How Are Health Insurance Rates Calculated

Written By: Vic Shallow on December 23, 2009 No Comment

The rates you pay for health insurance are determined by a number of factors, including your health, age, marital status, your height and weight, preexisting conditions at the time of application and the type of plan you choose, to name just a few. Some basic principles apply when setting medical insurance rates, most are based on risk, though insurers place more or less emphasis on each factor depending on underwriting guidelines.

As you might imagine healthier people pay less for health insurance, as do married couples and those who are height/weight proportionate. Those with low risk occupations and non-smokers also pay less. But it’s more complicated than that. A huge factor that has an effect on what you pay is the type of medical plan you choose which should be based on both, what you can afford and what kind of plan best fits your needs.

Indemnity Plan

An Indemnity Care Plan allows you to choose any doctor you want and to see specialists without getting approval from a “primary care physician” .You can seek medical assistance where and when you choose. Traditional health insurance is generally more expensive than other types of health plans and may require more paperwork to file claims. Many people don’t mind the higher cost in exchange for the greater freedom this type of plan offers.

Managed Care Plans – PPO vs HMO

PPO (Preferred Provider Organization)

PPOs are less flexible than traditional health insurance plans but more flexible than HMOs. You can choose the doctor you want to see (including a specialist), but your co-payment will be higher if the physician you choose is not a “preferred provider”, that is, a physician that the health plan has a contract with. With a PPO you will almost always need to get their approval before entering a hospital. They are however, more likely to cover checkups and other preventive medical services than traditional health insurance plans.

HMO ( Health Maintenance Organization )

Most of the several types of HMOs will require you go to a health care provider within their organization in order for the expenses to be covered. Most will require that you choose a primary care physician who will coordinate your care. More than likely to see a specialist, you’ll have to get approval from your primary care physician. Before entering a hospital or receiving some other kinds of non-emergency carey ou must get approval from the HMO. HMO’s also the least expensive are also quite restrictive .

Bottom line: your insurance company takes all these factors into consideration when setting health insurance rates. So choose your plan carefully and take charge of the factors within your control to help keep premium rates low.

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