What Is a Health Insurance Premium for Individual Plans?

Individual and Family

What Is a Health Insurance Premium for Individual Plans?

Published on April 20, 2018


Whether you’re trying to understand the costs of your current individual health insurance plan, or you’re shopping for a new one, it’s important to know what the health insurance premium is.

What is a health insurance premium?

There are plenty of costs and definitions associated with a health insurance plan, but the premium is the bread and butter of health insurance terms. The health insurance premium is the cost that you probably saw (or are seeing) when comparing individual health insurance plans.
The monthly health insurance premium is a set cost you pay monthly in order to have health insurance coverage.  If you are in a group plan, the sponsor (your employer) would split this cost with you, but with individual health insurance, you pay the premium yourself.
Keep in mind that even after you have met your deductible or out-of-pocket cost, you will still need to pay your premium every month.

Do high health insurance premiums mean expensive plans?

Although a high health insurance premium means you are paying a little more every month than you would with a lower premium, high health insurance premiums are often associated with more coverage. This might mean your plan is less restrictive with going out of network, your health care deductible and out-of-pocket maximum are lower, or that cost sharing is more in your favor.
For people who will pile up medical costs throughout the year, choosing a plan with a higher premium but lower costs elsewhere may actually end up being cheaper for them in the end.
Some people with little to no medical costs, who simply want health insurance for emergencies and a check up here and there, a plan with a low premium might end up being cheaper overall.
So the answer is, it depends. Make sure to do your research and consider your medical needs, and your families’ if they will be included on your plan.
Each plan has its own terms and limitations, so be sure to check the official plan documents to understand how that specific plan works.  This article is only for general education.

How to compare health insurance premiums

If you are shopping for a new individual health insurance plan, the best thing you can do for yourself is compare. While you might find a plan with the lowest premium right off the bat, it does not necessarily mean that’s the best or cheapest plan for you.
By getting free quotes and comparing benefits and costs that come with different plans, you will have a better chance of understating which health insurance plan is right for you.
While the health insurance premium is an important cost, make sure you also know other health insurance terms when shopping or trying to understand your current plan.

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