How can you go from having great coverage with low premiums with one job, to a job with terrible coverage and high premiums? First, it’s based off of your group size. You’re either considered a large group or a small group.
If you’re a large group, there will be some underwriting involved. When it comes to group insurance, the carriers use your past plan experience to see how much they think your participants will use the insurance and how much they estimate the costs to be. Large group insurance is more complex, because it’s based off of the health of your group. This is where a young employee can have higher than normal rates. If the group is primarily made up of older and/or unhealthy employees, the rates will typically be higher for everyone.
Small group rates are much easier. Small group rates are adjusted as a whole, quarterly for enrollments. This means that all small groups will be treated the same, regardless of the health of the group. Age, gender, and home zip code are what make up the rest of the premiums. Similar to large groups, if you have a majority of older employees on your plan, they can increase the premiums for the younger employees.
The home zip code of the employees is also very important because some plans are only available in certain zip codes. So, depending on where your employees are, you want to make sure that they can all receive coverage from doctors that are nearby. The last thing an employee wants is to have coverage that they can’t use.
Once the rates have been established and sent to the employer, the employer, board, or HR then decides which plan fits their company the best. Sometimes the employer will get input from employees and sometimes they won’t.
This is where looking at the costs of plans can get confusing. Whoever chooses the insurance will typically choose what they believe is the best coverage for the cost. The only thing is everyone’s opinion of health insurance is different. Some may consider a plan with a low deductible and low max out of pocket, with no coverage until the deductible has been hit, a great plan. Whereas someone may also think a plan that is made of copays is the best because they know how much services will cost before they have the service done.
To get a better understanding of this, call us now.