Health Insurance Premiums

By: EconomyWatch Content   Date: 15 February 2010

About The Author

EconomyWatch Content

Follow The Money

EconomyWatch, Content Team

 

  • Dot Div
  •      

Health insurance premiums are the amount of money that one pays to an insurer to buy health protection and coverage under certain terms and conditions. Health insurance, being a contract between the insurer and the insured, uses various quantifiable factors for calculating the premium amounts. In the current market scenario, bigger health insurance premiums imply lesser deductibles and bigger coverage.

 

How Are Health Insurance Premiums Calculated?

As health dwindles with growing age, the age of the insurance seeker is the first point of consideration for insurers. Also, as the need for regular doctor visits increases for the elderly, it translates into frequent coverage, and the higher premiums reflect it.

Besides age, the following factors are considered while calculating health insurance premiums:

·        Medical history: Even though most insurance plans do not offer coverage for pre-existing conditions, the existing conditions make a person a highly risky coverage seeker; a reason for quoting higher premiums anticipating emergencies and increased medical needs and claims. That is, more the number of medical conditions, higher the premium.  

·        Type of insurance plan: PPOs, HMOs or POS follow different methods of delivering healthcare. While PPO offers more flexibility in terms of choosing your doctor, HMOs offer regulated medical assistance. As coverage and operational cost differs with different types of plans, so does the premium.

·        Group members: If the average age of a group is on the higher side, the premiums tend to be higher and vice versa. Higher average age indicates more elderly in the group and thus, the risk increases for the insurers. 

·        Lifestyle: People who travel frequently or are in professions that are potentially harmful pose bigger risks for insurers, and therefore, premiums are increased to compensate for the increased risk.

·        Location: Expensive places such as New York have expensive medical infrastructure and machinery. This means, for a medical treatment that would have cost lesser somewhere else, people living in New York have to shell out more money. The higher expenses increase the premiums.

 

Health insurance premiums are usually paid monthly; however, people paying in lump-sum are offered some discounts as well.

 


  • Dot Div
  •      

Most Popular in Health Insurance

Related Links
blog comments powered by Disqus