Factors that influence health insurance rates

 

If you have your health insured or are researching your options to do that you have probably noticed that quotes vary from company to company and depend on a set of factors. These factors are used by insurance providers to determine how much of a risk is to provide you with respective coverage and how likely you are to use health care services. If the risk is high then you will have to pay higher premiums.



There are two main types of health plans
– individual and group
– and depending on the plan type you sign to the weight of these factors will differ.
Under group plans, which are usually provided by employers, there is a large group of people involved with different factors and health conditions and it's up to the HR department to determine what is the optimal rate for each plan participant. However, under individual plans all the factors mentioned below will really matter. So if you want to know what will affect your rates here are the factors:

1. Insurability

When you apply for a health insurance plan the company first determines whether you can actually be categorized into various groups or should be denied coverage right from the start. This is called insurability and it reflects how it is likely for you to get insured. For most people insurability isn't a problem. However, if you have serious or terminal health conditions, have low or unsteady income, use health services too often or have other problems then you may be denied health insurance right from the start.

2. Health condition

Health itself is another very important aspect when determining your rates. If you don't have any health problems then the premiums you will pay will be lower compared to the situation where you have health problems or some risk factors involved such as smoking, drug abuse, alcoholism, high risk job activity and so on. The insurance company will require you to take a set of clinical tests in order to determine whether you have any health risks and will also ask you to provide your health history report. The better your health the cheaper the plan.

3. Plan type


There are different types of health insurance plans you may choose from. The most popular are of course managed care plans such as HMO, PPO and POS. Depending on the plan type you will have different rates. For example under an HMO plan your premiums will usually be lower but you will have more restrictions on out of network services. Under POS you will have greater flexibility of where to receive care but the premiums will be higher. It also matters whether you choose to lower your co-payments or increase them. If you will choose to pay more from your pocket then the insurance plan will in turn be cheaper.

4. Location

If you live in a large city area then you will usually get higher rates for the same amount of coverage as compared to rural areas. This is explained by the frequency of doctor visits that are higher in large cities. There are also more health risks involved when living in a large metropolitan area. So it really matters where's your residence when buying a health plan.

5. Age

It's evident that the older is the person the more health risks are involved. That's why younger customers always get lower premiums for the same coverage set as older insurance users. Older people also tend to use health care services more often.