Let’s just put it out there.  Health insurance is costly.  For some people, the cost of their health insurance is more than their mortgage payment.  But, if you choose to go without it and have a major health issue, it can force you into bankruptcy.

So, what exactly drives the cost of health insurance?

Under the new laws, health insurance companies can form rates based on the following criteria:

1. Age
2. Your address
3. Your gender
4. Tobacco usage

Health insurance uses “rate bands” for each age group.  The older you are, the higher the premium.  This is because younger people typically go do the doctor less frequently than older people.

Your address also plays a factor in your rate and the plans available to you.  In more rural areas, there are fewer options/doctors available for health care.  Doctors and insurance companies also negotiate contracts each year.  When you are shopping for coverage, keep in mind that the plans that cost more typically have more doctors in their networks.  You truly get what you pay for.

Your gender also plays a role in your health insurance costs.  Women typically have higher rates, as they go to the doctor more frequently, live longer, and have babies.  This is similar to the concept that auto insurance carriers use when charging higher rates for younger male drivers that are more likely to have accidents and speeding tickets.

Tobacco usage also plays a huge role in your health insurance rates.  Usage of tobacco is linked to many medical conditions.  The result is that you will pay higher rates for usage of tobacco.

I hope that you find these tips helpful as you shop for coverage during open enrollment!