How Is Health Insurance Premium Calculated? 
Under the provisions of the Affordable Care Act -LRB- ObamaCare -RRB- individual health insurance and fully insured small group health insurance are subject to community rating . In simple terms this means that for each insurance plan design there is a rate table set up by age in one year increments . If you are 45 they go to the rate table for that plan design , and whatever the rate is associated with that year of age is the rate you will be quoted . As you might guess , this approach can be an administrative challenge for both the insurance company and the employer as it can result in people with the same level of coverage -LRB- e.g. - employee only -RRB- having different rates based solely upon their age . While more group insurance carriers are moving to this age banded rating approach , some insurance carriers calculate a `` composite '' rate for their group clients based off of the rate grid for their particular group and then bill a uniform rate amount of each coverage level . One rate for employee only coverage , one for family coverage , etc. . Your rate may also be impacted by whether or not you are a tobacco user . This is especially so in the individual health insurance marketplace though the impact can vary from state to state based upon decisions made by various state insurance departments . 