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What is the Average Health Insurance Cost by Age?

5 min read

30 sec brief

The cost of health insurance is not one size fits all, in fact, it’s not even a one type fits all matter. Many factors go into determining what your health insurance will cost you. Let’s explore how health insurance prices are determined, and take a look at how age affects your rate.   5 Factors Included…

The cost of health insurance is not one size fits all, in fact, it’s not even a one type fits all matter. Many factors go into determining what your health insurance will cost you.

Let’s explore how health insurance prices are determined, and take a look at how age affects your rate.  

5 Factors Included in Premium Prices

To understand how health insurance is priced, it’s vital to know the factors that affect the cost.

Insurance companies can only take the following 5 factors into consideration when setting premiums:

  • Age – Premiums can be up to 3 times as much for older people than for younger people.
  • Location –  Where you live is a big factor in how much you’ll pay for health insurance. Factors such as local competition, state and local rules and even cost of living account for these price differences.
  • Tobacco use –  Insurers can charge up to 50% more if you use tobacco, versus those who don’t.
  • Individual vs. family enrollment – Insurance companies can charge more for plans that cover you and your family.
  • Plan category – Health insurance has five plan categories (Bronze, Silver, Gold, Platinum, and Catastrophic). The difference between the categories comes down to how you and the plan share the costs. For example, Bronze plans typically have lower monthly premiums and high out-of-pocket expenses, whereas Platinum plans come with high monthly premiums, but low out-of-pocket costs.

Each state can limit how each of these factors will affect your premium price.

The good news is that all Marketplace plans cover the essential health benefits which include:

  • ambulatory patient services
  • hospitalization
  • pregnancy
  • maternity and newborn care (before and after birth)
  • mental health and substance abuse disorder services
  • prescription drugs
  • rehabilitative and habilitative services and devices
  • laboratory services
  • preventative and wellness services
  • chronic disease management
  • pediatric services (including oral and vision care) as well as additional benefits

How Age Affects Premium Prices

Age plays a big part in what you’ll pay for health insurance. Health insurance companies see younger people as being less risky and less likely to need a lot of medical care. As you age, you become riskier to health insurance companies.

ValuePenguin has a very helpful chart to visualize how health insurance premium prices are priced according to age.

Typically, the insurance rate starting point is based on a healthy 21-year-old. In 2019, an average 21-year- old can expect to pay about $200 per month for health insurance. This is based on a Silver plan price, which is above Bronze but below Gold and Platinum.

From there, the price of premiums will increase, ever so slightly, each year. For example, by the time you reach 26, the average price will be about $205 per month (based on 1.024 x $200). 

The increase is pretty small each year, but over time the prices go up dramatically. From age 21 – 45, the increase is pretty consistent. A 30-year-old is looking at around $227 per month (1.135 x $200), and 37-year-old $248 per month (1.238 x $200). Once you hit 46, you’re looking at paying 1.5 times the original base rate, right around $300 per month. 

By the time your 53rd birthday comes along, you can expect to pay more than double the base rate of $200 ($200 x 2.04), coming in at $408 per month.

Remember how we talked about age being a factor in health insurance price? Well, when you celebrate your 64th birthday, your premium could be around $600 per month, 3 times as much as a 21-year-old.

The truth is, these are very general guidelines. Prices greatly vary from state to state. In fact, some states, like New York don’t even factor age into the complicated equation. And, don’t forget, there are 4 other factors that come into play when determining your personal premium price.

It’s vital to take your time, do some intense research and make sure you get the best plan for you.

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Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

About the author

Vicky Warren

Vicky Warren, once a nurse, now a freelance healthcare writer and social media coach.

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