Typically, the average cost of health insurance premiums for an individual can vary from $200 to $300 and for a family can range from $500 all the way up to $1100 depending on a variety of factors including where you live. Of course, there are differences between private, group, family and individual plans.
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While you may not have complete control over how much your health insurance premium costs, you may be able to save some money by varying your plan or increasing your deductible.
Group Health Insurance Premiums
Group insurance is typically offered through employment and as such you can often get a better price for your health insurance premium. With group insurance, everyone pays the same price for the same plan, although there may be a couple of different plans from which to choose. Families, of course, pay more than individuals, but again all of the plans are priced the same.
Since an employer can offer a health insurance company a relatively high number of employees to insure, the insurance company is willing to offer higher discounts and therefore better rates to that group. For example, as a private individual the insurance company has little incentive to give you a break on your health insurance premium, but when an employer wants group health insurance for its company of 50 or more people, the health insurance company is now willing to negotiate rates.
Also, with most group insurance plans, the employer usually pays a portion of the premium as an employment benefit. So, if your insurance premium is $500 your employer may pay $300 of it and deduct the remaining $200 from your paycheck. This greatly reduces the cost of your health insurance premium as well.
There are down sides to group coverage. Since everyone is covered, the healthiest members pay more to cover the risks of less healthy participants. Your flexibility and choices are also limited. For this reason, some healthy people seek out private insurance coverage for things like doctor choice and payment flexibility.
Private Health Insurance Premiums
Private health insurance premiums do not have the same negotiation flex power as group insurance policies so the rates are usually pretty set. However, you can lower your premium by increasing your deductible or by changing your benefits. If you increase your deductible then your premium will be lower but you will also have to pay more out of pocket before your insurance company will start to pay out benefits. Also, changing your plan may reduce your benefits and increase your out of pocket costs.
Catastrophic health insurance for an individual can average about $300 per month through private health insurance. This type of plan may also have a $1000 to $2000 deductible and only pay 70% once that deductible is met.
Doctor’s visits may also be your responsibility in full until you’ve paid your deductible. So, while $300 may be a low premium for health insurance, the benefits are also smaller and the money you have to pay upfront is larger. If you don’t need to use your health insurance then this plan could be good for you.
A lower deductible, say $500, may increase your premium to $500 for private individual health insurance. However, your insurance may also pay 80% after your deductible is met and include a co-payment for doctor’s visits of only $30 for your share. If you frequent a doctor’s office this plan may end up costing you less overall even though the premiums are higher.
The Average Cost of Health Insurance Premiums by State
Health insurance is a competitive market and so by shopping around you can usually find a lower premium for the same level of coverage. However, the range of rates that you encounter are going to be pretty standard based on the state where you reside. The cost of health insurance tends to reflect the general wealth of the state.
If the state has a higher cost of living then the health insurance is usually higher. For instance, in New York the annual premium for a family is $1100 per month while a family in Iowa averages a health insurance premium of $460 per month.
If you live in a state with a higher income and expense bracket, then it is inevitable that your cost of health insurance premiums will also be more expensive. You will not be able to combat the average cost of health insurance for your state, but you can try to reduce your health insurance costs by joining a group plan or modifying the deductible or benefit level of your private health insurance plan. The best way to reduce your health insurance premium is by shopping around for quotes from different providers.
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