About the Cost of Health Insurance

A multitude of factors affect the cost of health insurance, but only some of them can be manipulated. Plans can be customized to meet your needs and fit within your available budget, while still providing coverage that is effective and comfortable.

Group vs. Individual

• In nearly every situation, group health insurance plans are less expensive than identical plans offered individually. It’s not uncommon for certain features and benefits included in group plans to be withheld from individual products. Because insurance companies can spread risk across a large number of people with shared characteristics, the cost of group health policies falls below individual products.

Plan Types

• The cost of health insurance depends largely in part on the specific type of plan you purchase. Health Maintenance Organization (HMO) policies tend to be less expensive than Point of Service (POS) and Preferred Provider Organization (PPO) products, usually because the HMO contract structure is more restrictive for members seeking treatment. Flexibility and freedom in POS and PPO insurance plans comes with a higher price tag.

Gated vs. Non-Gated

• In the insurance industry, “gated” generically describes a plan that requires a referral from a primary care physician before a patient can visit a specialist. The doctor, his staff, and the insurance company are positioned as gatekeepers to eliminate unnecessary testing and procedures. The cost of gated health insurance plans is less than non-gated plans, ones that allow customers to freely seek services from a specialist. Non-gated health insurance policies are more flexible, and as such demand higher premiums.

Hospital Cost Waivers

• Most managed care plans offer an optional hospital cost waiver as an available feature. Plans that include the waiver cost significantly more than identical plans that do not. The majority of HMO and PPO policies require patients to contribute a specific dollar amount before benefits are available, or obligate them to pay for a specific percentage of treatment costs. Since a portion of medical expenses will be the responsibility of the patient, health insurance costs are lower. Waivers alleviate any stress or confusion associated with calculating percentages and spending large sums of money for hospital stays because this optional feature puts the entire cost of in-patient and out-patient care in the hands of the insurance company.

Deductibles

• Many health insurance plans include deductibles, which are amounts the patient must pay in full before the actual benefits of the medical policy become available. Deductibles are a cost-sharing technique that put more of the financial responsibility back onto the shoulders of the patient, resulting in reduced monthly costs. Customers willing to pay larger deductibles enjoy lower policy prices than those who purchase plans with small or nonexistent deductibles.