What Is a Health Insurance Premium?
Your monthly premium is what you pay for your health insurance coverage.
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Keep in mind that a health insurance premium doesn't pay directly for your medical care. Your premium is the cost you pay to keep your policy, and you're responsible for paying separate costs when you go to the doctor.
Your health plan's monthly premium depends on factors like your age, where you live and the type of health insurance you buy.
What is a health insurance premium?
An insurance premium is the monthly cost you pay to buy and keep your health coverage.
Your monthly premium is different from other costs you're responsible for paying with insurance. Those include your deductible, copays and coinsurance. That's because you have to pay your health insurance premium whether or not you use your insurance that month.
Your health insurance policy doesn't start until you've made your first premium payment. If you stop paying your monthly premium, your insurance company may cancel your coverage. You can think of your insurance premium as the cost you pay to keep your health insurance.
Insurance premium: Definition and meaning
Insurance premiums are defined as a monthly rate you pay for coverage. Your premium keeps your policy active, but it's important to remember that you still have to pay other costs when you get care.
Most people pay their health insurance premiums monthly. If you have workplace health insurance, your employer typically takes your premium out of your paycheck.
You're responsible for paying your premium directly to your insurance company if you have marketplace coverage. If you qualify for discounts based on your income, also called subsidies, you can choose to pay a reduced premium each month, or you can get your subsidy as a lump sum when you do your taxes.
How much does health insurance cost?
The average health insurance premium is $621 for a 40-year-old with a Silver health plan in 2025.
Keep in mind that your health insurance premium depends on factors like your age, your plan tier and the company you choose.
You may qualify for discounts from HealthCare.gov or your state health exchange if you earn a low income. These subsidies can lower your monthly health insurance premium by up to hundreds of dollars per month.
Average health insurance premiums by age
Age | Monthly rate |
|---|---|
| 20 years old | $471 |
| 30 years old | $552 |
| 40 years old | $621 |
| 50 years old | $868 |
| 60 years old | $1,319 |
All rates for a Silver health plan without subsidies.
How are health insurance premiums calculated?
Your health insurance costs are calculated by companies using your age, the plan tier you choose, where you live and a few other factors. The Affordable Care Act (ACA), also called Obamacare, limits what factors regular health insurance plans can use when calculating premiums.
- Age: Health insurance premiums usually cost more as you get older.
- Where you live: Factors like local laws, cost of living differences and the companies doing business in your area all influence how much you pay for health insurance.
- Number of people on your policy: The more people on your plan, the higher your typical health insurance monthly cost.
- Plan tier: You can choose from several different health insurance plan tiers. Catastrophic and Bronze plans typically have the cheapest average health insurance premiums while Gold and Platinum plans have the most expensive monthly costs, on average.
- Tobacco use: Many states let health insurance companies increase your monthly premium if you use tobacco products.
- Plan type: Health insurance plans that limit you to a network of doctors like HMOs (health maintenance organizations) tend to have cheaper premiums than plans that give you more freedom like PPOs (preferred provider organizations).
Companies weigh these factors differently, so you should look at multiple companies to find the best rates.
How much does health insurance cost in total?
Your premium isn’t the only cost you have to pay with health insurance. Remember, your premium is the cost you pay to get an insurance policy.
You also have to pay other costs when you visit the doctor like your health insurance deductible, copays, coinsurance and your out-of-pocket maximum.
Deductible
Your deductible is the cost you have to pay before your coverage starts. Deductibles reset every year, so any money you've paid toward last year's deductible won't count towards this year's.
Plans with lower deductibles tend to have higher monthly premiums. High-deductible health plans typically have cheap premiums, but you have to pay thousands of dollars before your coverage starts.
Copays
A copay is a set amount of money that you pay when you go to the hospital or get a prescription filled. For example, your plan may require a $20 copay when you go to the doctor for a check-up.
Coinsurance
Coinsurance is a percentage of your medical bill that you're responsible for paying. For example, if you have a 20% coinsurance and you have a surgery that costs $1,000 then you would pay $200.
Copays tend to cost less than coinsurance, so it's a good idea to choose a health plan with copays for services and drugs you use often.
Out-of-pocket maximums
Your out-of-pocket maximum is the most that you'll pay for medical care in a single year. This cap on out-of-pocket spending includes your deductible, copay and coinsurance.
Your health insurance premiums do not count toward your out-of-pocket maximum.
All marketplace and employer health insurance plans have an annual spending limit. Typically, the higher your monthly premium, the lower your out-of-pocket maximum. But, short-term plans and supplemental coverage don't have this requirement.
Frequently asked questions
What is a health insurance premium?
A health insurance premium is a monthly payment that lets you keep your coverage. Remember that your premium is the cost you pay to have insurance, and you'll typically have other costs you're responsible for when you go to the hospital.
What's the average health insurance premium?
In 2025, the average health insurance premium was $621 per month for a 40-year-old with a Silver health plan. The amount you pay for health insurance will depend on factors like your age, where you live and the type of plan you choose.
What is the difference between a copay and a premium?
A copay is a fixed cost that you pay when you visit the doctor or get a prescription filled while your monthly premium is the monthly cost you pay to keep your insurance active. You're only responsible for copays when you get medical care, but you need to pay your monthly premium regardless of whether or not you've used medical services.
Methodology
Average health insurance premiums were calculated using data taken from the public use files (PUFs) on the Centers for Medicare & Medicaid Services (CMS) government website and from state-run marketplace sites. Listed rates are for 40-year-olds with Silver health plans. Information related to health insurance rules came from HealthCare.gov.
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