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Group Health Insurance Renewal Explanation

Guest post by: Corinne Mitchell

Article Overview: Do you dread renewal time for your group health insurance plan, afraid that your renewal notice will include an increase in cost? Find out what the 6 factors that can affect your renewal premium rates.

Group Health Insurance Renewal Explanation

You get your group health insurance renewal letter from your insurance carrier, you insurance agent or a letter from each of them. They notify you that your rates are going up. Did you ever wonder what factors contribute to this increase?

Here are the 6 factors that can affect your renewal premium rates:

1. Change in Base Rate

The change in base rate reflects changes due to medical and drug prescription cost trends in your city. Increases in the cost of medical treatments and the cost of prescriptions in your geographical area will have an impact on your base rate.

2. Change in Age/Gender

These changes are based on the demographics of your group.

If your plan uses age banded rating, rates may increase as employees move into a higher costing age band. With age banding, the price brackets are generally broken into five year segments. So, the insurance company provides a different rate for each employee, based on the age of that employee. An older employee will pay a higher the premium than a younger employee.

Similarly, some plans set health insurance rates based on gender. If you have such a plan, changes in the number of women and men enrolled in your group plan will affect the premiums.

3. Group Size Adjustment

Changes in the number of employees enrolled in your plan can affect the cost of the plan's premium.

4. Change in Area Factor

Where the employees enrolled in the plan live influences the cost of the insurance. Premium amounts are base on the member's home address.

So, if you have new employees living in higher rated areas or you have employees that move into higher rated areas, the premium will increase.

5. Change in Industry Factor

The type of business you run - what industry it is categorized as - can also impact premium cost. Occasionally, an insurance company will re-evaluate their pricing based on industry. If they raise the rates for your industry, this increase will be reflected upon renewal of your policy.

6. Risk and Compliance Adjustments

These adjustments are based on the overall rate level change to the group and reflect the claim and use history of the group.

Please note that you may have a policy that does not take every one of these factors into consideration. Check with your insurance agent to see which ones your plan includes.

The good news is that these rate change factors can also result in lower premiums if changes to your group profile are favorable.

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Referred by: http://www.searchengineworkshops.com



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