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how are premiums calculated

How Are Health Insurance Premiums Calculated?

When looking for health insurance, most wonder precisely how are premiums calculated? Well, five factors can affect a plan’s monthly premium: location, age, tobacco use, plan category, and whether the plan covers dependents. However, this can vary from state to state.

Under the health care law, there are five things that an insurance company can account for when calculating premiums.

  • Age: Premiums usually cost more the older you are.
  • Location: Where you live has a significant effect on your premiums. Differences in competition, state and local rules, and cost of living account for this.
  • Tobacco: Health insurance companies will charge more for those who use tobacco versus those who don’t.
  • Individual vs. family insurance: Insurers can charge more for a plan that also covers a spouse and/or dependents.
  • Plan category: The categories are based on how you and the plan share cost.

The ages of your spouses/dependents are typically the most significant factor in determining your total premiums.

Premiums are determined by adding together the age and tobacco use, if applicable, and premiums for each family member enrolled. If a family has more than three kids under the age of 21 insured, then premiums will only be charged for the oldest three kids, although all of them are covered.

For example, if you have four kids, ages 19, 13, 10, and 4, your total family premium would be your premium, plus the cost of the premiums for your 19, 13, and 10-year-old kids; your 4 year old will be insured at no charge. However, this only works for more than three kids under the age of 21. Now let’s say your kids are 21, 13, 10, and 4; you will have to pay premiums for all four of them.

Cosmo Insurance Agency is a full-service independent insurance agency based in Hackensack (Bergen County) and Lakewood (Ocean County), New Jersey that offers an all-encompassing range of insurance options for both individuals and businesses. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating our knowledge of the insurance guidelines for healthcare, employee benefits, life insurance, self-insurance, dental, disability, and long term care insurance, we keep our clients up-to-date with affordable plans that cover all their specific insurance needs.

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