Health insurance is a critical component of managing healthcare costs. It can help people access and pay for necessary medical care, and offer peace of mind. However, understanding the cost of health insurance can be daunting. There are many options available and many complex health insurance terms to understand.
Read on to explore some of the coverage options available, factors that influence health insurance costs, how premiums and deductibles factor into those costs, and the average health insurance premiums by state in 2023.
Individual vs. Family Health Insurance Plans
When shopping for health insurance, someone can generally choose to purchase a plan that only covers the policyholder or one that covers the policyholder and their eligible dependents. These are commonly referred to as individual plans and family plans.
While the benefits covered under the health insurance policy may be the same regardless of whether an individual chooses to enroll in an individual or a family plan, the cost of premium and the amount of cost-share are generally higher for family plans. Often, the costs of a family plan are double that of an individual plan.
Employer-Sponsored vs. Individual Health Insurance Coverage
Premium costs may also vary depending on whether health insurance coverage is obtained through an employer, directly from an insurance company or purchased through a health insurance marketplace. Many people receive insurance benefits through their employers. Some employers that offer health insurance pay for some or all of an employee’s premium as a benefit of employment. Some employers may also cover some of the premiums for an employee’s eligible dependents, making a family plan more affordable.
Individuals can also obtain health insurance coverage directly through an insurance company or health insurance marketplace. Depending on their income and other factors, some individuals may qualify for premium and/or cost-share subsidies when they enroll in a health insurance plan through a health insurance marketplace.
Other Factors that Influence Health Insurance Costs
Besides the individual or family plan decision, other factors can affect the cost of health insurance. Some of the most common factors that influence health insurance costs include:
Insurance company rates. Different insurance companies may have different pricing structures and underwriting criteria which affect their health insurance premium rates. It’s important to choose a company that offers competitive rates.
Location. The cost of healthcare can vary depending on where an individual resides . Healthcare costs are higher in some states and counties, so health insurance premiums are typically higher in states and counties where healthcare costs are higher.
Age. Younger individuals typically pay less for health insurance premiums than older individuals. This is because insurance companies assume less risk to cover a young adult, so they don’t charge as much in premiums. Affordable options for older individuals may also be available.
Choice of plan. Different types of plans have varying costs, benefits, and healthcare provider networks. For example, an individual may choose a plan that has a higher deductible and a lower monthly premium.
Tobacco product use. In some states, individuals who use tobacco products pay more for health insurance premiums due to the increased health risks associated with the use of tobacco products. The insurance company assumes higher risk of having to pay for healthcare services if an insured uses tobacco products, so they may charge higher premiums for those individuals.
Income. Individuals with higher incomes may pay more for health insurance. Some employers subsidize employees’ premiums based on their income. Additionally, individuals with higher incomes who enroll in health insurance coverage through a health insurance exchange may not qualify for premium and/or cost-share subsidies.
There are other factors that can affect the cost of health insurance, but these are some of the most common ones.
Premiums vs. Deductibles
When purchasing health insurance, there are two main costs: premiums and deductibles. These two terms can be confusing, and they’re vital to understanding health insurance costs. So, what is a premium, and what is a deductible? What’s the difference between the two?
Premium is the monthly cost a policyholder pays for health insurance coverage. The amount of premium depends on different factors, including those discussed above.
Deductible is the amount an insured must pay for certain benefits out of pocket before the insurance plan starts to pay. For example, if someone has a $1,000 deductible and receives a medical service that costs $3,000, they would be responsible for paying the first $1,000, and the insurance company would cover the remaining $2,000, subject to other cost-share, if applicable.
The amount of the deductible typically impacts the amount of the health insurance premium. Plans with lower deductibles tend to have higher premiums, while plans with higher deductibles generally have lower premiums.
Individuals often select a health insurance plan based on their healthcare needs. For example, someone who is generally in good health and rarely needs healthcare services might find it more beneficial to purchase a health insurance plan with a higher deductible and lower premiums. On the other hand, an individual who has significant medical needs might find it more beneficial to enroll in a health insurance plan that has a higher premium but a lower deductible.
Other types of cost-share, including copays and coinsurance, may also apply to certain benefits covered under a health insurance plan.
There is also a maximum out-of-pocket limit which is the maximum amount a policyholder and dependents, if applicable, have to spend on covered healthcare services in a year. After they reach this amount, the insurance company pays 100% for covered services.
Average Health Insurance Costs in 2023
The national average cost of health insurance in 2023 for an individual is $560 per month according to ValuePenguin. However, these costs can vary significantly depending on the factors, including those discussed above.
The costs below include information from ValuePenguin to illustrate the average insurance premium amount by state and type of plan network.
Average Insurance Costs Based on Location
| State | Average Premium |
| Alabama | $591 |
| Alaska | $822 |
| Arizona | $569 |
| Arkansas | $456 |
| California | $541 |
| Colorado | $489 |
| Connecticut | $614 |
| Delaware | $566 |
| Florida | $599 |
| Georgia | $474 |
| Hawaii | $482 |
| Idaho | $483 |
| Illinois | $561 |
| Indiana | $425 |
| Iowa | $551 |
| Kansas | $565 |
| Kentucky | $479 |
| Louisiana | $652 |
| Maine | $506 |
| Maryland | $385 |
| Massachusetts | $553 |
| Michigan | $435 |
| Minnesota | $404 |
| Mississippi | $499 |
| Missouri | $626 |
| Montana | $519 |
| Nebraska | $652 |
| Nevada | $575 |
| New Hampshire | $372 |
| New Jersey | $535 |
| New Mexico | $551 |
| New York | $776 |
| North Carolina | $666 |
| North Dakota | $538 |
| Ohio | $513 |
| Oklahoma | $634 |
| Oregon | $493 |
| Pennsylvania | $532 |
| Rhode Island | $424 |
| South Carolina | $469 |
| South Dakota | $792 |
| Tennessee | $533 |
| Texas | $589 |
| Utah | $558 |
| Vermont | $760 |
| Virginia | $425 |
| Washington | $470 |
| West Virginia | $871 |
| Wisconsin | $550 |
| Wyoming | $882 |
Average Premium Cost by Type of Network
Health Maintenance Organization (HMO)
These plans usually don’t cover out-of-network care, except in an emergency.
Average Premium: $480
Preferred Provider Organization (PPO)
These plans generally have lower cost-share for services provided by in-network providers than out-of-network providers.
Average Premium: $576
Exclusive Provider Organization (EPO)
Managed care plans where services are usually covered only if they are provided by in-network providers, except in an emergency.
Average Premium: $507
Point of Service (POS)
These plans require a referral to see a specialist and cost less to use in-network providers.
Average Premium: $462
The Bottom Line on Health Insurance
There are a variety of health insurance plans to choose from based on your needs. There are also certain factors that can affect health insurance premiums.
One important factor is choosing a health insurance company that offers plans that are right for your needs at competitive rates. Finding a health insurance company can be complex. Contact Acrisure to be connected to an insurance professional that can help you access an insurance company that is right for you.