Under the Affordable Care Act (Obamacare), the age of the policyholder is one of the few characteristics insurers are permitted to use for determining your health insurance premiums.
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Older applicants will find that they are required to pay a larger premium for health insurance because they will need more medical services. Luckily, federal regulations allow for a maximum cap on the price for care. However, a few states have tighter regulations for private health insurance premiums as they relate to age. This is dictated by how the state runs its health insurance marketplace and the risk pool, which allows the state to adjust the premium for health insurance.
Average Cost of Health Insurance Plans by Age
Obamacare health insurance plan costs are calculated based on your metal tier of coverage (Catastrophic, Bronze, Silver, Gold or Platinum), your county of residence, your family size and age. Of these variables, the biggest factor that influences your health insurance quote will be your age, as this directly impacts how a health insurance company judges your likelihood to need medical care. Federal regulations set guidelines on how ACA-compliant plans can adjust their rates based on the age of the policyholder, but health plans will be more expensive for older applicants.
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In most states, the base rate for a plan is calculated using a 21-year-old policyholder. This rate is then adjusted according to the age of the consumer. Health insurance rates go up as a policyholder gets older, with the largest increases after age 55. This reflects the higher expected share of health care costs that older Americans are expected to utilize.
At the high end of the age range, premiums for consumers who are 64 and older are capped at three times the premium for a 21-year-old’s base rate. For instance, for a Silver plan, a 64-year-old would pay $1,123 per month. This premium is three times more expensive when compared to the monthly cost for a 21-year-old, which is $374. As you can see from the data below, the largest changes in health insurance costs take place for adults over age 50, where premiums go from 1.79 times the 21-year-old rate to 3 times by age 64. The following table shows how federal premium adjustments increase based on age.
|Age||Average monthly cost of a Silver health plan||Premium multiple|
|64 and older||$1,123||3.00|
Since the implementation of the Affordable Care Act (ACA), health insurance premiums have steadily risen year over year. Today, the average cost for a Silver plan for a 40-year-old is $478, which is 73% more expensive than its cost in 2015.
State-Specific Age Bands for Health Insurance Costs
Some states set their own standards when it comes to age factors for health insurance rates. The following states have more restrictive regulations, meaning there is less variation in health insurance costs between the youngest and the oldest policyholders.
New York does not permit using age as a factor when determining health insurance rates. That means health insurance premiums in the Empire State don’t vary based on age across the board. This usually means premiums are higher for people ages 21–50 and lower for those who are older, when compared to other states.
Vermont also doesn’t permit insurers to use age as a factor when calculating health insurance premiums. Insurers must charge the same premiums regardless of health status, age or gender in the state. Like New York, younger citizens of Vermont typically pay relatively higher premiums while seniors pay lower premiums when compared to other states.
Utah has the same 3:1 ratio when it comes to health insurance premiums, but the scaling in the different age groups tend to be more aggressive. For instance, consumers ages 27–36 pay almost 40% more than the base rate in the state, whereas the same group would pay anywhere from 13%–27% more under the federal guidelines. Children under the age of 14 are also more expensive, with medical insurance costs fixed at 79% of the base rate.
Minnesota has an age curve similar to the federal guidelines. But for policyholders younger than 21, premium multiples are 89% of the base rate.
Massachusetts allows insurers to adjust premiums based on age to a maximum of 2 times the premiums charged to a 21-year-old. This makes for a narrower variation of premiums based on the age of the policyholder. Additionally, Massachusetts has the highest premium age curves for younger applicants: 21- to 26-year-olds pay 118% of the base rate set by federal guidelines.
Alabama, Mississippi and Oregon all follow the same federal premium multiples for anyone over the age of 21. However, for people under 21, these states do not use the same federal scale for health insurance. Instead, this age group pays a health insurance premium set at 63.5% of the base premium rate.
Finding Health Insurance if You Are Over 65 Years Old
If you are over 65 years old, then you may be eligible to enroll in your state’s federally funded Medicaid program. Your eligibility for this type of health insurance will depend on your level of income and whether your state has adopted the expanded form of Medicaid. In states that have expanded the Medicaid program, the household income limit is set to 138% of the federal poverty level.
Health Insurance Options if You Are Under 26 Years Old
If you are under 26 years old, then you have two options for acquiring health insurance if you do not get coverage through an employer: Stay on your parents' health policy, or purchase health insurance through the state exchange. All states allow parents to add and keep their children on their health insurance policies until the child reaches age 26. New York state allows policyholders to extend coverage up to age 29 by adding an Age 29 Rider to a marketplace health insurance plan.