The U.S. healthcare system is quite complicated. If you’re confused by insurance options, you’re not alone. If you feel overwhelmed by the high costs and are unsure of how to navigate the complex pricing system, SABEResPODER is here to help.
We created this comprehensive guide to help you understand the costs around the U.S. health insurance system. With this information, you’ll be able to compare plans with confidence and find the best option at the right price point for you.
The U.S. Healthcare System
The United States healthcare system consists of public, private, and group health insurance options. Public plans are for low-income citizens, people with special needs, or elderly individuals who qualify to receive government assistance. Priced on a sliding scale, private insurance plans are also eligible for government subsidies. Group plans, on the other hand, require purchases through an employer or another organization.
Before deciding on the right type of insurance for you, it’s important to understand the industry’s terminology. This will allow you to compare plans and choose the best option for your family.
What’s a Premium?
The cost of health insurance is generally referred to as the premium. This is your monthly payment.
As a rule of thumb, plans with a lower premium tend to offer less coverage. If you have recurring medical expenses, a higher premium could cover a larger percentage of healthcare costs and be more convenient in the long run.
What’s a Deductible?
Your deductible is the maximum amount that you pay before the insurance company starts to pay for your benefits. For example, if your plan has an annual deductible of $500 and each doctor appointment costs $100, your insurance would start covering your medical expenses after five doctor visits.
It’s important to note that deductibles vary from one insurance plan to another. Some cover the costs of certain services or medication even if you haven’t met your annual deductible, while others only pay after you’ve paid the deductible.
What’s a Copayment?
Every time you receive medical assistance, you must pay a fixed fee for these services. This is known as your copayment, or “copay.”
Some policies offer copays for routine services, regardless of your deductible. For example, if your insurance has a deductible for emergency care, your doctor appointments may have a $20 copay even if you haven’t paid the deductible.
With other plans, you have to pay the total cost of all medical services until you reach your deductible. These types of plans require paying the deductible amount before you’re eligible for copays.
What is coinsurance?
Coinsurance is similar to a copay, but instead of paying a fixed fee, you’re responsible for a percentage of the cost of services rendered. If you have 20% coinsurance and have surgery that costs $5000, you’d pay $1000 out of pocket ,while the insurance plan would cover the remaining 80% (or $4000.)
What is the out-of-pocket limit?
Out-of-pocket maximum/limit refers to the maximum amount that a person pays before the insurance company starts to cover all their medical expenses. Expenses that count toward this limit include:
The following expenses don’t count toward the out-of-pocket limit:
- Monthly premiums
- Services that aren’t covered by the plan
- Out-of-network services
- Costs exceeding the maximum dollar amount allowed by your plan
Factors that determine the price of health insurance in the United States
Your premium cost depends on a variety of factors. According to HealthCare.gov, the following are some factors that determine your monthly insurance premium:
Federal and state laws
The Affordable Care Act (ACA) is a federal law that makes it mandatory for everyone in the United States to have health insurance or pay a penalty. Each state’s laws determine the maximum amount that a company can charge for their services.
The cost of your health insurance varies depending on how you purchase your policy. For the most part, it’s more affordable to join a group plan through your employer than to buy a private family or individual policy on your own.
The Size of Your Company
When you work for a large company, you may have access to a cheaper insurance plan. Because these firms have more employees in their group plan, they can negotiate insurance coverage at a lower cost than smaller companies with fewer employees.
The ACA guarantees access to health coverage at reasonable prices for those who qualify. This law establishes a sliding scale that uses your income levels to offer subsidies and tax credits to help those individuals who need it.
State of Residency
Premium costs also vary depending on the state where you live and the state’s specific laws regarding health insurance coverage.
County of Residency
Each county offers medical insurance. However, some only offer one plan, while others provide access to a variety of options. The number of plans available in your county affects the price that you pay for health insurance.
Living in an Urban or Rural Area
Medical costs and the number of options available can vary in urban areas with many healthcare options. while rural areas typically have limited access to services. That’s why insurance plans tend to be cheaper in larger cities.
Type of Medical Plan
The insurance Marketplace offers four levels of coverage. The following are the types of plans available through the ACA. We have listed them in order of cost, from the least expensive to the priciest:
Group plans available for purchase through your employer also have different price levels. The cost of these tiers varies depending on the deductible, copay, and coinsurance that you’re willing to pay.
The cost of health insurance plans go up as you become older. After age 55, health insurance premiums can triple in cost.
Tobacco use also affects your insurance premium. Smoking can cause your health insurance to be up to 50% more expensive than the premiums paid by non-smokers.Keep in mind: According to the ACA, the two factors that can’t affect the cost of your health insurance are gender and pre-existing health conditions.
Average Premiums per State
The following table includes the average cost of medical insurance in most states, according to Investopedia:
Average premium cost of Marketplace medical plans for 27 year-old individuals in the year 2021
Premium Tax Credit
According to the Internal Revenue Service (IRS), the Premium Tax Credit is a reimbursement that helps eligible individuals and low-income families pay for their health insurance through the Marketplace.
If you’re eligible, you can request this tax credit ahead of time. Doing so can help lower your monthly premium payments and makes insurance more affordable. Or, if you prefer, you can pay your full monthly premiums and receive this tax credit when you file your return.
The requirements to qualify for the Premium Tax Credit are:
- Have income within the parameters determined by the IRS.
- Subscribe through the government Marketplace.
- Pay for the monthly premiums that are not covered by the tax credit.
- Do not file taxes as married filing separately.
- Not be a dependent on anyone else’s tax return.
- Not have coverage through your employer.
- Not have coverage through a state-sponsored plan like Medicaid or Medicare.
Medicare and Medicaid
Medicaid and Medicare are the health insurance plans provided by the U.S. government.
Using federal and state funds, Medicaid provides medical services to low-income U.S. citizens. Eligibility requirements vary from one state to another and depend on your level of income and the size of your family. You may also qualify for Medicaid if you’re pregnant, over the age of 65, or disabled.
Medicare is the government health insurance plan for disabled individuals or those over the age of 65.
How Much Does Employer-Sponsored Health Insurance Cost in the United States?
According to Investopedia, the average cost of health insurance for a family of four in 2020 was $21,342. However, employers absorbed 73% of this cost, and employees only paid for the difference. This means that a family of four paid approximately $5,762 for their medical insurance.
Employee Medical Insurance Premiums
If you purchase your insurance policy through your employer, the company is responsible for a percentage of the premium and you pay for the rest. For your convenience, many companies deduct this payment directly from your paycheck.
Frequently Asked Questions
What do Health Insurance Plans Typically Cost in The United States?
According to studies conducted by the Kaiser Family Foundation, the average annual cost of individual health insurance plans in 2021 was $7,739. Family plans had an average annual cost of $22,221 for the same year.
For employees who purchased a high deductible medical plan through their work, the average annual premium in 2021 was $7,813. The cost of an equivalent family plan that year was $21,804.
How Can I Find an Affordable Health Insurance Plan That Suits my Needs?
Start by checking the HealthCare.gov plan finder. On this government website, you can compare the different plans that are available in your area. In order to use the website, you have to provide your income information. This data will help determine if you and your family are eligible for any subsidies or government-sponsored health insurance plans.
A Healthy Family is a Happy Family!
The cost of your medical insurance depends on the plan that you choose and how you purchase your policy. We hope that this article provides you with the necessary insights to compare available plans and the benefits that each policy offers. This will help you determine which insurance plan works best with your budget and that covers your medical needs.
We encourage you to also consider PODERsalud. With this medical membership, you and your family can access quality healthcare services for only $16.95 a month. PODERsalud offers significant discounts and confidential care from the comfort of your own home.Remember that the team at SABEResPODER can help you take control of your health. If you need more help, we chat to guide you and answer all your questions.