A major medical health insurance plan is a comprehensive plan that complies with the minimum essential benefit standards set by the Affordable Care Act (ACA, also known as “Obamacare”). These plans cover a wide array of inpatient and outpatient healthcare services, ensuring broad health coverage.

It’s crucial to understand that not all major medical plans are eligible for premium tax credits, which can help lower your insurance costs. While enrolling in a major medical plan exempts you from federal tax penalties that were once imposed under Obamacare for being uninsured, this federal penalty was eliminated starting in the 2019 plan year. However, depending on where you live, you may still face a state tax penalty if you can afford major medical insurance but opt to go uninsured. State laws on this requirement vary, so it’s important to verify whether your state mandates health insurance and understand any associated costs of non-compliance. Check out this article to see if your state requires health insurance.

Understanding Major Medical Insurance Costs

Grasping the various costs involved in major medical insurance is essential for effectively managing your healthcare budget and ensuring that you can afford necessary medical care when you need it. Major medical insurance, which adheres to the standards set by the Affordable Care Act (ACA), involves several cost components that you should be familiar with:

• Premiums: Premiums are the regular payments you make to keep your insurance active, usually paid monthly. The amount can vary widely based on factors like your age, location, tobacco use, and the level of coverage you choose.
• Deductibles: A deductible is the amount you pay out-of-pocket for healthcare services before your insurance begins to cover its share of the costs. Plans with higher deductibles typically have lower monthly premiums, but it means paying more upfront for care when you need it.
• Copayments and Coinsurance: These are the amounts you pay for specific services after meeting your deductible. Copayments are fixed amounts (e.g., $30 for a doctor’s visit), while coinsurance is a percentage of the cost of a service (e.g., 20% of the cost of a hospital stay). Understanding these fees is crucial as they will directly affect your out-of-pocket expenses for medical care.
• Out-of-Pocket Maximums: This is the maximum amount you will pay in a year for covered services under your plan. Once you reach this limit, your insurance will pay 100% of the costs for covered benefits. This cap provides financial protection against high medical costs from extensive or expensive treatments.

Knowing these cost components helps you compare plans more effectively and choose one that best fits your financial situation and healthcare needs. It’s important to balance these costs with your typical healthcare usage to find a plan that offers the most benefits while remaining affordable. This understanding ensures that when you need medical care, you can focus on recovery rather than worrying about unexpected expenses.

How much does Major Medical Insurance cost?

Many factors will affect the cost of your health coverage, including the type of plan you enroll in, the services you need and how often, and whether you take prescription drugs.

When you’re calculating the cost of major medical insurance, it’s important to look beyond just plan premiums, or the monthly amount you’ll pay for coverage. Oftentimes, major medical plans with low premiums may be offset by other costs, such as higher deductibles or cost sharing, or a higher maximum out-of-pocket limit. eHealth’s plan finder tool lets you look up and compare costs like premiums, deductibles, copayments, and more for a wide selection of individual and family plans.

Based on Kaiser Family Foundation’s (KFF) study, here are the 2024 average benchmark costs in the U.S.:

• Premiums for major medical plans average: $477 per month
• Deductibles for major medical plans average: $3,507 per year

The cost of Major Medical Insurance can vary significantly based on several factors including age, plan type, metal tier, and geographical location. Generally, younger individuals pay less for premiums compared to older adults, due to lower risk of health issues. For instance, the average monthly premium for a 21-year-old might range from $200 to $300, while a 60-year-old could pay between $500 to $700, depending on the state. Plan types like HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations) also influence costs, with HMOs typically offering lower premiums due to restricted network usage compared to PPOs that provide more flexibility but at a higher cost.

Additionally, plans are categorized into metal tiers—Bronze, Silver, Gold, and Platinum—which indicate the split of costs between the insurer and the individual. Bronze plans have the lowest premiums but highest out-of-pocket costs, ideal for those expecting low medical usage, whereas Platinum plans charge the highest premiums but cover the most percentage of healthcare costs, beneficial for those needing frequent medical care. Understanding these variations is crucial for selecting a plan that aligns with your healthcare needs and budget constraints.

Factors Affecting Major Medical Insurance costs

While major medical health insurance premiums rates can vary, fortunately the Affordable Care Act curbed some of the volatility of premium costs by eliminating factors such as gender and pre-existing health conditions (i.e., your current health status or medical history. Still, several factors will affect the actual cost of your major medical health coverage.

Age and health status

In most states, age plays a significant role in determining health insurance premiums, with older individuals generally facing higher rates due to increased health risks associated with aging. Notably, New York and Vermont are exceptions where age does not impact premium costs. Alongside age, your overall health status is another crucial factor. Individuals with pre-existing conditions or chronic health issues might see higher premiums, reflecting the higher anticipated healthcare costs.

Additionally, lifestyle choices such as tobacco use can significantly affect insurance costs. Health insurance providers are allowed to charge smokers up to 50% more than those who do not use tobacco. This surcharge reflects the higher medical risks and potential for more frequent healthcare services needed by tobacco users. Together, these factors—age, health status, and tobacco use—combine to shape the cost of your health insurance, making it important to consider how your personal health profile and habits might influence your insurance expenses.

Geographic location

Where you live affects the price of the premiums. Generally, premiums are lower in densely populated areas where numerous insurance companies are competing for business. Rural areas may be served by only one or two insurers and pay more for major medical health insurance.

Plan type and coverage level

The insurance company and type of plan you choose will also affect your health insurance monthly premium. ACA major medical plans are classified by metal tiers: Bronze, Silver, Gold, Platinum and Catastrophic. Each metal tier carries different premiums based on the percentage of overall healthcare costs they cover.

Employer vs. individual plans

When comparing the costs of employer-sponsored health insurance plans versus individual plans, several key differences emerge that can significantly impact your financial outlay for healthcare. Employer-sponsored plans often provide a cost advantage because many employers contribute a substantial portion of the insurance premiums as part of employee benefits. This subsidy can drastically reduce the amount employees need to pay out of their own pockets. Additionally, premiums for employer plans are typically paid pre-tax, which can lower your total taxable income, resulting in further savings.

On the other hand, individual health insurance plans, purchased through the marketplace or directly from insurers, usually come without the premium contributions from an employer, meaning the individual bears the full cost of the premium. While these plans can be more expensive up-front, individuals may qualify for government subsidies if they meet certain income criteria under the Affordable Care Act (ACA). These subsidies can help lower the monthly premiums and out-of-pocket costs to more manageable levels.

Ultimately, the choice between an employer-sponsored plan and an individual plan can depend on several factors, including the level of employer contribution, your employment status, and eligibility for ACA subsidies. Each type of plan has its merits and costs, making it important to assess your personal and financial situation to determine the most cost-effective and beneficial option for your healthcare coverage needs.

How to lower Major Medical Insurance costs

Navigating the costs of major medical insurance requires smart planning and knowledge of available options to minimize expenses while ensuring adequate coverage. This section provides strategies to help you reduce your healthcare costs effectively.

Choosing the right plan

Selecting a cost-effective health insurance plan is crucial for managing your healthcare budget. To choose wisely, compare plans not only based on premiums but also on what they cover. Look for a plan whose network includes doctors you already visit and covers medications you take. Pay attention to the out-of-pocket costs, including deductibles and copayments. It’s essential to match the plan features with your personal healthcare needs to avoid paying for unnecessary coverage. Review and understand the benefits and limitations of each plan, ensuring it aligns well with your anticipated healthcare usage.

Utilizing preventive care

Engaging in preventive care is a proactive way to manage health expenses over the long term. Most major medical plans under the ACA include a range of preventive services without any out-of-pocket costs when performed by in-network providers. Common preventive services covered include vaccinations, annual check-ups, cancer screenings, and wellness visits. By making full use of these services, you can prevent more severe health issues that could result in high medical bills down the line.

Taking advantage of subsidies and tax credits

Subsidies and tax credits are designed to make health insurance more affordable for those with qualifying incomes. The ACA provides premium tax credits to individuals and families within certain income brackets to help lower the cost of premiums when plans are purchased through the Health Insurance Marketplace. To see if you qualify, apply through the Marketplace during open enrollment or after experiencing a qualifying life event. Understanding how to navigate these benefits can substantially lower your health insurance costs.

Health Savings Accounts (HSAs)

HSAs are a powerful tool for managing healthcare costs. They allow you to set aside money on a pre-tax basis to pay for qualified medical expenses, reducing your taxable income. This can include costs like deductibles, copayments, and other medical expenses not covered by insurance. HSAs are only available with high-deductible health plans, and they offer the flexibility of rolling over unused funds year after year, making them a valuable option for both current healthcare costs and future medical needs.

How to enroll in a Major Medical Insurance plan

The Open Enrollment Period for major medical health insurance occurs each year, starting November 1st for coverage that begins January 1st the following year. Depending on your situation, you may be eligible for a Special Enrollment Period if you have lost your current health insurance, moved, married, had a baby, or similar life changes. You can enroll online via Healthcare.gov or your state’s marketplace if your state has its own health insurance exchange, through a private health insurance exchange, such as eHealth, or by directly contacting a health insurance company or health insurance broker.

Find the right Major Medical Insurance plan for your needs

At eHealth, it’s our goal to make finding health coverage as simple and painless as possible. Our plan finder tool makes it easy to browse major medical plans from top insurance companies and compare benefits and costs side by side. Remember, health insurance prices are fixed, so you’ll never pay more at eHealth than you would elsewhere.

To get started finding health coverage that fits your needs, enter your zip code in the tool on this page. If you need assistance, call us during business hours to reach an expert licensed insurance agent, who will be happy to help you.

For business owners looking for major medical plans, eHealth is here to partner with you, as well. You’ll need at least one employee to be eligible for small business health coverage, and you must contribute to workers’ premiums.

The good news is that you can shop for small business plans at any time of the year and eHealth’s licensed brokers can help you find the right plan for you and your employees. Check out all the available small business health insurance plans, or contact us today to get guidance on finding the right coverage for your business.