Why do you think individual vs. family enrollment impacts the cost of health insurance premiums?

Notice:

FYI Your health, medical history, or gender can’t affect your premium.

When choosing a plan, it’s a good idea to think about your total health care costs, not just the bill (the “premium”) you pay to your insurance company every month.

Other amounts, sometimes called “out-of-pocket” costs, have a big impact on your total spending on health care – sometimes more than the premium itself.

Beyond your monthly premium: Deductible and out-of-pocket costs

• Deductible: How much you have to spend for covered health services before your insurance company pays anything (except free preventive services)
• Copayments and coinsurance: Payments you make each time you get a medical service after reaching your deductible
• Out-of-pocket maximum: The most you have to spend for covered services in a year. After you reach this amount, the insurance company pays 100% for covered services.

How to estimate your yearly total costs of care

In order to pick a plan based on your total costs of care, you’ll need to estimate the medical services you’ll use for the year ahead. Of course it’s impossible to predict the exact amount. So think about how much care you usually use, or are likely to use.

• Before you compare plans when you’re logged in to HealthCare.gov or preview plans and prices before you log in, you can choose each family member’s expected medical use as low, medium, or high.
• When you view plans, you’ll see an estimate of your total costs — including monthly premiums and all out-of-pocket costs — based on your household’s expected use of care.
• Your actual expenses will vary, but the estimate is useful for comparing plans’ total impact on your household budget.

Total costs & “metal” categories

When you compare plans in the Marketplace, the plans appear in 4 “metal” categories: Bronze, Silver, Gold, and Platinum. The categories are based on how you and the health plan share the total costs of your care.

Generally speaking, categories with higher premiums (Gold, Platinum) pay more of your total costs of health care. Categories with lower premiums (Bronze, Silver) pay less of your total costs. (But see the exception about Silver plans below.)

So how do you find a category that works for you?

• If you don’t expect to use regular medical services and don’t take regular prescriptions: You may want a Bronze plan. These plans can have very low monthly premiums, but have high deductibles and pay less of your costs when you need care.
• If you qualify for "cost-sharing reductions" (CSRs): Silver plans may offer good value. If you qualify, your deductible will be lower and you’ll pay less each time you get care. But you get these extra savings only if you enroll in Silver. If you don’t qualify for CSRs, compare premiums and out-of-pocket costs of Silver and Gold prices to find your right plan. See if your income estimate falls in the range for cost-sharing reductions.
• If you expect a lot of doctor visits or need regular prescriptions: You may want a Gold plan or Platinum plan. These plans generally have higher monthly premiums but pay more of your costs when you need care.

Older people pay higher premiums for health coverage because they typically need more medical care. Federal rules place caps on rates charged for individual Affordable Care Act (ACA) plans, but some states regulate health insurance premiums even more.

Under the ACA, the premium charged for a 21-year-old is used as the base to calculate rates for all other age groups.

In most states, people 64 or older cannot be charged more than three times that base rate. Rates for children under 21 are lower than the base rate due to fewer health risks.

Eight states and Washington, D.C., don't follow the federal rating guidelines precisely. If you live in New York or Vermont, age isn't used to calculate your health insurance rates. And residents of Alabama, Massachusetts, Minnesota, Mississippi, Oregon, Utah and Washington, D.C. — will see a slightly different formula for setting rates.

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Average cost of health insurance plans by age

Affordable Care Act (ACA) health insurance plan costs are calculated based on your coverage tier (Catastrophic, Bronze, Silver, Gold or Platinum), your county of residence, your family size and age. Of these variables, the biggest factor affecting your health insurance rate is age. Insurance companies use age to determine how likely you are to need insurance for medical care. Federal rules dictate how much ACA-compliant plans can adjust rates based on age, but health plans are generally more expensive for older applicants.

Using the federal formula, rates rise gradually to age 50, then show a steeper increase for people age 51 and older.

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Most states calculate the base rate for a plan using a 21-year-old policyholder. This rate is then adjusted according to consumers' ages. Health insurance rates go up as a policyholder gets older; the largest increases typically occur after age 55. This reflects the higher health care costs expected for older Americans.

At the high end of the age range, premiums for consumers 64 and older are capped at three times the base rate. For instance, a 64-year-old pays $1,230 per month for a Silver plan, which is three times more expensive than the monthly rate of $410 for a 21-year-old. The largest increases in health insurance costs occur for adults over age 50 when using federal ratios, while insureds under 21 have the lowest rates.

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Some states consider age differently when setting rates

A few states set their own standards when it comes to health insurance rates. For example, some states prohibit any health insurance company from setting rates based on age, while others use age ratios higher or lower than federal guidelines.

New York and Vermont do not permit using age as a factor when determining health insurance rates. That means health insurance premiums in these states don’t vary based on age across the board. This usually results in higher premiums for people ages 21-50 and lower rates for those who are older compared to other states.

Alabama, Mississippi and Oregon all follow the federal rating rules for anyone over the age of 21. But for people under 21, these states do not use the same federal scale for health insurance. Instead, this age group pays a health insurance premium set at 63.5% of the base rate.

Massachusetts has its own rating rules for all age groups. For example, 21- to 24-year-olds in Massachusetts pay 118% of the base rate, compared to the federal 1:1 ratio. For anyone 49 and over, the state's age ratios are lower than federal amounts.

Minnesota follows federal guidelines for people aged 21 and older. But while federal ratios vary for the under-21 age group, Minnesota applies just one ratio — 89% of the base rate — to all policyholders younger than 21.

Utah follows federal rules for the 64 and older age group, but scaling among other age groups can be more aggressive. For instance, consumers ages 27-36 pay almost 140% more than the base rate in the state, whereas the same group would pay between 105% and 123% more under federal guidelines. Children age 14 and under also are slightly more expensive in Utah, with medical insurance costs fixed at 79% of the base rate compared to 77% under federal guidelines.

Washington, D.C., rate factors are lower than federal requirements for all age groups. Consumers age 64 and older pay only twice the base rate rather than triple the base amount.

Finding health insurance based on income

If you meet income requirements, you may be eligible to enroll in your state’s federally funded Medicaid program. Eligibility for this type of health insurance depends on your income and whether your state has adopted the expanded form of Medicaid. In states that have expanded the Medicaid program, the household income limit is set to 138% of the federal poverty level.

Health insurance options if you are under 26 years old

If you are under 26 years old and don't have coverage through your employer, then you have two options for acquiring health insurance:

• Depending on your income, you may qualify for Medicaid.
• You can stay on your parents' health policy. All states allow parents to add and keep their children on their health insurance policies until the child reaches age 26. New York state allows parents to extend coverage for children up to age 29 under the Age 29 Dependent Coverage Extension law.
• You can purchase health insurance through the health insurance exchange.

Health insurance options if you are 65 or older

If you're age 65 and paid into Social Security while working, you generally are enrolled in Original Medicare automatically. You're not charged for Medicare Part A and pay $170.10 per month for Part B in 2022. Once you're on Medicare, you might choose to enroll in a Medigap or Medicare Advantage plan to help with costs not fully paid by Medicare. While some Medigap rates are based on age, Medicare Advantage plans do not count age as a rating factor.

Frequently asked questions

Yes, age is a factor in determining individual ACA insurance rates in most states. Older consumers pay higher premiums since they typically need more medical services. But insurance companies must comply with state and federal limits on age-based rate increases. For more on how age affects health insurance costs, read here.

Your state likely bases health insurance rates on age. Only two states do not use age to determine health insurance rates: New York and Vermont. If you live in any other state, the rate you'll pay for insurance changes based on your age, according to state or federal regulations. Read here for more info on how age impacts the average cost of health insurance.

If your state has expanded Medicaid, you may qualify based solely on your income. Even if your state has not expanded the program, you may be eligible based on a combination of income and health concerns. Requirements vary by state, so check your state's Medicaid website for eligibility information.

Rather than age, employers base health insurance rates on income, using sources like employee pay rates, wages on W-2 forms or the federal poverty level (FPL). If employer insurance gets too costly or stops offering minimum coverage, an employee may qualify for individual ACA insurance under a special enrollment period (SEP).

Methodology

ValuePenguin used Centers for Medicare & Medicaid Services (CMS) Public Use Files (PUFs) to confirm average premiums among varied age groups and specific coverage years. We confirmed age banding rates via CMS.gov and rating guidelines at HealthCare.gov.