There’s no “one size fits all” group health insurance plan or premium. Every business is different. Primary factors affecting the cost of your group coverage are your location, demographics of your covered employees and dependents, and the plan you select.
Your costs will depend in part on where you do business in Colorado. Colorado is divided into nine rating regions with insurance rating factors reflecting the cost of care in each region.
The ages of all covered employees and dependents are used to calculate the group’s total premium. Colorado Division of Insurance rules specify how different age groups factor into the total premium.
Health plans use two kinds of “history” in calculating group rates. For small groups, carriers look at their experience with all their small groups as a “pool” to determine how well small group premiums have covered the cost of claims and other expenses.
Large group rates can be based on a combination of the carrier’s experience with the pool of all large groups and with the specific employer group.
Each year insurance carriers must submit their rates to the Colorado Division of Insurance for approval. In August or September, the Division of Insurance posts on their website all carriers’ small group health insurance rates for the upcoming year.
The plan design you select is the biggest factor in your overall health insurance expense.
Health insurance carriers offer an assortment of plans with various levels of coverage, out-of-pocket limits, deductibles, copayments, provider networks, etc.
To make comparing easier, all carriers use the same names for their small employer group plans with the names indicating their level of coverage. You may hear them referred to as “metal levels.”
Not all carriers offer all levels of metal plans.
Two of the most popular plan types are the PPO (preferred provider organization) and the HMO (health maintenance organization). The PPO gives you greater choice of providers than an HMO plan, but the HMO may be more affordable. But if you don’t know your PPOs from your HMOs, don’t worry. We’ll explain the differences, the pros and cons, in easy-to-understand terms in a later post.
If your goal is to provide your employees the highest level of coverage possible without breaking the bank, you’ll appreciate having plenty of plans to pick from. If you find the choices a bit overwhelming, you might consider working with an insurance broker.
Understanding your group health insurance options can be confusing and time consuming, but that’s where insurance brokers are helpful. These agents can help business owners consider the relevant options and pick the best group health plan for their employees. Brokers’ services are free for small employers (up to 100 employees).
Brokers work independently and are familiar with the offerings of many insurance carriers.
Questions? Call our knowledgeable Employer Group team at 800-453-2981, option 3.
Next time, we’ll cover the differences between HMO and PPO plans for employer groups.
Have you missed any posts in our group health insurance series?