When deciding how much to charge for group health insurance premiums, insurers will consider a variety of factors. In most cases, groups will work with an insurance broker to find the best possible rate for their employees.
Size
The size of the group is one of the most important factors in determining premiums. The larger the group, the more negotiating power the employer has with insurance carriers, and this can lead to lower premiums for employees. In some cases, small businesses may be able to get a discount on their premiums if they purchase them through a state-sponsored small business health insurance exchange.
Demographics
The next factor is the demographics of the group. Things like age, gender, health history, and smoking status all play a role in how much the group will pay for health insurance. In general, groups with younger, healthier members will pay lower premiums than those with older or sicker members.
Type of coverage
Finally, the type of coverage that is selected will also affect the premium amount. For example, a plan with lower deductibles and copays will typically have a higher monthly premium than a high-deductible plan.
Employee contribution
Employers typically pay a large portion of the health insurance premium for their employees, but the amount that employees have to contribute can vary depending on the plan. Employees may be responsible for the entire premium, or just a portion of it. The amount that employees have to pay is usually deducted from their paycheck pre-tax, which can save them money on their overall taxes for the year.
The Basics of Premiums
Group health insurance premiums can be a complicated topic, but understanding how they work is important for both employers and employees. By knowing the basics of how premiums are determined, you can be better prepared to negotiate for the best possible coverage for your needs.