Which factor could lead to a higher premium?

Which factor could lead to a higher premium?

• A. Age only
• B. Zip code only
• C. Tobacco use
• D. Employer plan

Answer: (C)

Premiums are set based on the expected cost of covering an individual, using factors that signal higher or lower health care needs. Tobacco use directly signals a higher likelihood of costly health problems (such as heart disease, COPD, cancers, and related hospital visits), so insurers often apply a tobacco surcharge or otherwise raise the premium for smokers. This makes tobacco use the factor most consistently associated with higher prices in the marketplace. Age and location also influence premiums, but tobacco use is a direct risk marker that commonly leads to higher costs, whereas an employer plan is not a pricing factor used for individual marketplace premiums.

Premiums are set based on the expected cost of covering an individual, using factors that signal higher or lower health care needs. Tobacco use directly signals a higher likelihood of costly health problems (such as heart disease, COPD, cancers, and related hospital visits), so insurers often apply a tobacco surcharge or otherwise raise the premium for smokers. This makes tobacco use the factor most consistently associated with higher prices in the marketplace. Age and location also influence premiums, but tobacco use is a direct risk marker that commonly leads to higher costs, whereas an employer plan is not a pricing factor used for individual marketplace premiums.