Is Your Premium, Premium?

How to Tell Whether You’re Getting Real Value for What You Pay

Your premium is the one health insurance cost you’re guaranteed to pay, every month, whether you see a doctor or not. So it’s natural to want the lowest one possible. But a low premium doesn’t always mean a good deal, and a high one doesn’t always mean better coverage. The real question is whether your premium is premium: whether you’re getting the right value for what you pay.

What Is a Premium?

A premium is the amount you pay, usually monthly, to keep your health insurance active. If your coverage is through work, your employer often pays part of it and your share comes out of your paycheck. If you buy your own plan, you pay it directly.

Premiums don’t count toward your deductible or your out-of-pocket maximum. They’re the cost of having coverage at all.

What Affects Your Premium?

For plans bought on the Health Insurance Marketplace, premiums can only be based on a handful of factors:

• Age: Older adults generally pay more.
• Location: Prices vary by state and county.
• Tobacco use: Tobacco users can be charged more.
• Who’s covered: Covering a spouse or children increases the premium.
• Plan category: Bronze, Silver, Gold, and Platinum plans balance premiums and out-of-pocket costs differently.

Your health history and pre-existing conditions can’t be used to raise your Marketplace premium.

Low Premium vs. Low Out-of-Pocket Costs

Health plans trade one cost for another. A plan with a lower premium usually has a higher deductible and out-of-pocket maximum, so you pay less each month but more when you need care. A plan with a higher premium usually means you pay less when you use your coverage.

Neither is automatically better. The right choice depends on how often you expect to need care.

An Example: Look at the Whole Year

Compare two hypothetical plans for someone who expects regular doctor visits and an ongoing prescription:

	Plan A	Plan B
Monthly premium	$300	$450
Premiums for the year	$3,600	$5,400
Expected out-of-pocket costs	$4,500	$1,200
Estimated total for the year	$8,100	$6,600

Plan A looks cheaper every month, but for this person, Plan B costs about $1,500 less over the year. For someone who rarely sees a doctor, the math could easily flip.

You May Be Paying More Than You Need To

Depending on your household income, you may qualify for premium tax credits that lower the cost of a Marketplace plan, sometimes significantly. Many people never check, and some stay on a family plan through work without comparing it to other options. It’s worth reviewing your coverage at least once a year, especially if your income, family, or health needs have changed.

Questions to Ask Before You Choose

• What will I pay in premiums over the full year?
• How often do I expect to see a doctor or fill prescriptions?
• Are my doctors and medications covered by this plan?
• Could I afford the out-of-pocket maximum if something unexpected happened?
• Do I qualify for help paying my premium?

When you look at the full picture, not just the monthly price, you can choose a plan that’s truly worth what you pay.