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How Age Affects Health Insurance Costs

How Age Affects Health Insurance Costs

Older people pay higher premiums for health coverage because they typically need more medical care. Federal rules place caps on rates charged for individual Affordable Care Act (ACA) plans, but some states regulate health insurance premiums even more.

Under the ACA, the premium charged for a 21-year-old is used as the base to calculate rates for all other age groups.

In most states, people 64 or older cannot be charged more than three times that base rate. Rates for children under 21 are lower than the base rate due to fewer health risks.

Eight states and Washington, D.C., don't follow the federal rating guidelines precisely. If you live in New York or Vermont, age isn't used to calculate your health insurance rates. And residents of Alabama, Massachusetts, Minnesota, Mississippi, Oregon, Utah and Washington, D.C., will see a slightly different formula for setting rates.

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Average cost of health insurance plans by age

Affordable Care Act (ACA) health insurance plan costs are calculated based on your coverage tier (Catastrophic, Bronze, Silver, Gold or Platinum), your county of residence, your family size and your age. Of these variables, the biggest factor affecting your health insurance rate is age. Insurance companies use age to determine how likely you are to need insurance for medical care. Federal rules dictate how much ACA-compliant plans can adjust rates based on age, but health plans are generally more expensive for older applicants.

Using the federal formula, rates rise gradually to age 50, then show a steeper increase for people age 51 and older.

Line graph of rate trends by age

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Most states calculate the base rate for a plan using a 21-year-old policyholder. This rate is then adjusted according to consumers' ages. Health insurance rates go up as a policyholder gets older; the largest increases typically occur after age 55. This reflects the higher health care costs expected for older Americans.

At the high end of the age range, premiums for consumers 64 and older are capped at three times the base rate. For instance, a 64-year-old pays $1,314 per month for a Silver plan, which is three times more expensive than the monthly rate of $438 for a 21-year-old. The largest increases in health insurance costs occur for adults over age 50 when using federal ratios, while insureds under 21 have the lowest rates.

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Some states consider age differently when setting rates

A few states set their own standards when it comes to health insurance rates. For example, some states prohibit any health insurance company from setting rates based on age, while others use age ratios higher or lower than federal guidelines.

New York and Vermont do not permit using age as a factor when determining health insurance rates. That means health insurance premiums in these states don’t vary based on age across the board. This usually results in higher premiums for people ages 21-50 and lower rates for those who are older compared to other states.

Alabama, Mississippi and Oregon all follow the federal rating rules for anyone over the age of 21. But 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 rate.

Massachusetts has its own rating rules for all age groups. For example, 21- to 24-year-olds in Massachusetts pay 118% of the base rate, compared to the federal 1:1 ratio. For anyone 49 and over, the state's age ratios are lower than federal amounts.

Minnesota follows federal guidelines for people age 21 and older. But while federal ratios vary for the under-21 age group, Minnesota applies just one ratio — 89% of the base rate — to all policyholders younger than 21.

Utah follows federal rules for the 64 and older age group, but scaling among other age groups can be more aggressive. For instance, consumers ages 27-36 pay almost 140% more than the base rate in the state, whereas the same group would pay between 105% and 123% more under federal guidelines. Children age 14 and under also are slightly more expensive in Utah, with medical insurance costs fixed at 79% of the base rate compared to 77% under federal guidelines.

Washington, D.C., rate factors are lower than federal requirements for all age groups. Consumers age 64 and older pay only twice the base rate rather than triple the base amount.

Finding health insurance based on income

If you meet income requirements, you may be eligible to enroll in your state’s federally funded Medicaid program. Eligibility for this type of health insurance depends on your 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.

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Health insurance options if you are under 26 years old

If you are under 26 years old and don't have coverage through your employer, then you have two options for acquiring health insurance:

  • Depending on your income, you may qualify for Medicaid.
  • You can stay on your parents' health policy. All states allow parents to add and keep their children on their health insurance policies until the child reaches age 26. Other states, such as New York, allow parents to keep children on their health insurance plan into their late 20s under the "Age 29" Dependent Coverage Extension law.
  • You can purchase health insurance through the health insurance exchange.

Health insurance options if you are 65 or older

If you're age 65 and are receiving Social Security benefits, you generally are enrolled in Original Medicare automatically. You're not charged for Medicare Part A and pay $164.90 per month for Part B in 2023. Once you're on Medicare, you might choose to enroll in a Medigap or Medicare Advantage plan to help with costs not fully paid by Medicare. While some Medigap rates are based on age, Medicare Advantage plans do not count age as a rating factor.

Frequently asked questions

Does age affect my health insurance rates?

Yes, age is a factor in determining individual ACA insurance rates in most states. The average cost of health insurance is higher for older consumers since they typically need more medical services. But insurance companies must comply with state and federal limits on age-based rate increases.

Does my state base health insurance rates on age?

Your state likely bases health insurance rates on age. Only two states do not use age to determine health insurance rates: New York and Vermont. If you live in any other state, the rate you'll pay for insurance changes based on your age, according to state or federal regulations.

What if I can't afford ACA health insurance?

Health insurance subsidies can reduce the cost of insurance based on your income. People who qualify pay an average of $77 per month for insurance, and your costs could be even less. Also, you may qualify for Medicaid if you have a low income. Requirements vary by state, so check your state's Medicaid website for eligibility information.

Do employers determine health plan rates by age?

Rather than age, employers base health insurance rates on income, using sources like employee pay rates, wages on W-2 forms or the federal poverty level (FPL). If employer insurance gets too costly or stops offering minimum coverage, an employee may qualify for individual ACA insurance under a special enrollment period (SEP).


ValuePenguin used Centers for Medicare & Medicaid Services (CMS) Public Use Files (PUFs) to calculate average premiums by age groups and specific coverage years. Sources include CMS.gov age banding rates and HealthCare.gov rating guidelines.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.