Health Insurance

How Much Health Insurance Costs & Alternatives

Alexis Bryan07 Jul 2021

The cost of health insurance in the U.S. is not straightforward. There are multiple components that make up your total health insurance costs and specific factors that determine the amount you pay. This article outlines the complicated nature of health insurance costs in today’s market.

Learning the ins and outs of health insurance pricing can be time-consuming, especially when you are looking for immediate care. When in a rush, an alternative option is to sign up for Mira’s monthly plan to access same-day lab tests and urgent care visits for $45 per month. Health insurance is important for many, but getting the care you need, when you need it, should be a priority for all.

Overview of Health Insurance Costs

Health insurance is only becoming more complicated to the average consumer. In 2021, the average cost of health insurance per individual was $452 per month or $5,424 per year. This number more than doubles to $1,152 per month when considering family coverage. While health insurance costs vary by state, there are federal guidelines in place to standardize pricing procedures. 

How The ACA changed Health Insurance Costs

The Affordable Care Act (ACA), signed by President Obama in 2010, increased healthcare spending in the U.S. and altered health insurance eligibility. With the ACA in place, health insurance companies are no longer able to deny coverage or charge more to enrollees based on pre-existing conditions. Pre-existing conditions include health conditions that you have before you enroll in health insurance. 

Some common conditions that qualify as pre-existing conditions include:

  • Asthma
  • Diabetes
  • Cancer
  • Heart conditions
  • Depression

As Dr. Michael Sparer, J.D, Ph.D., chair of the Columbia University Department of Health Policy and Management, notes, while the ACA expanded coverage to millions of Americans, its cost-containment provisions were far less successful, “cutting costs generally requires cutting payments (to doctors, hospitals, etc.).  And there is no easy path to cutting payments, either in the ACA or in the healthcare marketplace more generally.”

Why Health Insurance Costs Are Rising

Health insurance costs continue to skyrocket with no end in sight. One clear reason is that the population is growing and aging. More people and older people with chronic conditions result in greater healthcare costs. To compensate for this population shift, health insurance companies raise costs to consumers to accommodate.

One study found that the price and intensity of services contributed to more than 50% of the health care spending increase. Dr. Sparer adds, “The reason the U.S. spends so much on healthcare is related to the price and volume of high tech procedures: simply put, Americans pay higher prices than their cross-national counterparts and also use expensive high tech services (such as MRIs) far more often.”

Again, insurance companies respond by raising health insurance costs to ensure they can pay for the health services used by their members. This makes having health insurance even more important though because you would be paying the full cost of each service out-of-pocket without health insurance coverage. 

Employer-Sponsored Health Insurance

The majority of Americans are enrolled in a health insurance plan through their employer. Health insurance costs are predicted to continue rising for all, putting the financial burden on both individuals and employers

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Mira helps you get healthcare services for up to 80% less than paying out of pocket or going through insurance. As seen on Forbes, Axios, and CNBC.

Employer-Sponsored Health Insurance Premiums from 1999 to 2019

What Determines Health Insurance Costs

Your total health insurance costs are composed of the premium, deductible, and coinsurance of your plan. The amount of each of these components is determined by your health insurance company based on various factors. There are national and state specific calculators to help you estimate your premium and potential subsidies through the health insurance Marketplace.

Premiums

There are a few main factors that affect your monthly premium. 

  • Your location: Depending on where you live, the laws differ by state and also the county. Premiums in urban areas tend to be less expensive than in rural areas.
  • Your age: Older people can be charged up to three times more than younger people.
  • Your income: There are premium subsidies to help lower health insurance costs for people who make less than 4 times the Federal Poverty Level.
  • If you smoke: Those who use tobacco products can have premiums up to 50% more expensive compared to those who do not.
  • The category of plan: Bronze, silver, gold, platinum, and catastrophic plans have different monthly premiums. The lower your premium, the higher your deductible is.
  • If the plan will cover family members: Buying an individual plan is the cheapest option, but if you want to cover your spouse or children you will need to pay additional fees.

Deductible

A deductible is an amount you must pay towards your total health insurance costs before your insurance plan starts helping. Some plans have very high deductibles, making care unaffordable except when absolutely necessary. Most health insurance plans on the Marketplace have deductibles below $3,000 per year, but this is out of reach for many people. 

In this case, many enrollees choose to pair alternative options, like Mira, with their traditional health insurance plans to help cover the costs of lab tests, urgent care and discounted prescription drugs.

Coinsurance and Copays

After you have reached your deductible, there are two cost-sharing mechanisms between you and your insurance company: coinsurance and copays. Coinsurance is a percentage of your healthcare costs you are expected to pay out-of-pocket. Consider a circumstance in which you have not yet used any medical services this year, but suddenly need expensive treatment. It could work like this:

Your Insurance:

  • Deductible: $1,000
  • Coinsurance: 60% paid by insurance, 40% by you

Cost of Medical Treatment: $1,500

What You Pay: You pay $1,000, then 40% of the remaining cost.

$1,500-$1,000=$500

$500x40%=$200

In total: $1,000+$200=$1,200

These cost-sharing policies are only in effect until you reach your out-of-pocket limit. At this point, your insurance company pays 100% of your healthcare costs. In 2021, the maximum out-of-pocket limit for a Marketplace plan is $8,550 for an individual and $17,100 for a family.

How Much Health Insurance Costs

As mentioned above, you can buy different levels of health insurance on the Marketplace. The information provided in the table below is the cost of individual plans in New York without subsidies.

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Health Insurance Costs by Tier of Plan

Plan Tier2021 Monthly PremiumPercentage of costs covered by planWho should buy it
Catastrophic$313/month100% after out of pocket maximum is reachedPeople who only want coverage in case of an emergency
Bronze$387/month60%People who are generally healthy and do not go to the doctor often
Silver$539/month70%People who qualify for tax credits
Gold$594/month80%People who often seek medical care
Platinum$709/month90%People who use a lot of care and can afford a high monthly fee

Subsidies

The federal government offers financial assistance for individual health insurance plans. The amount depends on your income, family size, and the cost of insurance where you live. People who make between 138% and 400% of the Federal Poverty Level (or spend more than 8.5% of their income on health insurance) may qualify for a premium subsidy. For individuals, this is less than $51,040 and for a family of four, this is less than $104,800. If you make less than the Federal Poverty Level you qualify for Medicaid in most states.

Health Insurance Alternatives

Some people may choose to forgo health insurance altogether, but healthcare can quickly become unaffordable if you are paying for all services out of pocket. Instead of going without any type of insurance, many people choose an alternative. Some options include care memberships, discount cards, and indemnity insurance. Each of these have advantages and disadvantages as well as variable associated costs.

A newer alternative to lower your health insurance costs is a healthcare membership where you pay a monthly fee for access covered services with no deductible. For example, Mira costs $45 per month and you can access in-network clinics, 80% lab testing, and affordable lab testing on the platform.

Health Insurance Costs Frequently Asked Questions (FAQs)

Health insurance costs can be unclear and contradictory. Below we list a few common questions regarding health insurance costs that can trip people up. 

What are the main costs associated with health insurance?

In order to understand health insurance costs, it can help to understand how health insurance works overall. The main health insurance costs are the monthly premium, plan deductible, and coinsurance. These are attributes of your health insurance plan and do not include services that are not covered like acupuncture, massages, or cosmetic surgeries. There are also additional fees for dental coverage if you choose to add it to your plan.

How can I lower my health insurance costs?

The best way to lower your health insurance costs is to evaluate your healthcare needs and ensure the plan you choose is right for you. There is a tradeoff between the monthly premium and deductible, therefore you need to find the right balance. For those who do not use many services, it makes sense to enroll in a plan with a low monthly premium. For those who use more care, a higher premium can save you money in the long run.

Are there cheaper alternatives to health insurance?

Recently there has been a rise in health insurance alternatives. These can be in the form of monthly memberships to access affordable care.  In order to get discounted rates for prescriptions and low-copay urgent care visits, one popular option is Mira. By obtaining some type of healthcare coverage, you can avoid paying outrageous medical bills for small health concerns and seek the preventative care you need to stay healthy.

Bottom Line

Health insurance costs are rising, making traditional plans unaffordable and inaccessible for many, especially those who are not offered coverage through their employer. When health insurance enrollment becomes too complicated and tedious, it may be easier to opt for a simple, easy alternative, like Mira.