How Are Health Insurance Premiums Changing for 2024?

Ever since the fall of 2013—when Affordable Care Act-compliant individual/family health plans debuted—there have been annual stories about how much the coverage costs. Starting in 2014, the headlines often focused on how premiums would be changing for the coming year, and those annual changes have fluctuated a lot over the years.

This article will explain what you need to know about how health insurance premiums for individual/family (self-purchased) coverage are changing for 2024.

Before we begin, it's important to note that open enrollment for 2024 health plans runs from November 1, 2023 through January 15, 2024 in most states (some state-run exchanges have different enrollment windows). After open enrollment ends, your opportunity to enroll in a plan or switch to a different plan will be limited.

Rate Changes for the Individual Market

The vast majority of the headlines you'll see each fall about health insurance premium changes are for major medical health insurance that people buy in the individual/family market (ie, non-group plans), and that are compliant with the Affordable Care Act (ACA).

That can be in the health insurance exchange or outside the exchange (i.e., purchased directly from the health insurance company), but it does not include coverage that people get from an employer, nor does it include Medicare, Medicaid, or the Children's Health Insurance Program.

But including on-exchange and off-exchange enrollments, only about 6% of the U.S. population has self-purchased (non-group, non-government) health insurance.

So although the vast majority of Americans get their health insurance either from an employer or from a government-run program (Medicare, Medicaid, CHIP, the VA, etc.), the headlines that you'll typically see don't tend to have anything to do with those plans. Instead, the headlines tend to refer to the individual market.

(It's also common to see news stories about changes in Medicare Part B premiums, especially in years when there is a substantial change to the Part B premium. But this article is focused on individual/family health insurance premium changes.)

The individual/family market was the health insurance market segment most in need of reform before the Affordable Care Act. And it's the market segment that was most heavily affected by the ACA (the small group health insurance market also saw some significant reforms, but not as much as the individual market). Not surprisingly, it's also been the market that has seen the most change over the last several years and has been in the spotlight each year when rate changes are announced.

(Note that while all new individual major medical plans are ACA-compliant, there are some people who are still enrolled in grandmothered and grandfathered individual market plans. And there are also other types of non-group coverage, such as short-term health plans, Farm Bureau plans in some states, and healthcare sharing ministry plans, that are not ACA-compliant. Some of these plans are not even considered insurance, and none of them are the plans we're talking about when we look at overall average rate changes for the individual market.)

Proposed Premium Changes for 2024

According to an ACA Signups analysis of overall proposed rate changes, as well as a KFF analysis of median proposed rate changes, insurers in the individual/family market have proposed an average increase of roughly 6% for 2024. But as is always the case, there is a lot of variation from one state to another, and from one insurer to another.

(Note that the ACA Signups analysis is based on weighted averages in states where that's possible, but unweighted averages in states where enrollment data are not available.)

Proposed rate changes are reviewed by state and federal regulators, and rates are typically made final in most states by early-mid October. The final rate changes are generally similar to the proposed rate changes, but often not identical (depending on the state).

Average rate change calculations tend to be based on how rates would change if everyone kept their current policy for the coming year, which is unlikely. A significant number of enrollees shop around during open enrollment each year and switch plans if there's a better option available.

And the entry of new insurers into some states' markets will add additional options for enrollees in those areas. For 2024, there are new insurers joining the markets in several states, including California, Colorado, Nevada, Oklahoma, New Mexico, and Delaware.

The most important point to keep in mind is that the majority of Marketplace/exchange enrollees receive premium subsidies that offset some or all of their monthly premiums. As of early 2023, more than nine out of ten Marketplace enrollees were receiving premium subsidies.

These subsidies change each year to keep pace with changes in the benchmark plan premium in each area. If the benchmark premium goes up, subsidies also go up. If the benchmark premium goes down, subsidies also go down. Decreases in benchmark premiums can happen when an existing insurer lowers its prices, or when a new insurer enters the market with premiums that are lower than the rates that were offered by the existing insurers.

So for most enrollees, premium changes include how the full-price cost of their plan is changing, as well as the amount by which their premium subsidy is changing for the coming year.

The data did not include information about benchmark plan changes for DC and the 17 states that run their own exchange platforms, which account for about a third of all exchange enrollment in the country (for 2022, this includes Maine, Kentucky, and New Mexico, all of which used HealthCare.gov as of 2021 but have established their own state-run exchange platforms as of the fall of 2021).

What This Means for 2024 Premiums

Benchmark premiums are important because premium subsidies are based on the cost of the benchmark plan. The idea is that the cost of the benchmark plan minus the premium subsidy results in a net premium that's considered affordable based on the enrollee's income. 

When the cost of the benchmark plan in a given area increases, premium subsidies in that area have to increase as well in order to keep the net premiums at an affordable level. But when the cost of the benchmark plan decreases, premium subsidies decrease too, since the subsidy doesn't have to be as large in order to get the benchmark plan's net premium down to an affordable level.

The specific subsidy amount for each enrollee depends on the cost of the plan they select and the cost of the benchmark plan in that area (benchmark plans vary considerably within each state). But in general, premium subsidies decrease when the benchmark plan premium decreases.

Average benchmark premiums declined in 2019, 2020, and again in 2021. And average premium subsidy amounts also declined: For people with effectuated coverage as of early 2019, the average subsidy amount was about $512/month. It had dropped to $492/month as of 2020, and to $486/month as of 2021.

But that was before the American Rescue Plan sharply increased premium subsidies starting in the spring of 2021. Those subsidy enhancements are still in effect through 2025, as a result of the Inflation Reduction Act.

So premium subsidies are larger than they used to be. In 2023, the average subsidy amount was about $527/month (up from $486/month in early 2021, prior to the American Rescue Plan).

If overall benchmark premiums increase for 2024, subsidy amounts will increase too. But the effects of the American Rescue Plan and Inflation Reduction Act will continue to keep subsidies quite a bit higher than they were prior to 2021.

Subsidy amounts also depend on average incomes and the average age of enrollees: If overall average incomes are lower, the average subsidy amount will be higher, because the subsidies are designed so that people with lower incomes receive larger subsidies. And if the average age of exchange enrollees is older, the average subsidy will also be higher, since premiums are higher for older enrollees and they thus need larger premium subsidies to make their coverage affordable.

How Will Your Premium Change for 2024?

The cost of your specific health insurance policy could go up or it could go down, depending on whether you receive a premium subsidy (most exchange enrollees do, but everyone who enrolls outside the exchange pays full price), and how much your plan's price is changing.

If you're subsidy-eligible and your plan's price is increasing slightly, but the premium subsidy in your area is decreasing slightly, you could end up with a higher net premium in 2024 than you had in 2023 (again, the American Rescue Plan enhancements that you likely began to see in mid-2021 will continue to be in place in 2024).

On the other hand, if you're not eligible for a subsidy, you'll just need to look at how much your plan's regular premium is changing—it varies a lot from one area to another and from one insurer to another, and final rates will be available in most areas by early October.

There's no single answer that applies to everyone. And sometimes changes that seem uniformly good can actually result in higher premiums for some enrollees.

For example, additional insurers joining the insurance market in a particular area generally seems like a good thing for enrollees—who wouldn't want increased competition, right?

But if the new insurer has lower prices than the existing insurers and undercuts the current benchmark plan, it will take over the benchmark spot. Since it has a lower premium, that will translate to smaller premium subsidies for everyone in that area, regardless of whether they switch to the new insurer or not. If they opt to keep their existing coverage, their net (after-subsidy) premium might increase, even if their own plan's rate stays fairly stable.

In areas where there will be additional plan options in 2024, it does bring added competition and choice. But it also makes it particularly important for enrollees to double-check their options during open enrollment.

Another example is reinsurance. Seventeen states have implemented reinsurance programs, which help to reduce overall average premiums in the individual insurance market. That seems like it would be obviously beneficial, but again, it depends on how it affects the cost of the benchmark plan.

When reinsurance drives down premiums, the people who don't get premium subsidies (and thus have to pay full price for their coverage) will obviously benefit from lower premiums. But for people who do get subsidies, the subsidies decrease along with the overall rates. And in some cases, they decrease by more than the cost of the average premiums, resulting in higher net premiums for people who get premium subsidies. This happened for many enrollees in Colorado in 2020, for example, due to the state's new—and quite successful—reinsurance program.

Summary

In the individual/family health insurance market, insurers have proposed overall average rate increases of about 6% (or a little higher) for 2024. These rate proposals are under review by state and federal regulators, and rates will be final prior to the start of the open enrollment period that begins in November 2023.

Most exchange enrollees receive subsidies, and those subsidies depend on the cost of the benchmark plan in each area. If benchmark premiums increase roughly in line with the cost of all plans, subsidies will tend to be larger in 2024, offsetting much of the rate increases.

A Word From Verywell

Specific rate change details will vary from one area to another and from one plan to another. As always, it's important to carefully comparison-shop during open enrollment and switch to a different plan if it will be a better fit for your needs and budget. If you need help, you can find a broker or navigator who is certified by the exchange.

If you're willing to shop around and consider new plan options, you might find that you can get a lower-priced plan for 2024, even if your current plan's premiums are increasing. And the American Rescue Plan's subsidy enhancements will continue to be in effect for 2024, meaning that coverage continues to be more affordable than it was prior to mid-2021.