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. Except in a few states that have tighter regulations about health insurance premiums as they relate to age, most states use the federal guidelines when making adjustments to the rates you'll be charged for a policy.
Average Health Insurance Costs By Age
While a large portion of your health insurance costs will depend upon the amount of coverage your plan provides (Bronze, Silver, Gold or Platinum) as well as where you live, we can examine how your age affects health insurance costs by looking at how the premiums for a single plan scale based on age. Fortunately for consumers, the federal regulations regarding individual health insurance set guidelines on how ACA compliant plans can adjust their rates based on the age of the policyholder.
Example: Sample Silver plan premiums
In most states, the base rate for a plan is calculated using a 21 year old policyholder in mind. This rate is then adjusted according to the age of the consumer. States using the federal age and premium guidelines will see anyone under the age of 21 all treated equally, with monthly costs coming out to a little more than 63% of the base rate for a 21 year old. Health Insurance rates go up as a policyholder gets older, with the largest increases coming after age 50. This reflects the higher expcted share of health care costs that older Americans are expected to utilize.
At the high end of the age range, those consumers 64 and older have their premiums capped at 3 times the premiums of the 21 year old base rate. As you can see from the data, the largest changes in health insusrance costs take place between the ages of 50-60, where premiums go from 1.78x the 21 year old rate to 3x by age 64. The following table shows the federal premium adjustments based on age.
Health Insurance Cost by Age
|Age||Premium Multiple||($) Sample Premium|
States Specific Age Curves for Health Insurance Costs
A few states set their own standards when it comes to age factors for health insurance rates. The federal age factor curve is the widest age curve that states can permit health insurers to use in calculating premiums. The following states have more restrictive regulations, meaning that there is less variation in health insurance costs between the youngest and the oldest policyholders.
New York does not permit any use of age as a factor when determining health insurance rates. In fact health insurance premiums in the Empire State cannot discriminate whatsoever and have the same price regardless of any policyholder characteristics. This typically leads to higher premiums for those who are ages 21-50, and lower premiums for those who are older when compared to other states.
Vermont also does not permit the use of 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 see higher relatively premiums, while those older consumers will see lower premiums in comparison to other states.
Utah has the same 3:1 range when it comes to health insurance premiums but the scaling in the different age groups tends to be more aggressive. For instance consumers 30-36 pay almost 40% more than the base rate in the state where as the same group would pay anywhere from 13 - 27% more under the federal guidelines. Children under the age of 21 are also more expensive with costs fixed at 79% of the base rate.
Minnesota has an age curve similar to the federal guidelines, with consumers over 21 experiencing the same scaling they would in other states. Where the state differs is the costs for those under 21, with premium multiples coming in at 89% of the base rate instead of the standard 63.5%.
Masschusetts allows insurers to adjust premiums based on age to a maximum of 2x the premiums charged to a 21 year old. This makes for a narrower variation of premiums based upon the age of policyholder.