How to Calculate and Plan for your Medical Expenses Monthly Cost


We are frequently under pressure to be responsible in our lives and in our finances. Knowing your medical expenses monthly cost is the epitome of ‘adult responsibility.’ It’s easy to assume that health insurance will cover most of your medical expenses and can thus be neglected in your financial plan.

Unfortunately, this is far from the truth. With out-of-pocket prices on the rise and the ever-present potential that an unexpected medical bill would dent your budget, health care costs should be a top budgeting focus.

Consider the following: According to the Bureau of Labor Statistics, medical costs account for over 8% of yearly household expenditure or nearly 7% of pretax income. Even if insurance agencies may come in to cover certain costs, premiums must be included in your health insurance budget.

Four ways you pay for medical expenses

Premium: This is the medical expenses monthly cost you pay to your insurance company. It is the most predictable expense you will encounter. The amount is determined by the health plan you choose. To calculate the annual cost of your health plan, multiply your premium by 12.

The more your insurance premiums, the lower your out-of-pocket expenditures each time you seek medical treatment. The converse is also true: the smaller the monthly cost of your health plan, the more you spend each time you require medical attention.

Many factors that influence medical expenses monthly cost are beyond your control. Nonetheless, knowing what they are is beneficial. Here are ten important factors that influence the cost of health insurance premiums.

1. Federal and state statutes: What health coverage must cover and how much insurance companies can charge are governed by legislation.

2. Type of coverage: The amount you pay depends on whether you are covered by an employer in a group health insurance plan or buy it on your own.

3. Level of income: Low-wage workers pay more through their employers, but they may pay less through a state or federal exchange thanks to subsidies.

4. Size of business. Insurance is typically less expensive at large corporations.

5. State where you live: The cost of premiums varies by state and county.

6. Type of neighborhood: Medical expenses monthly cost in urban areas are generally cheaper than in rural areas.

7. State where you live: Some states have only one plan, while others have many options that can lower costs.

8. Type of plan: The most expensive plans are preferred platinum plans and provider organizations (PPOs) through the federal Health Insurance Marketplace.

9. Age: As policyholders get older, their health insurance rates rise, with the highest increases occurring after age 55.

10. Tobacco consumption: Tobacco smokers face premium increases of up to 50%.

Deductibles: A deductible is a predetermined amount you must spend before your insurance provider contributes to your medical expenses. It may be $500, $1,000, or even more than $6,000 in value.

An overall deductible may apply to some plans. You might have to pay the full cost of doctor appointments or medical services until your deductible is met. After then, the health plan will begin paying its share of covered services. Depending on your insurance policy, part of your care will then be paid for through copays, coinsurance, or both.

In other plans, different deductibles may apply to different types of care. If you are seeing in-network physicians, the plan may begin paying for your health care sooner. You may be required to pay higher before the plan begins to share the cost of care received from out-of-network providers. Some plans have separate deductibles for health care services and pharmaceutical benefits.

Out-of-pocket costs in coinsurance or copayments: This is the amount of money you spend when you visit doctors, purchase medication, and receive other forms of medical services. Coinsurance or copayment may be required for each appointment or prescription. Co-insurance is a rate of the costs you bear, such as 30% of the cost of prescription medicine. Copays are one-time payments, such as $15 for a doctor’s appointment.

Medical care and supplies not covered by insurance: You will be responsible for the entire medical expenses monthly cost that your health care plan does not cover. These expenses could include:

1. Medicines available over-the-counter

2. Supplements and vitamins 

3. Chiropractic treatment or acupuncture doctor fees

4. Fees for services not covered by your plan’s network

The average cost of health insurance in 2022

This is the national average for private health insurance purchased through the Affordable Care Act’s Health Insurance Marketplace. Many Americans are eligible for subsidies that reduce the cost of health insurance in the Marketplace.

If your work provides health coverage, or if you’re qualified for government insurance programs like Medicaid or Medicare, which provide comprehensive plans like Medicare Advantage at affordable pricing, you may have lower-cost options.

The average cost of health insurance by state

Depending on where you live, medical expenses monthly cost can vary dramatically. According to the Department of Health and Human Services (HHS), Maryland has the most affordable health insurance, with a monthly cost of $338 for a typical 40-year-old. On the other hand, West Virginia has the highest average premiums, at $712 per month.

Variation in rates is caused by factors such as competition in a specific state, forcing insurers to offer competitive rates. Expenses may also vary depending on the population’s estimated health costs. For example, insurance firms set higher premiums to cover expenditures in states where people are less healthy, or hospitals and doctors charge more.

The average cost of health insurance by family size

Predictably, the more members of your family are covered by the health insurance policy, the higher your medical expenses monthly cost will be. HHS estimates the average monthly expense for a 40-year-old couple is $954, more than double the cost for an individual of that age. However, adding children is not as linear. A 40-year-old couple with one child under the age of 14 would pay $1,230 a month on average, while a family of five would pay $1,782.

The average cost of health insurance by family size

As people get older, they require more health care, and health insurance rates rise to meet those predicted expenditures. The average premium cost for an 18-year-old is $324 per month. A 50-year-old pays an average of $642, while a 60-year-old pays approximately $970. Seniors with low earnings, such as those who have retired or reduced their working hours, may be eligible for increased subsidies.

The average cost of health insurance by plan type

There are four different categories of health plans you can choose from. Each with different levels of flexibility and cost in the Marketplace.

Health Maintenance Organization (HMO): HMOs have reduced rates, but they demand you to use a specific set of doctors and receive referrals to specialists for covered care unless it’s an emergency. Silver HMOs cost $473 per month on average.

Exclusive Provider Organization (EPO): EPOs are somewhere between HMO and a PPO. They require you to use the health plan’s in-network providers, but they don’t usually require referrals to see specialists. Monthly fees for EPO Silver plans average $508

Preferred Provider Organization (PPO): PPOs are more expensive than HMOs, but they often have a larger provider network. When it comes to covered services, you don’t require a referral. Silver PPO plans on the Marketplace have an average premium of $517.

Point of Service (POS): POS plans are the most flexible, but they come at a higher price. You can get medical care outside of the health plan’s provider network, though you’ll likely pay more. The average monthly premium for POS Silver plans is $534.

The average cost of health insurance by metal tier

The Health Insurance Marketplace plans are divided into four tiers: Bronze, Silver, Gold, and Platinum. The tier correlates to the cost of the coverage or how health insurance plans and members share costs. These ratios are determined per tier and are based on a regular member’s estimated monthly medical costs.

Bronze: Bronze plans offer the lowest monthly premiums but the greatest out-of-pocket expenditures when you require medical attention. These plans’ deductibles are high, which means that if you need care, it will be pricey until you meet the deductible.

Silver: Silver plans have low monthly premiums and out-of-pocket expenses when using services. If you are eligible for cost-sharing reductions, a type of federal subsidy, you must enroll in a Silver plan to receive those benefits. As a result, Silver plans are the most affordable alternative for many people.

Gold: Gold plans include higher monthly premiums but lower out-of-pocket payments. Deductibles are often lower than those seen in Bronze and Silver plans.

Platinum: Platinum plans have the most expensive monthly premiums and the lowest servicing costs. Deductibles are often low, so if you’re willing and able to pay extra each month, you can expect to be covered for most of your expenses.

The average cost of public health insurance plans

The health insurance marketplace is one option for obtaining an insurance policy. According to the Kaiser Family Foundation, most Americans obtain health insurance through their jobs (50%) or the federal government (35%) through Medicaid, Medicare, or military benefits.

Medicare: Medicare is a government-sponsored health insurance program in the United States. The plan covers part of medical lift chair costs, people aged 65 and over, as well as younger persons who meet certain conditions and people with certain diseases.

Medicaid: Medicaid is a state program that primarily benefits low-income individuals. The federal government and the states jointly fund it, with each state determining eligibility and other criteria. A medicaid planner helps individuals find services that best suit them. Although state-specific criteria differ, most Medicaid enrollees have free or very low-cost coverage.

How to estimate costs

Past expenses: Medical billing and spending histories are crucial for budgeting for healthcare bills. Looking at how much you spent on healthcare in the past is the greatest place to start when considering how much to prepare for your medical expenses monthly cost.

When it comes medical expenses monthly cost, you may need to plan ahead to see whether you’ll have any unexpected expenses this year that you didn’t have last year. Ensure you know how much you’ll have to pay out of pocket by checking your insurance coverage each year and including it into your healthcare budget.

Online calculator: Some websites can provide you with an estimate of your insurance prices. If you have employer-provided insurance, your firm may provide a cost-estimating tool.

Family’s medical requirements: Children’s yearly checkups and immunizations are free. Still, you’ll have to factor in the costs of managing chronic diseases like high cholesterol and diabetes, as well as doctor visits and medication. Other costs could include mental health therapy and planned surgeries, pediatrician costs, or medical treatments, for which you may be required to pay a co-pay or co-insurance.

Ways to plan your healthcare spending

Make your health care a priority: Think of paying for health care bills as a ‘need’ rather than a ‘want’ when budgeting for insurance premiums, planning for doctor visits, and ordering prescriptions. Budgeting for medical bills will become second nature once you give your health the importance it deserves

Set up an emergency fund: Remember those unforeseen medical expenses that are difficult to budget for? Make an emergency fund while planning your healthcare budget. An emergency fund is a savings account set up to help cover a financial or medical emergency, such as an operation or medicine that your insurance plan does not fully cover.</p>

You can avoid large health bills by having home medical equipment to solve minor emergencies. If you’re beginning from scratch with an emergency fund, start modestly and set a realistic goal for yourself.

It’s impossible to predict how much health insurance will cost you. Many elements influence the final cost, but only a handful of them are within your control. You may use the government’s calculator to estimate the subsidies you’ll qualify for if you buy a plan through

If you purchase insurance via your job, study your open enrollment information as soon as it becomes available, so you have enough time to consider your alternatives. In case your claim is complicated and hard to comprehend, you may involve your law firm of choice for policy interpretation.

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