 Personal Finance PowerPoint Presentation Health insurance costs Prepare to get financially fit by practicing personal finance Remember that insurance is part of our long term risk mitigation strategy where we follow the adage of measure twice cut once putting a formal plan in place looking something like this we set the insurance goals develop a plan to reach those goals put the plan in action review the result and repeat the process periodically we're now looking at the cost of the health insurance most of this can be found at investopedia how much does health insurance cost which you can find online take a look at the references resources continue your research from there this is by Amy Fontini updated March 2nd, 2022 how much does health insurance cost so we've been comparing and contrasting talking about different kinds of insurance noting that health insurance can be more complex due to the laws and regulations surrounding it and simply the complexity of health insurance or just the health care system in general so we've got to wrap our mind around all these different kinds of concepts so we can think about what would be the best coverage for us the family and how much with those coverages being costing so how much does health insurance cost across the United States American pay widely different premiums monthly for medical coverage and that's not too unusual to expect for many different things because there's a wide range of differences between costs in general throughout the country for a variety of reasons so though these premiums are not determined by gender or pre-existing health conditions thanks to the Affordable Care Act a number of other factors impact what you pay we explore those factors below to help you understand how much you might pay for health insurance and why so it's kind of interesting when we think about this from a legal perspective you kind of say or from a policy perspective we think about these kind of things where we say oh the Affordable Care Act is going to make it so the insurance company is going to force us to give us coverage for things like the like if we have pre-existing conditions and obviously we could think favorably about that because we would never want to be caught with pre-existing conditions and not be able to get health insurance for example but at the same time we know that the health insurance costs need to be paid some way somehow by someone and so whenever these kind of adjustments that happen and whenever we put these laws into place we add more complexity oftentimes to the health insurance which somewhere the costs are going to have to show their ugly heads and we'll have to deal with them so how are they calculated 10 factors that affect premiums so that's a amount you're going to pay of course for the health insurance many factors that affect how much you pay for health insurance are not within your control nonetheless it's good to have an understanding of what they are it's good for your own policy conditions and decisions it's also good for you to be able to understand how things work from a policy perspective so you can vote on it because this is clearly a big political issue in terms of health care and health insurance and whether insurance is a right or a privilege and health insurance should be paid for should it be market based or should it be a top-down kind of approach how will that affect our continued ability to increase our health insurance and be the best health insurance that we can do our health marketplace to be able to fight diseases and so on in the future so here are 10 key factors that affect how much health insurance premiums cost number one, state and federal laws legislation dictates what health insurance must cover and how much insurers can charge number two, type of insurance whether you are insured by an employer's group plan or buy it on your own is a factor in how much you'll pay so clearly the state laws are going to have an impact as well as the federal laws and then traditionally we have the coverage that was basically through the employer with the benefits kind of system that would be put in place possibly given the company benefits including the group coverage which can sometimes lower the premiums as well as tax benefits and so there's been kind of changes to that dynamic a bit more as time has passed especially since a lot of people don't work for the same company for their whole life like they kind of more often did in the past we got an interesting dynamic there number three, income level low wage workers tend to pay more through employers but may pay less through a federal or state exchange due to subsidies so now on the low income side of things it was often thought that if you don't have your insurance through an employer possibly because your part-time employee or something like that you might miss out on the group insurance through the employer or something in that way but if you buy it yourself then you might get these subsidies through the marketplace kind of system that is set up which could be beneficial on that side so number four, employer size and insurance is usually cheaper at large companies but why in part you would think that they could get the group policies and the group policies would be cheaper if you had a bigger kind of group that they can focus their policy calculation on so the bigger companies might then have the benefit of the better premiums and also be able to provide better benefits if they're a good big well-known company to incentivize people to work for them but that's kind of like a form of compensation but in any case number five state of residence premium prices vary depending on the state and county so whichever states you're in high-cost living, low-cost living for example number six, type of community premiums tend to be lower in urban areas than rural ones number seven, a county of residence some counties have just one plan while others have more competition which can help reduce prices now this is one of the other kind of methods or tactics that people argue over and try to lower the premiums so we got these arguments over the health insurance remember that one argument is obviously politicians are going to say I'm just going to make the insurance I'm going to stick it to the insurance companies and make them pay for more stuff but that's kind of hard to actually do because the costs are going to come out somewhere because someone's going to have to pay for it the other more practical I think long-term method would be like well how can we actually lower the costs in the long run and the two kind of strategies that people often come up with which are actually diametrically opposed in some ways one would be we're going to force all insurance to kind of be on a one kind of system so that we have a large pool we force people to be insured or pay for insurance so we don't have the free rider effect and that way that might drive down costs because we eliminate the free rider effect and we could get a larger pool and possibly drive down costs with the Affordable Care Act but then parts of that kind of got dismantled with the requirement for the health insurance so it didn't so that whole like the full plan didn't really go into play the other side would say well no we shouldn't be going to one one one side fits all plan and try to consolidate everything together under a more of a top-down approach we should be having more competition we should be saying that we're going to allow more competition possibly across state lines people to have different packages of insurance and so on different offers that would specialize towards different groups and that way the competition would be lowering the cost just on a free market kind of basis so you can see how that will play out from a political side number eight plan type preferred provider organizations those are the PPO's and platinum plans through the federal health insurance marketplace tend to cost the most obviously the more expensive plans are going to cost more because they do you get more benefits typically and they're more flexible oftentimes nine the age health insurance rates go up as a policy holder gets older with the large increases after age 55 that would make sense right because from the insurance's perspective they're trying to figure out how often they're going to have to pay out and the premiums will reflect that as you get older you would expect that you're going to have more medical expenses with the insurance will cost more tobacco use premiums for tobacco users cost up to 50% more so if you have tobacco use they're going to be they're going to hit that one because a bunch of studies are saying tobacco's not good apparently and so so that can increase the risk which you can see why they would want to take that into consideration because the payouts will go higher so that would increase the premiums the coverage offered by the employers contributes to several of the biggest factors that determine how much your coverage costs and how comprehensive it is let's take a closer look so this is where it's kind of tied to the employer this is like the more traditional set up how it's been traditionally set up the health insurance often being tied to the employer so the employee health insurance premiums if you work for a large company health insurance might cost as much as a new car according to the 2020 employer health benefits survey from Kaiser family foundation Kaiser found that average annual premiums for family coverage were $21,342 in 2022 which was nearly identical to the base manufacturers suggested retail price of a 2022 Honda Civic $22,715 workers contributed an average of $5,588 towards the annual cost which means employers picked up 73% of the premium bill for a single worker in 2020 the average premium was $7,470 of that workers paid $1,243 or 17% Kaiser included health maintenance organizations those are the HMO's PPO's point of service plans PPO's high deductible health plans with savings options those are the HDHPs and the SO's arriving at the average premium figures so we've talked about these different kind of plan options the PPO's typically being more expensive than the HMO's and then the high deductible plans typically being less expensive in general due to the high deductibles they're trying to get an average for this kind of calculation to figure this stuff out it found that PPO's were the most common plan type ensuring 47% they're kind of like the oldest traditional kind of plan with more flexibility to them so that kind of makes sense 47% of covered employees they got the HDHPs those are the high deductible ones covering and the SO's covering 31% of insured workers so we've got the average employee premiums in 2020 employee share we got the family versus the individual the per year $5,588 individual $1,243 for month for 66 family $104 individual of course whatever employer spend on their workers health insurance leaves left money for wages and salaries so clearly when you get your payment through your employer they might pay for some of the benefits for the health insurance but the reason they're paying the benefits is because that's a form of compensation you either would have got the health insurance if they're paying for the health insurance and or they could be deducting it if they're paying for it as a deduction but if they're paying for it then they could have given you that or they could have given you actually the money but oftentimes it's beneficial for both of you to get some of these benefits because you might have tax benefits on it if you can get paid in some other way other than the money because you could have tax benefits so workers are actually shouldering more of their premiums than these numbers show in fact one reason wages may not have risen much over the past two decades is because health costs have risen so much so in other words people you might look at your W because of this relationship and because there's tax incentives and because there's a benefit to get your these benefits as opposed to just wages, income, cash from your employer excuse your income calculation because obviously if they cover the health insurance benefits that's part of your compensation and if the health insurance is going up then the company is going to have to pay you more to pay for the health insurance which is basically a raise so at the same time because employees get to pay health insurance premiums with pre-tax dollars their burden can be less than that of people who buy their own insurance through the federal health insurance marketplace or their state's health insurance exchange for the purpose of this article marketplace and exchange are synonymous so which type of plan employees choose deductibles, choice of health care providers and hospitals and whether they can have a health savings account and HSA among many choices so for families in which both spouses are offered employer health insurance a careful comparison is critical one plan may be much better deal than the other so in other words you might be saying I got two people that work somewhere and one comparing the two health care plans if you might be able to get the whole family covered under one plan or the other that's something you want to spend some time on possibly because it could have a significant impact one being much different and possibly much more beneficial than the other the partner whose plan is not used can pocket the part of their paycheck that isn't withheld for medical coverage so or a couple with no children may decide that each should opt for their own company's plan as individuals coverage for couples rarely involves any sort of discount it's basically just a doubling of the individual rates so individual health insurance premiums on the exchange the federal insurance plan marketplace at healthcare.gov you can check that out if you so choose aka Obamacare is alive and well in 2021 despite years of its political foes efforts to kill it if offers plans from about 175 companies so notice that again you've got this whole debate we've talked about this whole health insurance kind of issue with the affordable care act went into play and then obviously when President Trump went in they're going to say they're going to repeal the report the affordable care act but they didn't really repeal it they kind of made some changes like not being able to penalize people that don't have health insurance for example and now you've got the Biden administration which you would of course think would be supportive of the Obamacare and so and that's where we stand so the saga continues with the healthcare laws and legislation so some 12 states and the district of Columbia operate their own health exchanges which basically mirror the federal site but focus on plans available to their residents people in these areas line up through their state rather than the federal exchange so you typically want to go to your state first I would think check it out there if your state doesn't have that then you can go to the federal so each available plan offers four levels of coverage each with its own price in order in order of price from highest to lowest they are labeled platinum gold silver and bronze the benchmark plan is the second lowest cost silver plan available through the health insurance exchange in a given area and it can vary even within the state where you live it's called the benchmark plan because it's the plan the government uses along with your income to determine your premium subsidy if any so the subsidy if you buy on the marketplace would be basically possibly tax related meaning they're going to try to lower the premium based on a tax credit calculation and then try to reconcile that all out when you file the tax return which can be a little bit confusing although beneficial to many people the good news is prices are coming down a bit according to the Centers for the Medicare and Medicaid Services the CMS the average premium for a second lowest cost silver plan decreased by 4% on healthcare.gov from 2019 to 2020 for a 27 year old 6 states experienced double digit percentage declines an average second lowest cost silver plan premiums for 27 year olds including Delaware 20% Nebraska 15% North Dakota 15% Montana 14% Oklahoma 14% and Utah 10% and from 2020 to 2021 the average second lowest cost silver plan decreased 3% from a 27 year old for a 27 year old for states Iowa main and Wyoming have average benchmark plan premiums increasing by 10% or more the American Rescue Plan Act of 2021 also instituted a special enrollment period SEP for marketplace plans from February 15 to July 31st 2021 for new consumers selecting plans through the healthcare.gov during this time the average monthly plan premium fell 27% from $417 to $85 thanks to the expanded subsidies it also helped to lower out of pocket costs deductibles fell almost 90% from $450 to $50 so digging deeper for price information however it's not a universally good news for more details we consulted the CMS 2020 health insurance exchange premium landscape issue brief it indicates 27 year olds buying silver plans saw their premiums increase by 10% or more in Indiana, Louisiana and New Jersey more importantly it reveals that the percentage exchange don't tell us much about what people are actually paying quote some of the states with the largest decreases still have relatively high premiums and vice versa in quotes the brief said quote for example while Nebraska's benchmark plan decreased 15% from the prior year 2019 plan to 2020 the average 27 year old benchmark plan premiums is $583 on the other hand while Indiana average 2020 benchmark plan premium increased 13% from prior year 2019 the average 27 year old prior year 2020 benchmark plan premiums is 614 in 2021 that trend continues the 2021 addition of the CMS brief notes that for example while Wyoming's average benchmark plan premium decreased 10% from prior year 20 to prior year 21 the average 27 year old prior year 2021 benchmark plan premiums is $648 the highest in the United States 2027 year olds can afford that kind of monthly premium by contrast New Hampshire's benchmark plan premium for a 27 year old is the lowest in the nation at $273.7 all of these numbers apply only to the 36 states whose residents buy plans through the federal exchange at healthcare.gov residents of California Colorado, Connecticut, Idaho Maryland, Massachusetts Minnesota, Nevada New Jersey, New York, Pennsylvania Rhode Island, Vermont, Wisconsin and Washington DC buy insurance through their states exchange so in other words when you're looking at this exchange data information you might want to look at the state first that you're in because that's the exchange for the state but your state might not have that and then you'd go to the federal side of things so we have more information about the exchange monthly benchmark plan premiums for a 27 year old in plan year 2021 in healthcare.gov so you can take a look at that by state if you're interested to see the state by state breakout obviously some of these costs will be dependent on the state that you're in which has a lot of these different factors that could be implied there's a link down here you could just take a look at Investopedia how much does health insurance cost by Amy Fontanier so the importance of the state's insurance so the good news is that many who purchase marketplace plans will pay lower premiums through what the government calls advanced premium tax credits otherwise known as subsidies so basically they're trying to say if you buy in the marketplace you might be able to get a credit a tax credit which you usually wouldn't be able to get the benefit from until you file your tax return getting the credit but they're going to try to recalculate the credit for the premium so they could lower the premiums by the credit which is basically an advanced payment kind of thing that you would get and then you'd have to reconcile that when you file the tax return so for taxes it could be confusing but obviously a credit subsidy could be beneficial at the same time in 2019 88% of the people who enrolled at healthcare.gov were eligible for advanced premium tax credits what are these subsidies the government applies to your health insurance premiums each month to make them affordable so they lower the premium by the advanced credit in essence giving you money in the form of lower healthcare costs that you're not paying out of pocket but rather getting the benefit from that you then need to reconcile when you do your taxes so essentially the government pays part of your premium directly to your health insurance company and you're responsible for the rest. You can take your advanced premium tax credit in one of three ways equal amounts each month more in some months and less in others which is helpful if your income is irregular or as a credit against your income tax liability when you file your annual tax return which could mean you owe less tax or get a bigger refund so if you're talking to a healthcare you know someone that's in the marketplace that's trying to set you up they're probably going to try to set up the credit so that it takes an even amount after each month but to do that they got to calculate what they think your credit will be which will be based on your income which is difficult so you might say well maybe I'll lower that amount or have more of a conservative or lower estimate pay more of the premiums and then possibly see if I can get more of that benefit of the credit when I file my tax return at the end of the year so that I don't end up in a situation where I owe money although the current it's kind of funny the current situation how is kind of incentivizing people to overestimate the the amount of your estimate because I believe that they actually waived the amount at least one time that if you overestimated meaning if you were to say oh whoops I overestimated the amount of my credit and I got too much taken out of my premium because I didn't know my income was going to be as high as it was and then at the end of the year when you file the tax return you would think that you would have to pay that back sometimes the government might say well we're going to waive in the past waived some of that kind of thing which incentivizes people to overestimate on their credit when they put the premium in so you might take that into consideration when you're doing your planning but you can't really plan on that being the case so the tax credit is designed to make premiums affordable based on your household size and income your credit is based on your estimated income for the year so if your income or household size changes in the year it's a good idea to update your information at healthcare.gov right away so your premium credits can be adjusted accordingly so if your income changes then again the whole calculation that they did is going to be wrong because they're trying to do an estimate which is hard because it's a tax projection which gets quite complicated these days so that way you won't have any unpleasant surprises at tax time nor will you pay higher premiums than you need to throughout the year health insurance deductibles what can you expect on top of premiums everyone who carries health insurance also pays a deductible this means you pay 100% of your health expenses out of pocket until you have paid a predetermined amount at that point insurance coverage kicks in and you pay a percentage of your bills with the insurer picking up the rest most workers are covered by a general annual deductible which means it applies to most or all healthcare services here's how general deductibles varied in 2020 you got the $1,644 average annual deductible for a single worker employee or plan $2,295 annual, that's the average annual deductible if that single worker was employed by a small firm $1,418 average annual deductible if that single worker was employed by a large firm so they got the medical individual deductible qualifying health plan withholding subsidies from healthcare.gov you got the bronze, silver, gold and platinum the tiers of the plans so individuals who are eligible for cost sharing reductions a type of federal subsidy that helps reduce out of pocket costs for healthcare expenses such as deductibles and co-pays are responsible for deductibles as low as $115 for those with household incomes closest to the federal poverty level a note on short term plans if you missed the annual enrollment period and don't have one of the reasons that qualify you for a SEP you may have to resort to buying a short term health insurance plan that lasts anyone from three months to 364 days so there's a window in other words when you can basically get the plan set up if you're not in that window then you still want to be covered during that short term time period might need a short term plan to do so because these plans tend to cost an average of 54% less than exchange plans according to the Kaiser Family Foundation you may also decide to opt for one if you can't afford health insurance through your employer or on the exchange maybe you're not eligible for a subsidy a buyer beware regulations vary by state but in general you can expect that pre-existing conditions won't be covered your application may not even be accepted if you have certain health problems so that pre-existing condition thing may not apply to the short term plans if you need that so be aware other common exclusions include maternity care mental health services and prescription drugs and be on the look at full dollar limits on coverage short term plans don't offer the same protection that exchange plans do and may not help enough or at all when you need coverage for the most so how do I find an affordable health insurance you might ask so group plans are generally cheaper than individual plans so if you are eligible for one through your employer your union or some other association that's the best bet in terms of coverage for that money so the first place you want to typically look is like do I have my employer do they provide health insurance plans that might be the first place to look because you might get cheaper amounts due to the group insurance and possibly tax benefits does my spouse have access to an affordable plan that might be the second or other place you would be comparing if that's not the option the public health marketplace established by the affordable care act offers affordable health insurance for individuals so you might go to the marketplace and you might first look at the state to see if your state has its own marketplace if not in that state then you might go to the state national or federal so in most of the U.S. you can sign up for the plan offered through the federal government via the healthcare.gov sites you can check that out however 12 states run their own marketplace and residents sign up via their sites so make sure you're checking out does your state have its own marketplace if not healthcare.gov so how much is health insurance a month for a single person it depends on a variety of factors ranging from your resident state age to the type of plan workplace or individual employer sponsored plans average to $622.50 a month with individual employees paying $105 of that for example individual plans on the healthcare exchange range from an average of $648 to $273 monthly what is the ACA health insurance marketplace that's the affordable care act established by the affordable care act ACA the health insurance marketplace is a platform that offers medical insurance plans to individuals families and small businesses 14 states and the district of cumbulumbia offer their own marketplaces also known as exchanges while the federal government manages a marketplace open to residents of other states marketplace plans are divided into four categories that range in cost and coverage though offered by private companies all must meet certain criteria established by the state or federal government so what's the bottom line what's the bottom line doc am I gonna die how much am I gonna pay how much you'll pay for health insurance isn't a number you can guess so clearly we're gonna get it depends here it's affected by many factors few of which you can control though maybe there's a case for leaving wyoming in search of a cheaper insurance so we got the high cost the high state cost for the health insurance in wyoming apparently so if you're buying a plan through healthcare dot gov you can use the government's tool for establishing which subsidies you'll qualify for so in other words you might first look for your insurance if you can get one from your employer or your spouse's employer because you might get the benefits or better coverage in those instances and or if you can't then you might be looking at the marketplace which if you're in a state that has a state marketplace you might go there if not go to healthcare dot gov marketplace and continue your research if you're buying insurance through your employer review your open enrollment information as soon as it's available so you have plenty of time to review your options attend any information sessions and use any comparison tools your employer offers to help you pick the most valuable plan you can afford