The Basics: What a Premium Is
Your health insurance premium is the monthly (or annual) payment you make to your insurance
company to maintain your health coverage — regardless of whether you use any healthcare
that month. The premium is like your membership fee for being covered. You pay it even in months
when you don’t see a doctor or fill a prescription.
Your premium is separate from your deductible, copay, and coinsurance — those are what
you pay when you actually receive care. The premium is just the cost to keep your plan active.
What Determines Your Premium
On ACA-compliant plans, premiums can only vary based on a limited set of factors:
- Age: Older individuals pay higher premiums. Insurers can charge up to 3x more
for older enrollees compared to younger ones.
- Location: Premiums vary significantly by state and even by county within a state,
based on local healthcare costs and carrier competition.
- Plan metal tier: Bronze plans have the lowest premiums; Platinum plans have the highest.
- Tobacco use: In most states, insurers can charge tobacco users up to 50% more.
- Household size: Family plans with more covered members have higher premiums.
Insurers cannot charge more based on your health history, pre-existing conditions, or sex under the ACA.
ACA Subsidies Reduce Your Premium
If your household income falls below 400% of the federal poverty level (approximately $60,000 for a
single person in 2026), you may qualify for ACA premium tax credits that directly reduce your monthly
premium. The subsidy is applied at the point of sale — you pay the net (post-subsidy) amount
each month rather than paying the full premium and waiting for a tax refund.
Employer Premium Contributions
If you get insurance through an employer, your employer typically pays a significant portion of the
premium — often 70–80% for employee-only coverage and 50–60% for family coverage.
You pay the remaining employee contribution, usually pre-tax through payroll deduction. The employer’s
contribution does not appear on your paycheck but is part of your total compensation.