An employer offering benefits can be one of the most important reasons for taking a job for some families, but have you ever looked at or joined an employer sponsored plan and wondered, how can I be paying this much, I thought group insurance was cheaper? There are many factors that can play into that high premium.
Individual medical insurance is usually based off your age and gender, so typically, the younger you are the less your plan should cost. Group medical insurance rates can be based off the age of everyone in your group. This could mean that if you have a larger number of older folks joining the plan, compared to younger folks, the rates would typically be higher for the younger employees. A couple of ways to help keep that premium low for your employees is to contribute more towards each employee or offer multiple plans with less expensive options.
It could also be the type of plan. Typically, if a plan has a high cost, it has one of two things: 1) It either is made up of co-pays, which are services and features that you can use before you hit your deductible, or 2) they can be plans with low deductibles and maximum out of pockets. Typically, you must pay out of pocket before you reach your deductible, then once you hit your deductible, the insurance company comes in and pays their portion. With copays you’re almost prepaying a little more per month to not only know the cost, but to use that service before you reach your deductible. Your employer sponsored health plan could also have a higher premium because the deductible and maximum out of pocket are low. By keeping your deductible low, you can, help limit the amount you pay before the insurance company pays their portion and by keeping your maximum out of pocket low, you can know the maximum amount of money that you will spend on your medical expenses throughout the year.
It could also be the network size, typically the larger your network, the larger your premium could be. Your employer may have not wanted to go to the largest network but depending on where your business is in your state, it may dictate which plans are available to you. Plans are available to the group based on the zip code of their employer’s address. Because of this, some networks that the employee would like to be a part of may be available to that employee depending on where they live.
Offering group medical coverage could not only keep your turnover rate down, but it can also be the determining factor why an employee chooses you over another employer. If you offer insurance that the employee can use and afford, they may stay with you for a long time.