How much does health insurance cost in Texas? That’s a question we get quite often, but the answer isn’t necessarily as straightforward as you might think. People pay very different amounts for insurance since there are a number of factors that go into calculating premiums.
Today, we’re going to discuss your health insurance options in Texas and which components influence your cost.
Types of Health Insurance in Texas
First, let’s do a quick overview of the different kinds of health insurance plans in Texas. The type of plan you choose is the first thing that’s going to affect your premium.
● Individual health insurance
● Family health insurance
● Short-term health insurance
● COBRA (continuation of a group plan after employment)
● Medicare (for people over 65 or who have been on disability for two years)
● Medicaid (for low-income individuals and families)
If you’re wondering how much health insurance costs in Texas, chances are good that you’re looking for either an individual or family policy, so that’s where we’ll focus today.
Factors that Affect Health Insurance Premiums
Nine factors go into setting health insurance premiums in both group and individual policies.
Laws: State and federal laws dictate the services health insurance plans must cover and how much they can charge.
Type of policy: Group plans often have lower premiums than individual plans.
Income: Subsidies exist to help low-income earners with their health insurance costs.
Employer: Large employers often have lower costs than small employers.
State: States and counties with higher cost-of-living usually have higher insurance premiums.
Availability: Counties with more than one insurance option may have lower premiums because it creates competition, thereby reducing prices.
Type of insurance: There are several types of insurance, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). HMOs tend to be cheaper than PPOs.
Age: Generally, health insurance premiums increase as we get older.
Tobacco use: Tobacco users can expect to pay up to 50% more for their health insurance in Texas.
Costs Included in Health Insurance Policies
To get a full picture of how much you’ll pay for health insurance, you need to know more than just the cost of the monthly premium. It’s a good place to start, but you should also understand what other expenses you could have. Let’s review some terms you should become familiar with.
The premium is the amount you’ll pay (usually monthly) in exchange for healthcare coverage. We’ve established that a number of things influence your premium, but the average premium for individual health insurance without federal subsidies in Austin, Texas is $275 in 2022.
A deductible is an amount that you must pay before your insurance starts paying their portion of the cost. The deductible is always based on a one-year period. Many plans run from January 1 to December 31, but some plans have different one-year periods.
Health insurance deductibles vary considerably. Some plans have a $0 deductible, while others can be a few thousand dollars. As you probably guessed, you’ll pay a higher premium for a lower deductible.
There are two types of cost-sharing expenses: copayments and coinsurance. You’ll pay at least one of these expenses each time you receive a healthcare service. As with the deductible, the less your cost-sharing expense, the higher your premium.
A copayment, or copay, is a set amount you pay for a service. For example, you might have a $25 copay for each doctor’s visit. You’ll pay that amount at each visit after your deductible has been met.
A coinsurance amount is a percentage of the covered service. If your plan has a 30% coinsurance cost for every doctor’s visit and your doctor charges $100, you’ll pay $30. Again, you must meet your deductible before any cost-sharing begins.
All individual and family health insurance plans have maximum out-of-pocket limits for each benefit year. They serve as a financial safety net for the insured. You will never pay more than the maximum out-of-pocket amount for services in a given year. Once you have paid this amount, your insurance plan will pay 100% for covered services.
In 2022, Obamacare plans have a maximum out-of-pocket of $8,700 for individual plans and $17,400 for families.
Obamacare versus Private Insurance
Individuals looking for a health insurance plan in Texas have two ways to get coverage. (The same is true for families.) You can find a plan on the Marketplace or go through a private insurer. There are pros and cons to each.
Private Health Insurance
You can purchase health insurance directly through a private insurance company. However, not all states require private insurers to offer the same level of coverage that you’ll be able to find in an Obamacare plan, which we’ll talk about next.
The advantage of enrolling directly with a private insurance company is that they do not have limitations on when you can enroll. You can apply for a policy during any time of the year, regardless of your individual circumstances.
You’ll find you have many options if you enroll in a private insurance plan. There are varying levels of coverage, and you’ll also need to choose between several types of policies.
Obamacare Health Insurance
Purchasing an Obamacare plan through the Marketplace Exchange is probably the most common way people purchase health insurance, assuming they aren’t eligible for a group plan or a government plan like Medicare. The cost for an Obamacare plan will depend on which metal tier of coverage you choose.
Platinum Coverage Tier
The platinum tier offers the most cost-sharing of all the metal tiers. You will have a low deductible, and the plan will pay 90% of the cost of covered services. Your responsibility will be the remaining 10%.
Of course, this high level of coverage will cost more than the other plans. The average cost for a platinum Obamacare plan in 2022 is $150.
Gold Coverage Tier
Gold is the second-highest coverage tier. You will still enjoy a low deductible, and the plan will pay 80% of the costs, leaving you with 20%. The average premium for a gold plan is $70 per month.
Silver Coverage Tier
Silver tiers offer a 70/20 coinsurance split. The plan pays 70% of covered services, and you pay 30%. The average monthly premium is $20 for a silver tier plan.
If you enroll in a silver plan, you might be eligible for a government subsidy in the form of cost-sharing reductions. There are income requirements to qualify for this subsidy, but if you are eligible, it will help with deductibles, copayments, and coinsurance costs.
Bronze Coverage Tier
Bronze plans have some of the lowest premiums on the Marketplace. The average cost for a bronze plan is $0 per month. The coinsurance split is 60/40, so you will be responsible for more of your healthcare expenses than the other plans.
There is one more Obamacare insurance option that doesn’t fall into one of the “meta” tiers. For those looking for even lower premiums, a catastrophic plan might be a good option. These are great for individuals who are healthy and aren’t likely to use their insurance often.
Like the bronze plans, catastrophic plans also offer a 60/40 coinsurance split. However, they come with high deductibles. In 2022, the deductible is $8,700 for an individual. Preventive services are covered prior to meeting the deductible. A catastrophic plan averages $0 per month.
How to Lower Your Health Insurance Costs
It’s no secret that health insurance is not cheap. The high cost of healthcare continues to drive our premiums to new heights. However, there are some ways you might be able to lower your health insurance costs.
Two government programs offer subsidies to help with health insurance costs. First, The Advanced Premium Tax Credit subsidy will lower your monthly premium if you qualify. Second, The Cost-Sharing Reductions program will help you with the copayments and coinsurance expenses. Both programs are designed for individuals with limited income, so you will need to meet certain qualifications to be eligible. If you qualify for a premium tax credit in Texas, you could pay as little as $0 per month.
The Medicaid program and the Children’s Health Insurance Plan (CHIP) offer health insurance to low-income families. Each state regulates its own Medicaid program and might have slightly different eligibility requirements. Information can be found at your state’s Department of Insurance website.
High-deductible health insurance plans are typically going to have the lowest monthly premiums. To help with the strain of having a high-deductible, you can open a Health Savings Account (HSA). An HSA has great tax benefits. Money deposited into the HSA is tax-free, can be invited and grow tax-free, and then be spent on medical services tax-free. Unlike a Flexible Spending Account (FSA), you do not have to use the funds within one year – they roll over from one year to the next and can even be used as a savings account for retirement.
Many high-deductible plans still pay for preventive services prior to meeting the deductible.
You could also consider purchasing a supplemental medical policy that offers coverage in certain situations, like in an accident, disability, or critical care incidents. The premiums for these plans average $25 – $50 a month.
If you need health insurance, we can help! There’s a lot to consider when choosing a plan, and our licensed agents can help you find one that fits your healthcare needs and your budget. Give us a call today and schedule your complimentary consultation.