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How Much Will Health Insurance Premiums Increase in 2024? Here’s How to Plan

With health insurance costs rising annually, more than 9 in 10 Americans now agree inflation and the affordability of healthcare are among the nation’s biggest problems. As the new year approaches, anticipating the cost of health insurance premiums in 2024 has become a pressing concern for budget-conscious shoppers. Here’s what to expect in the coming year.

Expected Premium Increases in 2024

Overall, monthly premiums are set to increase for both employer-sponsored health plans and Affordable Care Act plans in 2024. Learn how much costs are rising.

Employer-Sponsored Health Plans 

Overall, employers expect to see significant increases in the costs of their health plans in 2024. The median projected increase is 7%, according to a recent survey from the International Foundation of Employee Benefit Plans (IFEBP). 

The expected increase is in line with what employers projected in 2023, though it’s high compared to other years. In 2021 and 2022, employers projected increases of around 4% to 5%.

Affordable Care Act Plans 

Insurance companies that sell plans through the Affordable Care Act Marketplace are requesting median premium increases of 6% for 2024. Most premium changes fall between around 2% and 10%. 

A sizeable minority of insurers are proposing premium increases outside this range. Nearly 13% of insurers are requesting increases of 15% or more. However, it’s not all bad news for consumers: A similar percentage of insurers are proposing rate decreases. 

Key Factors Influencing Health Insurance Premiums 

Employers and health insurance companies cite a variety of reasons for the upcoming increases in premium rates. Some of the more common reasons why higher costs are being passed to consumers in 2024 include:

  • Price increases for medical care: Over the last 12 months, the consumer price index, which measures inflation, rose 3.7%. The cost of medical care commodities, including drugs, medical equipment, and medical supplies, increased faster at 4.2%. To offset rising costs, insurers raise premiums.
  • Higher use of health benefits: Employees using more health services is a key factor in employers’ plans to raise premiums. According to employers, the increased usage is mostly due to chronic health conditions, but some employers also cite an aging workforce or pandemic-related care delays.
  • Specialty drug usage: Drug spending is driven by the high-cost drugs used to manage complex, chronic conditions. While fewer than 1% of all prescriptions are for the priciest prescription drugs, they make up around 15% to 25% of drug spending. Many employers cite specialty drugs as a key reason for premium increases.
  • Catastrophic claims: Health insurance helps protect consumers from the high costs of medical emergencies, such as major accidents or serious health conditions. For the employers and insurers who cover these costs, catastrophic medical expenses drive up the overall cost of providing coverage.

What Rising Premiums Mean for You

The effect of rising premiums varies depending on the type of health insurance you have and your financial situation. 

If You Have an Affordable Care Act Plan 

The Affordable Care Act was designed to help more Americans afford health insurance coverage, so it offers protections that shield consumers from annual cost increases. Low- and moderate-income shoppers who receive subsidies that lower their monthly premiums will likely not see added costs in 2024.

In general, the premium tax credit is available for people with incomes between 100% and 400% of the Federal Poverty Level (FPL). In 2023, a family of 4 meets these guidelines if its income is between $30,000 and $120,000 per year. Under the Inflation Reduction Act, some people with incomes above 400% of the FPL can also claim subsidies in 2024.

If You Have an Employer-Sponsored Plan

A majority of employees will likely not face higher premiums in 2024, according to the IFEBP survey. Only 16% of employers plan to pass higher premium costs along to their employees. However, most employers will make changes to their health plans to keep costs under control.

Requiring prior authorization is one of the main strategies employers plan to use. Prior authorization means employees need to get approval from their health plan before receiving a covered service. The goal of this rule is to prevent care that’s not medically necessary. 

Some employers plan to offer high-deductible health plans to keep premiums down, though the tradeoff is that employees pay for more expenses out of pocket. Other changes coming for some employees include additional fees for spousal coverage and audits to ensure dependents are eligible.

How To Manage Rising Health Insurance Costs

Whether they have coverage through work or the Affordable Care Act Marketplace, some Americans will face higher health insurance premiums in 2024. There are many ways to counteract higher premiums and put more room in your household budget.

  • Shop around for a new plan: Browse the Marketplace to see if there are lower-cost plans that offer similar benefits. Consider your employer’s other health plan options if more than one is available.
  • Use a tax-advantaged savings account: Health Savings Accounts and Flexible Spending Accounts help consumers pay for medical care with pre-tax money. While the funds generally cannot be used for premiums, they can be used for deductibles and copayments to lower your overall healthcare costs.
  • Look into government programs: Low-income people and families who cannot afford health insurance may be eligible for Medicaid, a program that provides free or low-cost health coverage. Other programs, such as Medicare or VA Health Care, may be an option, depending on your situation.
  • Cut back on other spending: If it’s not possible to lower your healthcare costs, review your budget and look for other areas where you can reduce spending. 

Putting It All Together

Monthly premiums for both employer-sponsored health plans and Marketplace plans are projected to increase in 2024, though the effect on individual consumers will vary. Some consumers will not see premium increases because they receive ACA subsidies or work for an employer that is not passing higher plan costs to its workers.

If you learn that your premiums are going up in the new year, consider shopping for a new, more affordable plan with the help of a trusted agent. 

You’re just a few steps away from a personalized health insurance quote.

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You’re just a few steps away from a personalized health insurance quote.

Learn More