There are many different costs that are associated with your health insurance. You will pay co-pays, deductibles and a health insurance premium. When someone talks about the cost of their insurance they are usually referring to the actual health insurance premium. The other costs, like co-pays or deductibles, are actual costs that you pay towards your health care. A premium is the actual cost of having insurance.

Factors That Determine Health Insurance Premium Costs

Each insurance company sets their own premiums. They usually have a base premium rate. Each individual may pay a different premium due to underwriting. There are a variety of factors that will determine the final premium rate that you pay.

The company creates its base health insurance premium rate on factors that include operating costs, the amount it is paying to health care providers, stock rates and profit margins. The company sets its base premium much like any company would price their products. In the health insurance business, though, they also have to consider trends in the medical field and current trends in the need for health care. This helps them to foresee possible changes that could affect their profits.

Insurance of any kind is based on risks. The purpose of insurance is that it exists to help in case something happens. You usually can't determine exactly when you will need to use insurance. With health care there are some situations where you know you will be using the insurance. For example, if you have a medical condition. Another example would be for routine preventative care.

To determine your individual health insurance premium rate an insurance company is going to access your risk status. They will determine how much you are likely to cost them. If you have a medical condition that requires regular care then your premium rate would be higher than someone who is generally healthy. They also may look at your family history to see if certain healthy conditions run in your family.

The company will also look at the general risk of having you as a customer. They will want to be sure that you are credit worthy and will pay your premium and other obligations under the terms of your health insurance policy.

Tips on Getting a Lower Premium

Once you understand how a health insurance company determines health insurance premium rates you can then start to find things that you can do to get a lower rate and save some money. There are many things that go into figuring a premium that you have no control over. You can't determine the company's profit margin or how well its stocks are doing. You also can't help it if you have a medical condition or if you have a family history of medical problems.

There are some things that you can do, though. You can get your credit in good shape, so that when the company does a credit check it won't add to your risk level. You can also stay up on preventative care. Many health insurance companies like to see that the person is getting the proper preventative care since preventing illness or medical problems usually costs less than caring for a problem once it is discovered.