How often do I pay health insurance premiums?
Health insurance premiums are generally paid on a monthly basis. People who are purchasing insurance through the Marketplace are charged a monthly premium that they pay directly to the insurance company.
People who obtain insurance through their employers usually have a designated portion of their paychecks deducted to cover the monthly premium. In this scenario, the employer pays the insurance company on behalf of the worker.
Medicaid and Medicare plans may also charge a monthly fee, but not all do. If cost is a concern to you, you should compare the options available before deciding on a plan to purchase.
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What is a premium?
A premium is simply the cost of obtaining health insurance. You have to pay the premium to your health insurance company if you would like your coverage to continue.
A health insurance plan will typically begin on the date of your first premium payment.
When is it paid?
In most cases, premiums are paid on a monthly basis. People purchasing insurance through the Marketplace are expected to pay their premiums each month.
If you purchase insurance independently through an insurance company, you may be able to work out a different payment plan. Some people may prefer to pay their premiums each year, every six months, each quarter, or every other month.
If you have insurance through an employer, it’s likely that the cost of your premium will be automatically deducted from your paycheck. If you’re paid every other week, the correct amount will be calculated accordingly.
Some employers pay 100 percent of their workers’ premiums, but most do not. The majority of full-time employees have to pay for a portion of their health care premiums. A company’s payroll department will take care of the accounting so that your premium payments will be sent to the insurance company directly.
What are other associated costs?
Premiums are only one component of your health insurance. If you visit a doctor, get a test performed, or purchase prescription drugs, you may have to make a copayment. The copayment can vary depending on your particular plan, so you need to understand what you’ll be responsible for when you seek treatments and services.
Coinsurance refers to the percentage of costs you’re billed when receiving specific types of care. For example, a plan may ask you to 20 percent of the cost of visiting a specialist.
Your deductible and your maximum out-of-pocket costs also play an important role in determining how much money you’ll be spending on health care in a given year. However, if you don’t seek any type of treatment in a calendar year, your only health care costs will be the sum of your premiums.
How are premiums calculated?
The law dictates that premiums can only be determined by five things:
- Your age
- Where you live
- Tobacco use
- Whether you’re enrolling as an individual or as a family
- What type of plan you choose
You may be able to choose from basic and more comprehensive plans. On the Marketplace, there are Bronze, Silver, Gold, and Platinum levels.
The Bronze plan has the lowest premium but the highest coinsurance, copayments, and deductibles; the Platinum plan has the highest premium but the lowest coinsurance, copayments, and deductibles. You should take some time to consider your healthcare needs will be in the coming year before choosing a plan.
What happens if I don’t pay my premium?
You could lose health care coverage if you fail to pay your premium. The loss of coverage won’t happen right away, though. Most private insurance companies have built in a grace period to allow their customers to catch up with payments.
It may vary by state and by plan, so you’ll need to read the fine print to determine whether your grace period is one month, three months, or another period of time.
If you are insured through the Marketplace, have paid a premium for at least one month in the year, and qualify for the advanced premium tax credit, your grace period is 90 days.
That period starts on the first day of the month for which you have not paid. If you have still not paid a monthly premium after those 90 days, your coverage will be terminated.
(The advanced premium tax credit is available for people who’s income falls within a certain range. Those individuals, or households, can apply that tax credit to help them lower their monthly health insurance premiums.)
If I lose coverage, then what can I do?
You’ll likely have to wait for the next open enrollment period to begin a new contract with a health insurance company. Through the Marketplace, that period usually runs from November to January.
If you have faced certain situations during the year, you can see if you can apply for insurance during a special enrollment period. These situations include:
- Getting married
- Having a baby
- Getting divorced or legally separated
- Having a death in your immediate family if that person was who you obtained insurance through
If you’d like to find an ideal health insurance plan, it’s essential that you look into the monthly premiums that you’ll be asked to pay. Paying these premiums will ensure that your coverage will continue.
If you’re obtaining insurance on your own, you’ll pay your health insurance company directly. If you have employer-sponsored insurance, your premiums generally are paid directly to the insurance company and deducted from your paycheck.
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