6 factors that decide your health insurance costs (and 3 that don't)

Health insurance exists to protect people from the high cost of care, but that protection still comes at too high a price for many.

About 30 million Americans had no health insurance at some point in 2019, according to new Census data. Almost half the people who go without insurance say high premiums are a reason, a Kaiser Family Foundation survey found.

To figure out whether you could get health coverage for less, it’s important to understand what does — and what doesn’t — factor into your monthly premiums. Here are the facts as well as a few common myths.

Fact: Your age

Statistically, older people are much more likely to require medical services, and that translates to much higher premiums.

The federal government says older people could pay up to three times more than young people under a private plan. And younger applicants should keep in mind that if you’re under the age of 26, you can still get covered under your parents’ policy.

If you got your health care plan through your employer, you may have less to worry about. The Age Discrimination In Employment Act protects employees 40 years of age and older from getting gouged on benefits.

But it doesn't guarantee complete equality.

If an employer covers half of everyone’s premiums, older workers can still end up paying more because insurance companies will charge those people a higher amount to begin with. And in some circumstances, an employer could reduce an older worker’s benefits to keep the costs of coverage equal among all age groups.

Myth: Your health and medical history

Health insurers can’t charge you more, limit your benefits or refuse to cover treatment just because you have a pre-existing medical condition. That’s all in the past now.

Before the Affordable Care Act was signed by President Barack Obama in 2010, insurers could demand higher premiums if they expected you to require more medical attention due to diseases or health conditions like cancer or diabetes.

Under the current law, however, you won’t need to worry about higher premiums if you’re sick, injured or become sick or injured. This goes for both private insurers and employer- and group-based policies.

Note that the law, nicknamed Obamacare, has an uncertain future as it faces a new battle before the U.S. Supreme Court.

Fact: Where you live

Different states have different regulations for health care plans, and you could also pay more depending on the cost of coverage and amount of competition in your area.

Some states are happy to allow the federal government to run all aspects of their health insurance exchanges, while other states flex their own authority. For example, New York runs its own exchange and consistently rejects proposals for high rate hikes.

More populated states also tend to have more private insurance carriers, leading to greater competition and lower rates. Meanwhile, rural areas tend to have higher rates because it’s harder to provide the same coverage to fewer people spread out over a large area.

The average price of the cheapest exchange plan varies from as little as $219 a month in Rhode Island up to $590 per month in Wyoming, the Kaiser Family Foundation says.

Myth: Your sex

For many years, you could expect to get charged higher rates if you were a woman.

Since women require a range of health care services that men do not, such as maternity care and regular visits to the gynecologist, some states allowed this practice of “gender rating.” In some circumstances, insurers could even refuse coverage if a woman was pregnant.

Since 2014, the Affordable Care Act has banned gender rating altogether, so even private insurers can no longer use your sex to determine your premiums.

Fact: Your job

Your job, or more accurately your employer, plays a major role in determining how much you’re paying for health insurance.

Some employers will cover the vast majority of their workers’ premiums, while others pay less. The average percentage paid by employers is 82% for single coverage and 71% for family coverage, according to Kaiser.

On the other hand, if you’re under contract, self-employed or work for a small employer that isn’t required to offer a group plan, you’ll have to look for an Obamacare marketplace option. You’ll be responsible for the entirety of your premiums, unless you qualify for government subsidies.

Myth: Your weight

Obesity can increase your chances of developing all kinds of serious health problems, but it won’t contribute to higher premiums anymore.

The Affordable Care Act says insurers can’t discriminate if you have a pre-existing medical condition, and that includes obesity. You won’t be expected to pay more per month or be denied coverage.

However, it’s currently legal for employers to offer “health and wellness” programs that offer financial rewards for hitting weight-loss goals — meaning your slimmer colleagues could end up paying lower premiums. Today, 84% of large employers offer some form of workplace wellness program.

Fact: Your smoking habits

Even though smoking is addictive, insurance companies are allowed to use your habit to raise your premiums.

The Centers for Disease Control and Prevention says cigarette smoking is the leading cause of preventable disease and death in the United States, accounting for more than 480,000 deaths every year, or about 1 in 5 deaths.

The Affordable Care Act allows insurers to charge smokers up to 50% more than non-smokers through a tobacco surcharge. However, some states set the maximum difference at less than 50%, and several others, like New York and Vermont, prohibit this practice entirely. Some surcharges also increase with age.

Even if you have coverage through your company, you might not be off the hook. Some group plans charge extra for smoking, too.

Fact: Your family

Adding your spouse or kids to your coverage will increase your premiums, but you’re probably quite happy to do it.

On average, families under an employer-based policy pay $6,015 in annual premiums, while individual workers pay only $1,242, Kaiser data shows. But you’ll almost certainly pay less for a family plan than you would buying individual plans for your spouse and each of your children.

Bigger families with lower incomes may also qualify for larger subsidies and state or federal assistance when purchasing plans through the marketplace.

Fact: Your plan

If your employer’s purchasing your health insurance plan, you may not get much say in what benefits are provided or what premiums you’ll pay.

However, if you’re getting your own plan through the marketplace, you’ll have a range of options to consider. The more you’re willing to pay each month, the less you’ll have to pay when you actually need treatment.

• Bronze: Lowest premiums but you’ll pay an estimated 40% of your costs.

• Silver: Moderate premiums but you’ll pay an estimated 30% of your costs.

• Gold: High premiums but you’ll pay an estimated 20% of your costs.

• Platinum: Highest premiums but you’ll pay an estimated 10% of your costs.

Catastrophic plans are also available, but only to people under 30 or people with a documented financial hardship. They offer very low premiums but very high deductibles and you can’t use premium tax credits to reduce the costs.

So why do people buy their own policy?

Looking at the factors for group and private plans, you might be thinking: Why buy your own policy when employers are willing to foot most of the bill?

First off, if you’re a freelance writer or independent roofer, you simply don’t get that option. Or, if you happen to work for a small company, it might not be obligated to provide a group plan.

Not to mention, your coverage will end if you quit or get laid off.

Millions of Americans have already lost their benefits along with their jobs due to the COVID-19 crisis. Retirees need new coverage too, unless their work offered retiree benefits or they’re at least 65 and relying on Medicare.

All of those scenarios force people to buy their own coverage, but often people simply find affordable policies that suit them better in the private market.

You can go online and easily compare quotes from different insurers for free. It’s worth spending a few minutes to see what’s available, even if you’re just checking to make sure your group plan is really the best deal you can get.