How often do I pay health insurance premiums?

Kyle Walton

8 years ago

Key Takeaways:

Health insurance premiums are typically paid each month.
Premiums are paid directly to the insurance company. If you have job-based health insurance, your employer may do this on your behalf.
You may find that lower monthly premiums are often offered in exchange for higher costs elsewhere in your plan.

What is a premium?

Simply put, a health insurance premium is the recurring cost of retaining your health insurance coverage. Your premium must be paid each designated due date 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.

Health insurance premiums are generally paid on a monthly basis. Those who purchase insurance through the Marketplace are charged a monthly premium that they pay directly to the insurance company.

Those who obtain insurance through their employers usually have a designated portion of their paychecks deducted to cover their monthly premium. In this scenario, the employer submits premium payments to the insurance company on behalf of the worker.

Medicaid and Medicare plans may also charge a monthly fee for insurance, but not all of them do. If healthcare cost is a concern for you, be sure to carefully compare the options available to you before deciding on which plan to purchase.

When are premiums paid?

In most cases, premiums are paid on a monthly basis. Those 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 some of the other costs associated with health insurance?

Premiums are only one component of your health insurance. If you visit a doctor, get a medical test performed, or purchase prescription drugs, you may have to make a copayment. The copayment can vary depending on your particular plan, so you’ll need to understand exactly what costs you’ll be responsible for when seeking 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 pay 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 costs can only be determined by five factors:

Your age
Where you live
Tobacco use
Whether you’re enrolling as an individual or as a family
What type of plan you choose

In some circumstances, you may be able to choose between an array of basic or 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, while the Platinum plan has the highest premium but the lowest coinsurance, copayments, and deductibles.

Be sure to take some time to consider what you expect your healthcare needs to be over the course of the coming year before choosing a plan.

What happens if I don’t pay my premium?

If you fail to pay your monthly premium, you could lose healthcare coverage. The loss of coverage won’t happen right away, though. Most private insurance companies have a built-in grace period that allows their customers to catch up with payments.

This grace period 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 some other period of time.

If you are insured through the Marketplace, you have paid a premium for at least one month in the year, and you qualify for the advanced premium tax credit, your grace period is usually 90 days.

This 90-day grace 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.

In some scenarios, an advanced premium tax credit is available for people whose 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?

If you lose your healthcare coverage, yYou’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 experienced certain situations during the year, however, you can see if you qualify for a special enrollment period, which allows you to enroll in coverage outside of the open and annual enrollment periods. Situations that may qualify you for a special enrollment period may include:

Getting married
Having a baby
Getting divorced or legally separated
The death of your family’s primary insurance beneficiary

If you’re interested in finding 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 allow you to continue coverage.

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.