The Five Most Important Factors Affecting Health Insurance Premiums and Common Questions

Health insurance is the most common and important type of insurance for everyone. Unlike other types of insurance, health insurance is something everyone will need at some point, whether it’s for needs like doctor visits, check-ups, or prescriptions, or for surgeries, hospital stays, or ambulance services.

Generally, there are two ways to obtain health insurance: individual purchase or through group plans, which include employer-supported plans, unions, or associations.

ACA（ Affordable Care Act）

To understand healthcare in the U.S., one must first talk about the ACA – the Affordable Care Act. This comprehensive healthcare reform law was enacted in March 2010 by the Obama administration and is commonly referred to as the ACA, PPACA, or Obamacare.

Three Main Goals of The ACA

• Make health insurance more affordable and accessible. The ACA provides subsidies to families with incomes between 100% and 400% of the federal poverty line.

• Expand Medicaid coverage to include all adults with incomes below 138% of the poverty line (though not all states have expanded Medicaid coverage).

• Support innovative ways of delivering healthcare services to reduce the overall cost of medical care.

10 Standard Services Covered by Health Insurance

All health insurance plans purchased in the U.S. must include the following:

1. Outpatient services 

2. Emergency services

3. Inpatient care (surgeries or hospital stays)

4. Maternity care and newborn care

5. Mental health and substance use disorder treatment (counseling and therapy)

6. Prescription drugs

7. Rehabilitative services

8. Laboratory services

9. Preventive care/regular check-ups and chronic disease management

10. Pediatric services (including dental and vision care)）

The Five Common Factors Affecting Premiums

Health insurance premiums are determined by various factors, with one of the most significant being the level of benefits provided by the insurance plan. Health insurance is typically categorized into four metal tiers: Platinum, Gold, Silver, and Bronze. Platinum plans offer the best benefits and have the highest premiums, while Bronze plans offer fewer benefits but are more affordable. The following five factors will determine the metal ranking of a plan and significantly impact the cost of the insurance:

• Doctor Network

Different insurance plans or carriers come with their own doctor networks. Doctors and medical institutions within the insurance plan's network are referred to as "In-Network," while those outside of the network are called "Out-of-Network." Insurance companies offer a variety of doctor networks for policyholders to choose from. The broader the network, the higher the premium. For doctors outside the network, the insurance may either refuse to cover the medical costs incurred or apply a different reimbursement method than it would for in-network doctors.

• Deductible

A deductible is the amount of money that a policyholder must pay out-of-pocket before their insurance benefits begin to cover medical expenses. Once the deductible amount is reached, the insurance plan will start to help cover the costs of medical care. Generally, the lower the deductible, the higher the insurance premium.

• Copayment/Copay

A copayment is a fixed amount that the policyholder must pay to a doctor or medical provider for services, such as outpatient visits, emergency care, or prescription drugs. The insurance company covers the remaining cost of the service.

For example, if the copayment is $50 and the outpatient visit costs $150, without insurance, you would need to pay the full $150. However, with an insurance plan that offers a $50 copayment benefit, you would only pay $50, and the insurance company would cover the remaining $100.

• Coinsurance

Unlike a copayment, which is a fixed amount for different types of treatment or tests, coinsurance is a percentage-based cost-sharing method. For example, a 30% coinsurance means the policyholder pays 30% of the medical bill, while the insurance company covers the remaining 70%. Generally, the lower the coinsurance percentage, the higher the premium, as this means the insurance company will be covering a larger portion of the medical expenses.

• Out-of-pocket Maximum

The out-of-pocket maximum is designed to limit the financial burden on the policyholder in the event of a major illness and is an important factor in determining premium costs. It is the maximum amount the policyholder will need to pay for medical expenses in a year. Once this limit is reached, the policyholder does not have to pay any additional medical costs for the remainder of the policy year. Typically, this amount is only reached in cases of severe illness.

Here are the common questions and answers about health insurance:

1. Will an insurance company refuse to enroll me because I have certain diseases?

No, all health insurance plans are required to treat applicants equally, regardless of pre-existing conditions or chronic diseases. Insurance companies cannot refuse coverage or increase premiums based on your medical history.

2. Are health insurance policies the same across all states in the U.S.?

Generally, health insurance policies are similar across states, but some states may require additional benefits or have different regulations.

3. What if I need a treatment that is not included in the standard coverage?

Coverage can vary between insurance companies. You should check the details of your policy with the insurance provider to see if the treatment you need is included.

4. Do all health insurance plans on the market include the basic medical services mentioned?

Yes, all commercial health insurance plans must cover the ten essential health services, regardless of the insurance company, the level of coverage, or the size of the doctor network.

5. Do basic medical services have deductibles or copayments?

Most plans have deductibles and copayments. However, some routine preventive services might be free.

6. If my company has a self-insured policy, will it cover the same medical services?

This depends on how the company sets up its insurance policy. Generally, self-insured plans provide similar medical services, but you should check with your company or the company's health insurance broker for specific details.

7. What are the differences between company-provided insurance and individual insurance?

Company-provided insurance might cover part or all of the premium costs, while individual insurance may qualify for different government subsidies based on income levels. The specifics of the policy can also differ.

8. Can I use health insurance for dental care?

All plans will provide dental services for children, but adult dental care is often limited. Basic services like check-ups or cleanings might be covered, but more extensive dental care is generally not included. Coverage details depend on the specific insurance company and plan.