to have the condition in the future. And they will raise the premium on that network of care providers.

Health insurance companies cannot refuse coverage due to a condition, but they will put you in a risk group according to other personal information.

Factors That Determine Your Personal Health Insurance Cost

Healthcare.gov states that five factors affect the cost of your health insurance.

This is:

  • Age
  • Location
  • Tobacco use
  • Individual registration vs. Family
  • Package category (Bronze, Silver, and so on.)

It’s also important to be aware of issues that don’t affect the cost of your personal health insurance.

This includes (but is not limited to):

  • Gender
  • Medical history
  • Pre-existing conditions
  • Income or employment history
  • Race or country of origin
  • Child support or alimony obligation

However, in many states, insurance companies may use your credit score when calculating your premium. It is this juxtaposition of thoughts in health insurance pricing, which continues to drive much discussion. Many feel that credit scores should not be used to calculate a person’s health care premiums. There are substantial arguments for both cases. But that’s an article for another day.

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