What is a Health Insurance Premium?

What is a health insurance premium?

A health insurance premium is the fixed amount you pay your health insurance company every month. Premiums help keep your health coverage active. Like a subscription, you pay the premium, whether or not you use it.

How often do you pay a premium?

Premiums are usually paid monthly, although some health plans allow quarterly or annual payments.

What factors affect premium costs?

There are several factors that impact the health insurance premium cost. These include your:

• Age (older adults often pay higher premiums)
• Location
• Current health status
• Type of health plan you choose
• Drug/tobacco use
• Number of people covered

How do you choose a premium you can afford?

Before choosing a health plan, ask yourself:

• What is my current health status?
• On average, how much do I spend on health care each year?
• How much can I afford for out-of-pocket costs?

Take a look at your health care costs for the previous year and think about if you've had any changes to your health status.

If you have annual income available to pay for any potential out-of-pocket medical costs, a plan with a low monthly premium may be the right choice. Plans with low premiums often don’t begin covering costs until you’ve paid out-of-pocket for a large amount of your medical expenses. Other plans may have higher monthly premiums but cover a larger amount of your medical expenses.

How do you pay a health insurance premium?

If you have an individual and family medical plan, you’ll have to pay the full premium to your health insurance company each month. If you qualify for federal financial assistance, you may only pay for a portion of the premium.

If you have a medical plan through work, your employer may pay for part of your premium. You’ll need to cover the rest of the premium, and you may be able to choose to have that amount deducted from your paycheck each month.

Can you lower your health insurance premium?

If you have an individual and family medical plan (not through your work or employer), federal financial assistance may be available to help lower your out-of-pocket medical costs and/or your premium. To find out if you qualify, visit www.healthcare.gov.

You may get a lower premium by choosing a high-deductible health plan (HDHP) combined with a Health Savings Account (HSA).¹

Additional Health Insurance Premium Frequently Asked Questions (FAQs)

Can you pay your premium from an HSA?

You cannot pay your health insurance premium with funds from your HSA. These tax-free funds can only be used for out-of-pocket medical expenses. Learn more about Health Savings Accounts.

What are the consequences of not paying a premium?

If you stop paying your premium, your health coverage may be canceled. This would leave you responsible for the full cost of care.

What is the difference between a premium and deductible?

Premiums are paid regularly (typically each month) to make sure you keep your insurance coverage. A deductible is the amount you pay out-of-pocket before your health plan begins to pay for covered services.

A higher deductible usually means a lower monthly premium, while lower deductibles usually come with higher premiums.