Premium
The monthly amount you pay to maintain your health insurance coverage.
What is Premium?
A premium is the amount you pay, usually monthly, to keep your health insurance active. You pay this whether or not you use any healthcare services. Think of it as your membership fee for having insurance.
Premiums don't count toward your deductible or out-of-pocket maximum. They're a separate cost you pay in addition to any deductibles, copays, or coinsurance when you receive care.
Generally, plans with lower premiums have higher deductibles and out-of-pocket costs, and vice versa. HDHPs typically have lower premiums, which is part of their appeal - you can use the premium savings to fund your HSA.
Frequently Asked Questions
Can I pay premiums with HSA funds?
Generally no. Insurance premiums aren't HSA-eligible, with a few exceptions: COBRA coverage, health insurance while receiving unemployment, Medicare premiums after age 65, and long-term care insurance.
Why do HDHPs have lower premiums?
You're taking on more risk with a higher deductible, so the insurance company charges less. The savings can go into your HSA.
What happens if I don't pay my premium?
Your coverage may be cancelled. Most plans have a grace period, but missing payments risks losing your insurance entirely.
Related Terms
Deductible
The amount you must pay out-of-pocket for healthcare before your insurance starts covering costs.
High-Deductible Health Plan (HDHP)
A health insurance plan with a higher deductible and lower premiums that qualifies you to open an HSA.
Out-of-Pocket Maximum
The most you'll pay for covered services in a plan year, after which insurance pays 100%.
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