Why is your health plan costlier than others?

Looking for health insurance and confused about different health plans? Confused why your medical policy costs more than your friend’s? Wondering how is your premium calculated? Here is an overlook on the factors that contribute towards the premium on your health policy.

1. Locality
Insurance laws vary from state to state. And so does the cost of health plans. Price of the premium depends heavily on the regulations of the state and therefore the costs differ from state to state.

2. The type of Health Plan
The cost of an individual health policy will differ from a group plan to a family policy. Government sponsored health plans will have significantly lower premiums as compared to private policies. Accessing a health plan at work will be cheaper as the cost of the premium is shared by the employee as well as the employer. Similarly an indemnity health plan is much more expensive than a managed healthcare policy. Even in managed health plans, a HMO is cheaper than a PPO or a PoS.

3. Age
It is the single most important factor that determines the cost of the premium. The older one gets, the more his chances of falling sick and therefore the cost is higher. Therefore it is always advisable that the sooner one buys a health plan, the better and cheaper it is.

4. Lifestyle
Drinking or smoking puts an individual at a greater risk of health problems. Being overweight is also considered to be a health risk. Thus a person who smokes or consumes alcohol or is obese has to pay more for his health coverage than others.

5. Health Status
People with pre-existing medical conditions are often charged more for their health plans. Their applications are rejected quite frequently as well. Residents with existing medical conditions normally pay a higher premium than those who do not suffer from any illness.

6. Coverage
A short term plan or a policy that caters only to a specific disease will have a much lower premium as compared to a regular medical policy.

7. Added benefits
This applies mainly to individual health plans. Individual policies can be customized according to personal health needs of the person. So if a person has needs more benefits or extra coverage, then he would have to pay a higher premium.

Health plans are not ‘one-size-fits-all’ and so are the costs of the premium.  The price on the premium depends on a various factors and the combination of these factors decides the price of that particular health plan.