In this article:
Do you pay for health insurance out of pocket? If you have a credit card that earns cash back or other rewards, or just want some payment flexibility, you may wonder if you can use your credit card to cover the premiums while searching for carriers during health insurance open enrollment. The answer depends on your health insurance company: Some allow health insurance to be paid for with a credit card, while others require a different form of payment.
If your provider accepts credit cards, consider the pros and cons of this option before you pull out your card. While using a credit card can be convenient and even allow you to get some extra value out of the payment, it can also impact your overall credit health.
Do Health Insurance Companies Accept Credit Cards?
Health insurance companies are not required to accept credit cards. Still, many do allow them as a form of payment.
Some of the main health insurance providers that permit credit card payments for premiums include:
- Blue Cross Blue Shield
- Highmark Inc.
- Kaiser Permanente
- Health Net
- United Healthcare
In some cases, the type of medical plan you have may determine whether you can make payments with a credit card, and you may find instances where you can pay by card in person but not in other cases. Check with your provider for details.
If your health insurance company doesn't take credit cards, you may be allowed to pay online with your debit card or directly from your checking account. Many providers also accept checks and money orders by mail.
Does It Make Sense to Pay for Health Insurance With a Credit Card?
There can be advantages to paying your health insurance premiums with a credit card. Depending on the type of credit card you have, it could help you earn points or cash back rewards, or take advantage of bonus offers. Using a credit card may also be the most convenient choice.
But there are also potential drawbacks with choosing this payment method. The first is the added cost if you don't pay off the charge right away. If you carry a balance on your credit card from month to month, you will rack up interest charges on the unpaid balance. A premium payment of a few hundred dollars could end up costing you if it sits on your credit card for an extended period—especially if you use your card to pay premiums monthly and don't pay off the balance. With current credit card interest rates around 16%, those extra charges can add up fast.
Some providers also charge a convenience fee for credit card payments. In these cases, it's better to use a debit card, check or money order to save money. Before you pay your bill, check with your provider to find out whether there are any additional charges for using a credit card.
How Can Paying for Health Insurance With a Credit Card Affect Credit?
Paying for health insurance with a credit card can impact your credit depending on how you manage your credit cards. Here's how.
- Credit utilization: The amount of available revolving credit you use compared with your total credit limits makes up 30% of your FICO® Score☉ , the credit score most widely used by lenders. Your credit utilization ratio is calculated by adding up the balances across all your cards and dividing it by your total credit limits. Keeping this figure below 30% for each credit card and overall can help you maintain a good or excellent credit score.
To illustrate, if you have $2,000 in available credit on a card and your current balance is $500, your credit utilization is 25%. If you decide to pay your $250 health insurance premium on the same card, it will bring the balance to $750 and raise your utilization to 37.5%. In this case, you'd want to avoid using your credit card or pay off the premium payment immediately to keep credit utilization low.
- Payment history: This is the most significant component of your FICO® Score, accounting for 35% of your score. If you make timely credit card payments each month and never miss a payment, your positive payment history will help improve your credit score. But if you miss a payment and it becomes 30 days or more past due, you may receive a negative mark on your credit report and your score will suffer. If you fear you may fall behind on credit card payments, avoid using a card to pay health insurance so you don't risk damaging your credit.
Stay on Top of Your Credit Health
Many health care insurance providers allow subscribers to cover premiums with credit cards. While this may be a convenient and even valuable option, be sure you'll be able to pay off your premiums every month before moving forward.
Even if you don't use a credit card to pay your health insurance, staying on top of your credit is important. Experian makes it easy to keep tabs on your credit report and FICO® Score with free credit monitoring, which also provides alerts when there are any changes to your report.