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10 Factors That Affect Your Health Insurance Premium Costs

By Kira Botkin

doctors office cardIf you search for health insurance quotes online, you will receive a range of prices from different insurance companies for very similar policies. Different insurance companies assign differing values to components in your risk profile. The information in your insurance application, and your medical history, comprise your risk profile.

Insurance companies use historic data and extensive product research to compile various factors and create a benchmark for risk profiles. The companies review your risk profile, the information included in your health insurance application, against their company benchmarks to decide whether or not to provide you with insurance.

If an insurance company reviews your risk profile and determines that they want to provide you with health insurance, they calculate the insurance premiums based on the information in your individual application and provide you with a quote for the policy. Each company uses a different set of standards and assumptions to calculate that premium. Many different risk factors affect premium prices for most plans.

Physical and Medical Risk Factors

1. Body Mass Index
On average, people with a high body mass index have significantly higher premiums than those with a normal BMI. People with a high BMI can suffer from, or develop, diseases including diabetes, sleep apnea, and heart and joint problems. Additionally, for people with especially high BMIs, treatment for normal occurrences such as pregnancy have elements of risk, and require specialized treatment or equipment. If you have a high BMI, insurance companies might charge you more for health insurance.

2. Tobacco Use
Insurance companies penalize applicants who use cigarettes, chewing tobacco, or snuff by charging higher insurance premiums or refusing to provide them with coverage. Insurance companies also penalize people who have quit using tobacco within the last several years. It can take a very long time for someone to recover from a lifetime of tobacco use, and it takes time for his or her risk of disease to abate.

Some studies report that former tobacco users will always have a higher risk of cancer and other ailments, even if they never use tobacco again. Many plans provide coverage for smoking-cessation products, including nicotine patches or nicotine gum, if prescribed by a doctor. This coverage benefits both you and the health insurance company because when you quit using tobacco, your health risks begin to decrease immediately.

3. Gender
Women usually pay higher medical premiums than men, for three reasons, according to experts. Women may be more likely than men to go to the doctor regularly, take prescriptions, be subject to certain chronic diseases. For insurance companies that offer maternity insurance, a delivery costs $13,000 on average, not including prenatal and postnatal care, which can also be a contributing factor of higher insurance costs.

4. Age
Premium prices are usually lower for younger individuals. Young people have fewer diagnosed and undiagnosed health conditions than older people, and are less likely to develop health problems. Young people are less likely to go to the doctor, although they are much more likely to get into accidents or have significant injuries.

5. Pre-existing Medical Conditions
Insurance companies know that a pre-existing medical condition can be costly. Even if the insurance doesn’t cover pre-existing conditions, the policyholder may be more likely to have additional issues related to the pre-existing condition. Many plans won’t sell insurance to people with specific pre-existing conditions.

6. Family History
For applicants whose families have a history of certain medical conditions or ailments, the premiums may be higher. Applicants with a family history of cancer, for example, may pay higher insurance premiums than applicants with no family history of cancer.

health insurance policy

Lifestyle and Personal Risk Factors

Insurance companies have decades’ worth of data that they analyze regularly to find relationships between risk and a multitude of different factors. The insurance company assumes that people who share these factors have similar risks and price their policies accordingly.

7. Profession
People exposed to hazardous chemicals or radiation, or who work in jobs with high injury rates, have much higher insurance premiums than those with less dangerous jobs. There is also a trend to charge higher insurance premiums to those who have extremely sedentary jobs, requiring them to sit in one place all day, or to perform repetitive tasks or motions. People who work in sedentary professions may have an increased risk of cardiovascular disease. International business travel may also impact the cost of health insurance.

8. Zip Code
Whether due to a shared climate, a cultural aversion to exercise, or a lack of healthy food options, people who live in the same area tend to have similarities in their risk profiles. If your neighbors or coworkers have high health insurance premiums, you may also pay more for health insurance. This does not reflect upon you as an individual, but instead reflects the insurance company’s statistics, which may show that people in your area aren’t as healthy as people in other areas. Move to another area, and you might see a dramatic drop in premium prices.

Furthermore, insurance companies factor the cost of complying with local laws into the cost of your insurance premium. If the cost of doing business in your area is less expensive for the insurance company, that cost will be passed along to you.

9. Marital Status
For reasons that haven’t been determined, married couples live longer and are generally healthier than single people. Getting married usually causes a drop in health insurance premiums, although the benefits are greater for men.

10. Previously Uninsured
If you’ve been without health insurance coverage, or if you are buying insurance for the first time, insurance companies may charge you a higher premium. The insurance company anticipates that previously uninsured policyholders have been waiting to get covered medical care for various ailments. The insurance company also operates under the assumption that the previously uninsured will want to visit a dentist or physician, to begin receiving general health and wellness checkups. In addition, if you haven’t received regular medical care including checkups, any health problems you have may be exacerbated. The insurance company takes all of this into account, and they price policies accordingly.

Final Word

While many of these factors are beyond your control, you have the ability to lose weight, quit smoking, and move. Taking good care of your health and controlling the risk factors mentioned here reduces health insurance premiums now and in the future.

In addition, you can save money on your health insurance premiums by choosing higher deductibles. Review insurance quotes carefully; if you have to pay more out-of-pocket expenses for the benefits you use the most, even the cheapest plan might end up costing you more in the end.

Have you applied for health insurance online using sites like eHealthInsurance? What factors influenced the premium costs most?

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(photo credit: Shutterstock)

Kira Botkin
Kira is a longtime blogger and serial entrepreneur who enjoys gardening, garage sales, and finding stray animals. She lives in Columbus, Ohio, where football is a distinct season, and by day runs a research study for people with multiple sclerosis. She hopes that the MoneyCrashers team can help you achieve your goals and live a great life.

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The content on Money Crashers is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial or tax advisor. References to products, offers, and rates from third party sites often change. While we do our best to keep these updated, numbers stated on this site may differ from actual numbers.
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