What Is the Average Health Insurance Cost in California?
Shopping for health insurance is not like buying any other product or service. Many times, you only discover the true cost of your premiums after enrolling in a health insurance plan. The best workaround is to understand the average health insurance cost beforehand.
In this article, we examine the distribution of health insurance costs across the US and specifically in the State of California.
Average Health Insurance Cost in the US
Since 2010, health insurance costs have been changing due to the Affordable Care Act (ACA), which demands that all US citizens must have health insurance and offer options for those in underserved communities. The ACA health plans group the average monthly premium costs according to "metal tiers," Bronze, Silver, Gold, and Platinum.
A healthy, single 40-year-old will pay an average of $495 per month for health insurance in 2021. However, since the population comprises people of all ages, backgrounds, and health conditions, the average health insurance cost can be higher or lower than this amount. The average monthly premiums per tier estimates are as follows:
Amount per person per month
Factors That Determine the Average Health Insurance Cost
According to the tier system, the greater the premiums, the less the out-of-pocket costs, and vice versa. However, your location, employment status, age, and health all go into determining your actual cost of health insurance.
Individual plans typically cost more than employer-sponsored plans, but individuals can also qualify for tax subsidies that cater to a significant portion of the premiums. On top of that, premiums vary according to the number of individuals covered, so a health plan for couples will be cheaper than a plan covering a family of four.
Let's look at how these different factors affect the cost of your health insurance in detail.
The cost of premiums varies depending on your resident state and county. Urban areas with larger populations have more insurance options, driving down the cost due to competition between providers, so you are most likely to pay cheaper premiums.
Rural regions, in contrast, have much fewer insurance providers and, therefore, less price-based competition, which leads to higher premiums. Urban regions also have better healthcare infrastructure, such as more hospitals and clinics to serve the larger population, which means more health insurance plans are acceptable.
Rural areas are typically less developed, with one or two main hospitals that are most likely to accept the nationally recognized health plans rather than those developed to meet the state or county's needs. When you have fewer health plan options, your premiums will generally be higher.
The general rule in health insurance is that the younger you are, the healthier you are and, therefore, the cheaper your premiums. Individual health insurance plans are most affordable starting from age 21 and increase significantly with age.
Those at 50 and above pay the most expensive premiums. The actual figure can be three times higher than what a 21-year-old pays for the same policy. This is because older people have greater medical care needs than younger people because of preexisting health conditions.
It is also worth noting that families seeking health insurance will see a gradual increase in their premiums as their children grow older. Up to the age of 14, children's premiums add to the family's health plan at a flat rate, but every year past 15 will see increased premiums per child.
Type of Health Plans
There are four types of health plans according to the kind of insurance network that provides them. They are;
- Preferred Provider Organizations (PPO),
- Health Maintenance Organizations (HMO),
- Exclusive Provider Organizations (EPO), and
- Point of Service Organizations (POS).
Each of these plans uses different pricing strategies to manage healthcare access available to each state's citizens.
An HMO plan usually costs less because it predetermines the doctors you can visit and where to find them in your area. HMO plans only cater to individuals with a primary care physician, and in case of specialist care, you will get a referral to an in-network provider. This all translates into cheaper premiums.
On the other hand, PPO health plans allow you to visit any doctor within or outside the network, even without a referral. This means higher premiums, but it is ideal if you visit various specialists or prefer not to have a primary care physician.
The table below shows the average premiums according to each type of health plan in 2021.
Type of plan
Average cost per person per month
Average Health Insurance Cost in California
The State of California has higher health insurance premiums than the national average, estimated at $588 per month. Unlike most other states, California does not allow health premiums to increase based on tobacco use, but all the other factors explained above will determine the actual cost of your premiums.
The following table shows the estimated premiums by California counties, ranked from the highest to the lowest cost.
Average cost per person per month
Covered California Health Exchange
The annual state health exchange, Covered California, offers individuals, families, and small businesses opportunities to register or change their existing health insurance plans and enjoy subsidies if they qualify for Advanced Premium Tax Credits. The open enrolment period starts in the Fall and lasts for three months, and you have the option to enroll or change your health plan as you wish if any of the following life events happen during the year:
- The birth of a child
- A change of income
- An unexpected loss of health coverage, such as through job loss
- Relocation to an area that doesn’t support your current policy
Average Health Insurance Cost in California By Metal Tiers
If you have high medical bills, the Gold and Platinum tiers are the best health plans offered by Covered California. These plans may have the highest premiums, with Platinum plans covering 90% of all your medical costs, but their deductibles and out-of-pocket costs are significantly lower. These would also work best if you enrolled for a coinsurance plan as well to reach the deductible amounts quickly and ultimately save on costs.
The Silver tier is usually recommended for those with average medical costs or lower incomes because they offer a balance between premiums and deductibles. It is also easier to upgrade from Silver to Gold or Platinum if your health or income status changes due to any of the life events listed above.
Individuals whose income falls under 250% of California's federal poverty level can qualify for cost-sharing discounts for their Silver health plans.
The Bronze tier is ideal for younger, healthier individuals because they have the cheapest premiums. California also offers an Expanded Bronze tier with more cost flexibility. Although Bronze plans have the highest deductibles, healthy people expect to have much less medical costs, so they can ultimately save on their health insurance costs. However, in case of a high-cost medical expense, you can still use a coinsurance policy to meet the cost of deductibles.
The youngest partner's age is the basis for California insurance rates. If there is a significant age difference between partners, it would be best to enroll for the same insurance plan together and pay a reduced premium.
Couples who are closer in age could save money by enrolling in separate individual health plans with overall lower premiums. It is, therefore, best to understand your health, finances, and future plans as a couple to find the best insurance to suit your needs.
The Major Risk Medical Insurance Program for California
Suppose you have preexisting health conditions that make it difficult to find individual health insurance through the Cover California program, the Major Risk Medical Insurance Program (MRMIP) is how the State of California covers the cost of care by supplementing the premiums from other health insurance plans.
The MRMIP often has a waiting list because of high demand and limited funding, but recipients can finally afford the healthcare they need. To qualify, you must be a California resident and unable to secure sufficient health coverage for the existing health insurance plans.
You should also be unable to be eligible for COBRA or CalCobra insurance to continue having your health benefits and unable to qualify for Medicare Part A (hospital care) and Part B (outpatient care) except due to end-stage renal disease.
California Health Insurance Companies
When comparing health insurance quotes in California, the major health insurance companies are Anthem Blue Cross, Blue Shield of California, Kaiser Permanente, Oscar Health Plan of California, Western Health Advantage, Sharp Health Plan, and Sutter Health Plus.
These provide individual and family health insurance plans. However, if you need a dedicated dental plan, the California Dental Network, Delta Dental Insurance Company, and SureBridge are some providers that offer reliable dental insurance in California.
A Way Forward
As you can see, there is no way of knowing exactly how much your health insurance premiums will cost because so many factors go into determining each unique plan. Your best bet is to apply for quotes from multiple health insurance companies in California to make the best decision. Visit Affordable Care California for the latest health insurance quotes from the leading carriers in California today to help you make an informed decision on your insurance plan.