A health insurance premium is the amount you pay, usually every month, to keep your coverage active, whether or not you use care. It is separate from your deductible, copays and coinsurance, and it never counts toward them. On a Marketplace plan, a premium tax credit can lower the premium you pay.
Updated October 2026 for the 2027 plan year
Key facts (2027 plan year)
- What is a premium? HealthCare.gov defines it as the amount you pay for your health insurance every month.
- Premiums don’t count toward your deductible or your out-of-pocket maximum.
- ACA insurers may vary premiums only by age (up to 3:1 for adults), tobacco use (up to 1.5:1), family size and location (CMS).
- For 2027 coverage, the expected contribution toward the benchmark Silver plan ranges from 2.15% to 10.22% of income, and there is no premium tax credit above 400% of the poverty level (IRS Rev. Proc. 2026-26).
- Marketplace insurers proposed a median 15% premium increase for 2027 across 276 insurers in all 50 states and DC (KFF).
- With advance premium tax credits, the grace period for late premiums is usually 3 months (HealthCare.gov).
- What is a premium and how does it work?
- Premium vs deductible: what is the difference?
- What determines your premium?
- How do premium tax credits lower your premium?
- What is a net premium?
- Why are premiums going up for 2027?
- What happens if you miss a premium payment?
- How can you lower your premium?
- Frequently asked questions
What is a premium and how does it work?
Your premium is the price of having coverage. You pay it to your insurer each month, and in return the plan stands ready to pay its share of your covered care. If you stop paying, the coverage ends.
The premium buys access, not care. You still pay your share when you use services, through the deductible, copays and coinsurance. HealthCare.gov puts it plainly: in addition to your premium, you usually pay these other costs too.
Who pays the premium depends on where your coverage comes from:
- Job-based plans: your employer usually pays part, and your share comes out of your paycheck.
- Marketplace plans: you pay the insurer, and a premium tax credit may cover part of it.
- Medicaid and CHIP: many enrollees pay no premium, though some states charge small premiums for some groups.
Premium vs deductible: what is the difference?
A premium is what you pay to have insurance. A deductible is what you pay for covered care before the plan starts sharing costs. You pay the premium every month no matter what; you pay toward the deductible only when you use care.
| Feature | Premium | Deductible |
|---|---|---|
| What it pays for | Keeping your coverage active | Your first share of covered care |
| When you pay | Every month | Only when you use care |
| Counts toward out-of-pocket maximum? | No | Yes |
| Lowered by premium tax credit? | Yes | No |
| Lowered by cost-sharing reductions? | No | Yes (Silver plans, income up to 250% FPL) |
The two usually move in opposite directions. Plans with lower premiums tend to have higher deductibles, and plans with higher premiums tend to have lower ones. The fair comparison is premium plus the cost sharing you expect, explained in deductible vs out-of-pocket maximum.
What determines your premium?
Under the Affordable Care Act (ACA), insurers in the individual market can set premiums using only four personal factors: age, tobacco use, family size and where you live. They cannot charge more for your health history, a pre-existing condition or your gender.
| Factor | Effect on premium |
|---|---|
| Age | The oldest adults can be charged up to 3 times what the youngest adults pay (3:1) |
| Tobacco use | Up to 1.5 times as much (1.5:1); some states limit or ban this |
| Family size | Each person on the plan adds to the premium |
| Location | Rates vary by state and rating area |
| Plan choice | Metal tier, network type and insurer change the price |
| Health status or pre-existing conditions | Not allowed |
Source: CMS market rating reforms. Your plan choice matters too. A Bronze plan usually has a lower premium than a Gold plan with the same insurer; see Bronze vs Silver vs Gold vs Platinum.
How do premium tax credits lower your premium?
A premium tax credit is a federal subsidy that lowers the premium on a Marketplace plan. It is based on your expected household income and the price of the benchmark plan, the second-lowest-cost Silver plan in your area. You can take it in advance each month or claim it when you file taxes.
The credit is sized so you pay an expected share of your income for the benchmark plan. For 2027 coverage, that share is set by IRS Rev. Proc. 2026-26, and the IRS premium tax credit basics explain who qualifies:
| Household income (% of federal poverty level) | Share of income you pay |
|---|---|
| Under 133% | 2.15% |
| 133%–150% | 3.23%–4.30% |
| 150%–200% | 4.30%–6.78% |
| 200%–250% | 6.78%–8.66% |
| 250%–300% | 8.66%–10.22% |
| 300%–400% | 10.22% |
| Over 400% | No premium tax credit |
For 2027 coverage, 400% of the poverty level is $63,840 for a single person and $132,000 for a household of four, based on the 2026 HHS poverty guidelines. Above that, there is no credit at all. See health insurance subsidies 2027 for the full income table.
Taking the credit in advance is an estimate. You reconcile it on IRS Form 8962 when you file your 2027 tax return. For tax years after 2025, the IRS says you must repay the full amount of any excess advance credit, so report income changes to the Marketplace promptly.
Honesty.AI applies your premium tax credit to every plan, 24/7.
What is a net premium?
Your net premium is what you actually pay each month after any advance premium tax credit is applied. The full premium is the plan’s list price; the credit goes straight to your insurer; the net premium is the rest.
Because the credit is tied to the benchmark Silver plan, it is generally the same dollar amount whichever metal tier you choose, though it can’t exceed your plan’s premium and can’t be used on Catastrophic plans. That is why the net premium on a Bronze or even a Gold plan can be much lower than its list price suggests. The credit can’t be used on short-term plans or plans bought off the Marketplace.
Why are premiums going up for 2027?
Most Marketplace premiums are rising again for 2027. KFF found insurers proposed a median 15% increase, the second straight year of double-digit hikes after a median finalized increase of about 20% for 2026. Final rates vary by insurer and state.
KFF’s review of rate filings points to these causes:
- Rising health care prices, the main driver, including higher costs for health services, general inflation and labor shortages.
- The end of enhanced premium tax credits. The larger credits that ran from 2021 through 2025 expired on December 31, 2025.
- A sicker average risk pool, which insurers tie to the end of the enhanced credits.
Two different numbers change at once: the full premium and your tax credit. Read why did my health insurance premium go up and ACA subsidies 2027 for what that means for your bill. The practical advice is simple: shop again during open enrollment 2027 instead of auto-renewing.
What happens if you miss a premium payment?
If you get advance premium tax credits and have paid at least one full month during the year, you usually have a 3-month grace period. If you don’t catch up by the end of it, your insurer can end your coverage back to the end of the first unpaid month.
Without the credit, the grace period may be different; check with your state’s department of insurance. Losing coverage for non-payment does not qualify you for a Special Enrollment Period, so you may have to wait for the next open enrollment (HealthCare.gov).
How can you lower your premium?
The biggest lever for most people is the premium tax credit. After that, plan choice matters more than anything else.
- Update your income estimate on your Marketplace application so your credit is right.
- Compare metal tiers. A lower tier means a lower premium but more cost sharing.
- Consider HMO or EPO networks, which often cost less than PPOs if your doctors are in them.
- Check Medicaid and CHIP for anyone in the household who may qualify.
- Shop every year. Plans, prices and credits change each fall.
More ideas are in affordable health insurance and how much does health insurance cost.
See your real monthly premium
Honesty®, a licensed AI insurance agent from Honesty® Insurance Services, LLC (NPN 21094885), compares ACA, alternative and ancillary plans, applies your premium tax credit and shows the full yearly picture. It works for you, 24/7 by chat, voice or text, and never sells or shares your data.
Frequently asked questions
What is a premium in health insurance?
A premium is the amount you pay, usually monthly, to keep your health insurance active, whether or not you use care. It is separate from your deductible, copays and coinsurance.
What is the difference between a premium and a deductible?
A premium is what you pay every month to have coverage. A deductible is what you pay for covered care before your plan starts sharing costs. Premiums don’t count toward the deductible or the out-of-pocket maximum.
Does my premium count toward my out-of-pocket maximum?
No. Only what you pay for covered, in-network care, such as your deductible, copays and coinsurance, counts toward your out-of-pocket maximum. Premiums never do.
How does the premium tax credit lower my premium?
The premium tax credit pays part of your Marketplace premium based on your household income and your area’s benchmark Silver plan. You can have it paid to your insurer each month or claim it when you file taxes, and you reconcile it on IRS Form 8962.
Why did my premium go up for 2027?
Insurers proposed a median 15% increase for 2027, driven mainly by rising health care prices. The enhanced premium tax credits also expired at the end of 2025, so many people now get smaller credits.
Can insurers charge me more for a pre-existing condition?
No. ACA plans can set premiums using only age, tobacco use, family size and location. Your health history or a pre-existing condition can’t raise your premium.
Keep learning: health insurance terms A–Z, what is a deductible, what is coinsurance, how health insurance works and the health insurance marketplace.
