By Deborah Gordon. Updated on September 24th, Reviewed by Diane Omdahl. We want to help you make educated healthcare decisions. We adhere to strict editorial standards to provide the most accurate and unbiased information. Like monthly rent or mortgage payments for your home, health insurance premiums are the monthly cost of your coverage.
The premium refers to the set amount you pay no matter what services you use. Other healthcare costs vary depending on where you get care and who provides it. But there are many other healthcare costs. The premium is just one part of the total. Depending on your household income and situation, you may qualify for lower premiums through government-sponsored programs. Cost sharing means the share of costs for healthcare services that you pay yourself, 1 as opposed to what your insurance company pays.
Cost sharing typically refers to out-of-pocket expenses like deductibles, coinsurance , and copayments. Insurers try to set prices that will cover what they expect to pay for medical costs. Like a water balloon whose contents move from one end to the other when you squeeze it, health insurance costs can shift from one element, like a monthly premium, to another, like a deductible. A deductible is the first part of a medical bill that you pay before your insurance pays anything. Typically, the higher your deductible amount , the lower your premium, and vice versa.
You trade a set cost the premium for potential, less predictable costs if you use services the deductible. Typically, the higher your medical insurance premium, the less coinsurance you have to pay, and vice versa. Different services, providers, or types of visits require different copayment amounts.
Maximum amounts vary. Health insurance can be expensive, but paying a lower premium can cost you more in out-of-pocket expenses. The ACA makes premiums more affordable for low- and moderate-income people in two ways: Premium tax credits lower premiums for standardized Marketplace plans in any metallic tier bronze, silver, gold, or platinum. Menu Search button Search:. Medical care premiums: Fact Sheet : U.
Bureau of Labor Statistics Medical care premiums in the United States, March PDF The National Compensation Survey NCS program publishes comprehensive estimates on the incidence the percentage of workers with access to and participation in employer provided benefit plans and provisions of employee benefit plans.
A premium is an agreed upon fee paid for coverage of medical care benefits for a defined period of time usually 1 year. Premiums may be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor s depending on the plan.
Estimates are available for the share in percent of the premium paid by the employee and employer and the percent of workers with a contribution requirement. Table 1. Source: U. Your premium is a separate bill. Many people, particularly those with Affordable Care Act plans, get payment help with their monthly premiums. These are called advance premium tax credits , or subsidies. Subsidies can reduce your premium, or even cover the payment entirely.
Your eligibility for a subsidy depends on your income, while the exact amount of your subsidy is determined by the plans available in your area. Once you know your income, you can search for local plans to find your correct subsidy. Subsidies are automatically applied to qualifying plans. There are no extra steps on your part to make them work.
There are other ways to get payment help from nonprofits, local governments, and hospitals. And those with low monthly incomes may have easy access to Medicaid, which is another way to stay insured for minimal to no premiums. Health insurance premiums that you pay are a deductible medical expense. If you itemize your deductions instead of taking the standard deduction , then the premiums you pay will generally count towards the medical expense deduction.
Premiums paid on your behalf can be costly. You do not need to itemize your deductions to take advantage of this. Jane paid her premium each month, from July to December. Mike and Mary are both covered, along with their two children. Leaving your premium unpaid for more than 90 days will probably result in the company canceling your plan.
Paying a new premium does not restart the day clock if your first missed premium remains unpaid. Your health insurer will retroactively cancel coverage to the day of your first missed premium. They are rarely sent to collection agencies. However, if you stop paying premiums, any claims your insurance paid during your grace period will be sent back to you.
Medical bills frequently go to collections. These bills will impact your credit score less than other types of debt, but can cause serious problems that counteract the benefits of your insurance.
The premium of a health insurance plan refers to what you pay simply to stay enrolled, so insurance companies take this bill seriously. The true answer is probably lost to history, but the word premium has been used at least since insurance became commonplace in the 18th century. Premiums are the monthly price that you pay to stay on health insurance. Go ahead and compare plans to find out more. Hal was a former staff writer at HealthCare. We do not sell insurance products, but there may be forms that will connect you with partners of healthcare.
You may submit your information through this form, or call to speak directly with licensed enrollers who will provide advice specific to your situation. Read about your data and privacy. Our mission is to provide information that will help everyday people make better decisions about buying and keeping their health coverage. Our editorial staff is comprised of industry professionals and experts on the ACA, private health insurance markets, and government policy.
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