It is true that the benefits offered in the policy and the type of policy play a large part in deciding the cost of the health insurance policy no matter where you are applying for it. But do remember that there are other factors like the case characteristics which play a huge part in determining the policy cost. The ‘case characteristics’ could include the employee health condition, working environment, and also age, gender, group size and even geographic location. We shall discuss the reasons for each of these considerations in the following passages:
Age of the group, it is reasonable to expect older members to be more susceptible to health problems. And hence we can logically conclude that they are going to be a lot costlier to the insurance company.
Gender. Females generally incur higher health care costs. And the costs are higher for younger females, usually during the child bearing ages. And then it gradually starts diminishing until it becomes lesser than that of men after the age of 50. If your group has a larger younger female workforce or a huge older men population, you can expect to pay higher premiums.
Number of members in the plan. The insurance providers generally provider lower premium rates for larger groups. This is because of a number of reasons. Firstly the administrative costs per employee with more employees. Secondly, a larger group cannot tailor make their policy to their benefit. The cost factor will not be more than 20% of the plan cost.
Type of industry. Some industries are inherently high risk. This could be due to the working conditions or stress associated with the type of work. The factor can weigh to about 15% of the cost.
Geographic location. The health care costs vary according to the region in which the insurance holder resides. This could be due to climatic conditions, pollution levels, life style etc. the insurance providers will vary the cost based on the zip code that you provide for your business.
The rating process for a small business is two fold. First the insurance company will decide the baseline price of the policy. For this they will study the case characteristics and plan design without regard to the health factors. Next they will adjust the rates to reflect the health status factors. But this adjustment must apply to all the member of the group uniformly and must not be more than 67% of the baseline price.
Some small businesses may not be able to afford the costs of a group health insurance policy. In such cases, you can try to offer individual health insurance coverage quotes to each of your employees with a view to improve retention and morale without burning a hole through your pocket.