What Determines Your Health Insurance Premium
Many factors go into determining your health insurance premium, and not all of them are under your control. When an insurance company considers what the cost of their coverage will be, they take into account the cost of the care provided to the patient, including the payouts they make to health care providers. They consider the cost of selling their services, advertising and marketing, and the cost of setting up a policy. They add in administrative costs, and account for a profit margin.
Finally, they look at the risk they are taking by giving the policy to an individual. What kind of health is that person in? That's where the things you can control come into play.
If you are a smoker, your health insurance premium is guaranteed to be higher than someone who doesn't smoke at all. Some insurance companies look at your exposure to second-hand smoke as well, and charge you extra if you are in the presence of it on a regular basis.
Your health insurance premium will be higher if you are overweight, as most health professionals feel that obesity - or even that extra five pounds - can account for numerous medical problems, such as high blood pressure and diabetes. Speaking of medical problems, if you do have one, it's considered a pre-existing condition. Having a pre-existing condition will cause your insurance premium to rise, may require a waiting period before benefits kick in, and might even make you ineligible for insurance at all.
Another factor some insurance companies consider if your line of work. If you are in a dangerous job, or one that can cause repetitive motion injuries, you might be declined for coverage or charged a higher premium than someone who has an easier work position.
Finally, a premium for an individual is usually higher than those who are involved in group plans. This is a result of something called 'adverse selection.' The reasoning behind it is simple: Not everyone in a group plan is going to get sick or injured at the same time! The insurance companies reason that there are enough healthy people paying their premiums, and thus not taking advantage of the insurance company payouts, to make up for those employees who are not in the best of health.
Each insurance company has a different set of premiums and criteria. Before you decide on a health insurance plan, shop around to find the one that is right for you.