By Kelly Montgomery
This question would be much easier to answer if our health insurance marketplace were not so complex. Unfortunately, the average health insurance premium depends on a variety of factors:
- Insurance type: There are several different types of health insurance, including job-based coverage, individual policies, and government-funded plans like Medicare. The premium costs associated with each type of insurance varies.
- State: Many job-based plans, and all individual policies, are regulated at the state level. This means that each individual state has its own rules governing insurance policies bought and sold within that state. These rules can have a significant effect on premium rates.
- Age: In most states, insurers selling individual policies can vary premiums according to the age of the insured.
- Benefits: People often have a choice about what benefits they would like in their insurance plan. For example, many jobs allow employees to select from two or more job-based health plans. Insurance companies selling individual policies may have a wide array of plans available, including HSAs or high-deductible plans, as well as more comprehensive options. Medicare Part D allows seniors to choose from hundreds of prescription drug plan options. These options vary in price.
- Health Status: Job-based health plans cost the same for every employee on the plan, regardless of their health status. However, in most states, insurers can charge higher premiums for individual coverage (or deny coverage outright) if the applicant has a preexisting medical condition.
Most people looking into the average cost of health insurance are seeking an individual policy. The Association of Health Insurance Plans, an insurance trade group, conducts a survey of individual policies each year. In December 2007, they issued a report with information about average premiums sorted by age, as well as average premiums by state.
If you look at the charts on pages 7 and 8 of this report, you will see how much the average premiums vary. However, you can apply this information to your personal situation to get a “ballpark” figure. Please note that these figures ONLY apply to individual policies and do not take into account the benefits associated with the policies. This is an average, which means that some plans may cost a lot more, and some may cost a lot less.
The federal government tracks average spending on health insurance for people with job-based coverage. The most recent figures are from 2005, and indicate that the average individual’s job-based premiums were $3,991 that year, while families spent an average of $10,728.
- healthinsurance.about.com -