How much does health insurance cost?
Understanding how much you will pay for health insurance is essential when shopping for the right health plan — one that works for your health needs and your budget.
What contributes to the cost of health insurance in the U.S.?
There is no one reason why health care costs as much as it does. It is instead the result of a lot of contributing factors, such as:
- Chronic conditions. It has been estimated that 86 percent of health care spending is due to chronic conditions.¹ While some conditions are genetic, many can be prevented by making better lifestyle choices, such as eating healthy, exercising, limiting alcohol consumption, and not using tobacco.
- Advances in medical technology. Finding new and better ways to treat illness and injury is good, but the research and equipment can be costly.
- Prescription drugs. The research and development of new drugs and treatments can be expensive, and it often affects the price of the drug. Even when a more affordable generic equivalent exists, many people still opt for the more expensive brand-name version.
- Aging population. As we get older, we need more medical attention. New Jersey has a high population of older adults, with an estimated 16.9 percent ages 65 or older.²
- Uninsured population. Hospitals and doctors are required to treat people without insurance. These costs are often passed on to those who have health insurance, resulting in higher premiums.
- Medicare and Medicaid payments. When payments to doctors and hospitals drop below the actual cost of the care, health insurers are usually required to pay the difference.
- Provider cost increases. While doctors and hospitals need to receive fair and competitive compensation, sometimes their cost increases exceed the rate of inflation.
- Fraud and abuse. Health care fraud and abuse not only threaten the quality and safety of care, but they waste billions of dollars each year.3 The National Health Care Anti-Fraud Association estimates conservatively that health care fraud costs the nation tens of billions of dollars annually.
- Fear of malpractice suits. Some doctors and hospitals use more intensive diagnostic testing to confirm diagnoses and lower their risk for malpractice liability.
How much will individual health insurance cost you?
Several factors can affect how much you’ll pay in monthly premiums for a health plan. They can include:
- Age — Monthly premiums can be higher for older people and lower for younger people.
- Household income — Your household income may affect how much you’ll pay for coverage and which plans are available to you. When you apply for coverage, you’ll need to provide your expected household income for the year you want coverage.
- Tobacco use — Monthly premiums can be higher for tobacco users than for those who don’t use tobacco.
- Type of plan — While all Affordable Care Act (ACA) health plans must cover the same essential health benefits, they differ in the monthly premium, deductible, copay, and coinsurance amounts.
Note: Your current health, medical history, or gender cannot affect your premium.
There is more to health insurance costs than monthly premiums
In addition to the monthly premium, health plans also have out-of-pocket costs — deductibles, copays, and coinsurance — members must pay when they receive certain services.
- Deductible — The deductible is the amount you pay each year before your health plan starts paying for covered services. For example, if your plan has a $1,000 deductible, you will pay the first $1,000 of the costs for the care you receive. After that, your insurance pays a portion or all your costs, depending on the plan.
- Copay — The copay is the fee you pay each time you receive care — for example, $20 to see a doctor or $100 to go to the emergency room.
- Coinsurance — Coinsurance is the percentage you pay for some of your covered services. If your coinsurance is 20 percent, your insurance company pays 80 percent of the cost for a covered service, and you pay the remaining 20 percent.
- Out-of-pocket maximum — The out-of-pocket maximum is the limit on how much you will pay out-of-pocket for covered health services each year. No matter what, you will not pay more than this amount.
Every ACA health plan is assigned a metallic category: Bronze, Silver, or Gold. The categories can help you compare your plan options based on how much you will pay towards your monthly premium and out-of-pocket costs when you receive care. In general:
- Bronze plans have lower monthly payments but higher out-of-pocket costs.
- Silver plans have monthly payments lower than Gold plans but higher than Bronze. Out-of-pocket costs will be lower than a Bronze plan but higher than a Gold plan.
- Gold plans have higher monthly payments but lower out-of-pocket costs.
Compare cost and coverage by category.
AmeriHealth New Jersey also offers “catastrophic plans” to individuals under 30 and those with extreme financial hardship. Catastrophic coverage protects you from the costs of worst-case scenarios, providing coverage for hospitalization or serious illnesses.
Health insurance cost subsidies
There are a number of ways New Jersey residents can get help paying for some or all of their health insurance. Learn more about Affordable Health Insurance for New Jersey Residents.
Do you really need health insurance?
The State of New Jersey has an individual health insurance coverage mandate, which requires New Jersey residents to have health insurance or possibly pay a fine. This helps keep insurance premiums lower for individuals because it pools together all the health care consumers in a given area — both those who are likely to have very few medical issues and those who are likely to have very many.
Choosing the best health insurance in New Jersey
Despite the rising cost of health care, AmeriHealth New Jersey remains committed to offering plans that work for everyone.
- Shop for a plan. Compare all our individual New Jersey health insurance plans and apply for coverage.
- Find out if you qualify for financial assistance. Depending on your income, age, and the number of people in your household, you may be eligible for financial assistance.
¹ “Multiple Chronic Conditions Chartbook”, accessed April 2014.
²State QuickFacts — New Jersey United States Census Bureau, 2020, accessed July 26, 2022.
3Combating Health Care Fraud, WASTE and Abuse — Health Cost Containment, accessed December 2017.