Did you know there are five factors that can affect how much your health plan’s monthly premium is under the health care law?
However, individual states can limit how much these factors come into play.
These five factors are:
- Age: Premiums can be up to 3 times higher for older people than for younger people.
- Location: Where you live has a big effect on your premiums. Differences in competition, state and local rules and cost of living are the reasons why.
- Tobacco use: Insurers can charge tobacco users up to 50% more than those who don’t use tobacco.
- Individual vs. family enrollment: Insurers can charge more for a plan that also covers a spouse and/or dependents.
- Plan category: Bronze, Silver, Gold, Platinum, and Catastrophic. The categories are based on how you and the plan share costs. Bronze plans usually have lower monthly premiums and higher out-of-pocket costs when you get care. Platinum plans usually have the highest premiums and lowest out-of-pocket costs.
In addition, insurance companies may offer more benefits, which could also affect costs. Furthermore, insurance companies can not charge women and men different prices for the same plan, nor can they take your current medical history or health into account when otherwise known as pre-existing conditions.
Millennials find themselves in the stage of life that may require them to purchase their own insurance. After having aged out of their parent’s insurance coverage and buying or renting a place to live, coverage needs may not be as black and white as one might think.
Knowing these five tips will help navigate through the sometimes-complicated policies out there.
- Shop smart for adequate coverage- Although cost is an important factor, having the coverage you need is equally important. You may be tempted to choose the least expensive plan but when it comes time to make a claim, you will see less of a financial benefit. In fact, a high deductible could cause a unexpected financial burden.
- Look for discounts- Often insurance carriers will offer discounts for bundling services, such as your home or rental insurance and your car insurance. In addition, there are discounts for being in school and getting good grades. Be sure to ask your agent about these and other possibilities.
- Fill in the gaps- An average policy will provide basic coverage but that may not be enough for all your coverage needs. For instance, a rental or homeowner’s policy may not cover personal items such as jewelry over a certain dollar amount. Be sure to ask if you have collectables or higher value items.
- Purchase life insurance- Life insurance is important, no matter how old you are. For a millennial, it may also save you money on a policy in the long run. It is especially important if you have children. Life insurance can help your family cover unexpected costs in your absence. If you have children, a life insurance policy can support their education or child care expenses.
- Consult an independent broker or agent- Talking with an independent insurance agent is the first step in finding the coverage you need and can afford. An independent broker works with multiple providers and can help you navigate the different policies and coverage. They can also help explain some of the terms and conditions that may be difficult to understand.
Beware anything that looks too good to be true!
Yes, your parents were actually right on this one.
Insurance is just math. If it’s cheaper, there is a reason. I have found that most of the time those reasons look like limits on care.
For example, many “cheaper” policies limit cancer coverage to $500,000. Sorry, but many
forms of cancer can eat that up in a month or less. In those types of plans, you would be
left holding the bag on the remaining cost of treatment, or WORSE, having the hospital or
physician refuse to treat you.
If you are looking at insurance options and one is much cheaper than the others, find out
why before you sign up! They often have clauses that lock you in for a year or may not be
qualified coverage so you can’t get in through the marketplace. It may be cheaper because
it excludes something you don’t care about (like maternity when you are done having kids),
but you need to read the fine print. And I mean the 130+ page document that outlines
Or ask a knowledgeable local agent who has probably read the contract for fun,
like the insurance nerds we often are.
To download the entire guide, click here.