Where Does Your Insurance Premium Dollar Go?

Insurance Premiums.

With increasing medical costs, the rise of chronic illness and obesity, decreasing insurer competition and skyrocketing pharmacy costs, healthcare insurance premiums are on the rise. When you pay all of your portion of your healthcare premiums, whether through your company or directly – do you understand where that money goes?

Most people understand that their premium dollars go into a large collective pool of all member premiums. That pool of money is then used when a member needs to utilize healthcare services. The pool covers the costs of providing insurance including administration, as well as any medical care received (like prescription drugs, doctors’ visits, wellness programs and customer service).

But how much of that dollar goes toward each of these things? Let’s break it down.

insurance premiums

*Prescription drug costs include outpatient, physician- and self-administered medications.
**Operating costs are those of the insurance company and include activities like member communications, customer service operations, quality reviews, and data analysis.
Values exceed 100% due to rounding.


If you would like additional quotes on your health insurance premiums to see if you’re getting the best deal in the marketplace, contact Tandem HR today at 630.928.0510 or visit TandemHR.com and click FREE consultation at the top of the page.


Original information calculated and released by America’s Health Insurance Plans.