Conversations happen around the kitchen table in many homes in Texas. Bob and Nancy were no different. Through the years, they have discussed many life changes, problems, and crises at their well worn table. And here they are again. This time, they are discussing how they get health insurance as a major life event has left them reeling after "corporate downsizing". This turn of events that feels like it is happening everywhere, has left Bob figuring out what working looks like until formal retirement age in a few years. He's done with the corporate world that has helped him pay off his house, but obviously doesn't care for him anymore.
Since Medicare doesn't start until age 65, Bob and Nancy were left deciding how to bridge the gap from here to there. Bog's COBRA benefits will run out before they get to age 65, and they have heard horror stories about the plans available on the ACA Marketplace here in Texas. They had heard that types of plans available on the health insurance exchange were mostly Health Maintenance Organizations. Otherwise known as the HMO plans that everyone despises. Words like Open Enrollment, Special Enrollment Periods, and Premium Subsidies all seemed like confusing jargon and just made things worse. They needed help and the internet was awash with different answers. They didn't necessarily need the cheapest insurance. They were interested in making sure their coverage level could take care of those things that can pop up as you move through your early 60s.
When Bob got to one of our agents, the questions about health care plans were plentiful. But with few exceptions, the majority of the questions revolved around one thing:
What is the cost of health insurance in Texas?
It doesn't matter if you are self-employed, own a business, or work for a business, the costs of health insurance plans have escalated to crazy levels and Nancy was particularly nervous. She had heard stories from her friend about coverage gaps and being caught out of the network of doctors that they needed. And those two things can make expensive costly insurance seem even more expensive as the cost of care that is not covered moves up dramatically.
Fortunately, we did have answers for Bob and Nancy. Our agents were able to help them understand that the key drivers of age, location, and health can make a huge difference in the cost of your health care coverage. Your type of plan available can change dramatically if those three items line up in your favor. So let's take a look at what drives the cost of your monthly premium for your health plan and what you can do about it.
How Much Does Health Insurance Cost Per Month In Texas?
While we cannot give you an exact cost per month without some personal information that is specific to you, we were able to help Bob and Nancy find their average health insurance cost along with their plan options above and below that amount. We needed some basic information to make that happen and they were happy to comply.
In a recent study that was published by Bloomberg, it is documented that average cost for family health coverage in the US now tops $20,000 per year. That comes out to $1,667 per month for a family. That's crazy! You are basically paying a second mortgage for health insurance premiums that the average Texas family is paying to the insurance company. The good news for Bob and Nancy is that they only had two people in their household. The bad news is that they were a little older.
The key factors that control what you are paying for health care coverage in Texas shouldn't be surprising.
- Location - plans available and monthly insurance premiums will vary by county
- Age - Your consumption of Medical Care that is covered by the health insurance plans goes up as we get older which raises the price
- Family Size - covering one person is always cheaper than five since the healthcare bills go up on average with more people
- Out Of Pocket Maximum - the more financial burden of healthcare expenses that you assume, the lower the average premiums will be
- Annual Household Income - the Premium Tax Credit (aka Premium Subsidy) can drastically lower your monthly premiums on health insurance marketplace plans
Those first four factors are universal to all health insurance plans sold, whether you live in Texas or some other less fortunate place. Bob and Nancy found those to be pretty straight forward, and since they live in Fort Worth, they had plenty of plans to choose from. All of those options allowed them to see the effect of taking on more out of pocket health care expenses had on the average health insurance premiums.
The fifth factor is specific to the ACA Marketplace plans, which was a bit confusing for them.The factors of location, age, family size, and out of pocket maximum are pretty self explanatory when thinking about medical expenses. The older your large family becomes the more times that they will need to interact with a healthcare professional. Those covered doctor visits will generate more costs for the health insurance company to cover and more out of pocket costs for you in the form of copays, deductibles, and coinsurance. The use of health care services drives up the cost of insurance for individuals. The insurance companies will leverage Preventive Care to mitigate some of those costs, but since essential health benefits are covered without copay it can still drive up costs that have to be accounted for when thinking about prices.
Household Income can be a sensitive subject to Texans. We don't like to air our laundry out in public so to speak. Bob and Nancy were no exception to this train of thought. Since its inception, the Health Insurance Marketplace has been offering coverage options to families with and without Pre-Existing Conditions. It is a very key component of the ACA Exchange plans.
One of the components of the health insurance coverage offered through the Health Insurance Marketplace is the Premium Tax Credit which is also known as the premium subsidy.The Premium Tax Credit is an amount of money available to households to offset the high cost of Health Insurance Coverage. It is based on your household size and adjusted gross income.
The amount of subsidy available is based on a sliding scale of those items and the federal poverty level. The Health Insurance Marketplace then allows you to apply a portion of the tax credit against your monthly premiums keeping more money in your pocket for other things that come up in life. Bob and Nancy were ready to look at what this could mean for them since Bob had just lost his job.
So What's My Price?
Bob and Nancy said this all makes sense, but we still need to see what price we're looking at. Family budgets are important. Most families in Texas have their Health Insurance Program through their employer-sponsored plan. As a result, the worker's average cost out of their paycheck is $500 per month which doesn't sound that bad and is in line with what Bob and Nancy had experienced with Bob's plan through his previous employer.
However, they had forgotten to factor in Health Care Costs like deductibles, co-pays, and other out of pocket expenses that come with these plans. When you actually use your insurance that costs $6,000 per year, your costs can turn into a lot more very quickly. Especially since deductibles for major events continue to creep up and up. And if you are needing to use out of network providers, the costs can go up even further.
While we do help employers find business health insurance plans, many of the Texans that we help find health insurance are self-employed, own small businesses, or work for a small business that doesn't provide health insurance. These Texans see the full price of their health insurance just like Bob and Nancy will over the next few years. And those costs for comprehensive coverage can make a Texan squirm.
Many of these Texans opt for ACA Marketplace based plans simply because of the Premium Subsidy that helps keep premium costs down. These plans also allow for you to be covered regardless of pre-existing conditions which can be a major factor if you are a bit older and have some wear and tear on your body. The downside of these plans is the deductibles tend to be somewhat outrageous and out of pocket maximums can be substantially large.
If you do not qualify for premium tax credits under the Affordable Care Act, you are likely looking for ways to save money on your plan to get that $1,667 down to a more manageable level. Costs can range from a few hundred dollars on limited care plans all the way up over $2,000 for larger or older families that have lower deductibles. As a result, many Texans are looking for Health Savings at a time when costs just seem to keep skyrocketing.
What Are My Health Insurance Options?
- ACA Marketplace Plans - The health insurance marketplace policies sold on the ACA Exchange have differing levels of coverage that are described as Metal Tiers. Gold plans have the lowest deductibles and out of pocket costs for you while Bronze plans will transfer more cost back to you. The plans with significantly higher deductibles can be a bit more cost effective lowering your monthly costs by as much as 20%. However, those deductibles can become punishing if you are hospitalized and are suddenly having to cough up $8,000 plus co-insurance.
- Short-Term Health Insurance Plans can have substantial cost savings for families that are not dealing with pre-existing conditions that would exclude them from clearing underwriting. Just know that maternity benefits are often excluded on these plans, if you are of that age and mindset. Since these plans can be issued for up to three years, they make a great bridge for an early retiree between a group employer plan and Medicare when you hit age 65.
- Limited Benefit Plans are great for folks who "never use the doctor". These plans can cover just hospital and surgical items rather than all of your daily outpatient type items. You have to be careful of what you are buying and understand the fine print, but this can be an option for folks who want to keep their sunk costs lower.
- Sharing Plans require you to pay cash for services and then submit for reimbursement, which can make them unattractive for those on a very tight budget. However, the cost savings are substantial because of the way that they operate. Just remember, they are not an actual health insurance plan and should be viewed with a bit of a cautious eye when it comes to financial solvency.
- Catastrophic plans allow you to dramatically lower the costs of monthly premiums by as much as 50% or more. The policy only provides coverage for you when major events happen. Think strokes, heart attacks, cancer, or major accidents requiring hospitalization. These health insurance policies do not care who you use for a primary care physician or if you go at all. Since they are not providing all of these low level services or processing claims for them, they pass the cost savings on to you. Using this type of coverage paired with a Direct Primary Care doctor can give you a GREAT experience rather than the run-around that we have all become accustomed to.
How Do I Find Exact Pricing For Health Insurance?
The great news is that you have options, and our independent health insurance agents help Texans secure all of these policies everyday. Bob and Nancy found a plan that worked for their needs and their budget. Insurance For Texans, as an independent insurance agent, can help you evaluate the pros and cons of each of these options along with the exact costs just like we did for them. And it doesn't matter if you are young and healthy, or a bit older trying to bridge that gap!
With some quick information, we can get preliminary pricing so that you can quickly evaluate if these options will work for you and how to best maximize your situation. To get started, just give us a bit of information below!