How Are Group Health Insurance Premiums Calculated? - Loop

Read this guide to know how are group health insurance premiums calculated? - Factors that affect the cost of group health insurance premiums are 1. The average age of your employees
Team Loop Health
May 25, 2021

Many of your employees spend a majority of their waking hours working. And a happy team means less turnover, greater creativity, and higher productivity. The right complement of extras can make a difference in recruiting the cream of the crop, keeping the talent you have, improving employee productivity, and enhancing your business in several ways. 

After salary, group health insurance is one such important benefit that employees look for, especially, after the recent pandemic. Before you and your organization make a decision about group health insurance, it’s essential you understand the costs involved. 

Premiums are one of the primary determinants in the cost of health insurance. Premium is the payment you make to keep your employees’ coverage active. To ascertain how much premium you pay, the insurer considers several factors, which you will read about shortly, that estimate the costs. While group health insurance comes at a price, the benefits certainly outweigh the costs!

Read the below guide to know how are group health insurance premiums calculated and also the factors that help calculate premium for group health insurance.

How Are Group Health Insurance Premiums Calculated?

Following factors help you in deciding the premium for your group health insurance policy. With prior planning, you can ensure that premium costs fit within your budget and ensure maximum protection.

1. The average age of your employees

With insurance, younger people are less likely to need medical care. Typically, they have higher immunity and less health risks, so their premiums are generally cheaper. With age, the need for medical services may increase, and thus, premiums increase with age.

So, the age of your workforce is one of the primary factors that influence your group’s total premium amount. The higher the age, the higher the premium.

2. Total sum insured

Sum insured is the maximum amount your insurance company will pay in a year for your hospitalization. Having the right sum insured is as pivotal as the right insurance policy. If the sum insured is less, you’re left paying out of your pocket, and too much, and you’re attracting higher costs.

You can arrive at an apposite figure based on factors like the coverage you provide and the hospitals your employees’ visit. Sum insured and premiums go hand in hand - the higher the sum insured, the higher the premiums.

With this in mind, Loop Health offers will help you design the right group health insurance plan for your team with extensive coverage against a gamut of medical conditions. This allows your employees to meet any unexpected health-related emergencies, protect their savings, and focus on productivity.

3. Past claims experience

The cost you pay for premiums depends on your claim history. In the past, if your organization has a high number of claims, it will affect your group health insurance policy and result in marginally higher premiums. So, if your organization is looking to renew policies, the cost of the premium will depend on how much your company has claimed in the previous year. On the other hand, if you’re a first-time buyer, the cost of premiums is cheaper.  

4. Type of coverage

Typically, group health insurance plan covers a group of individuals who work in an organization. If you wish, you can extend the coverage for family members of the employees. It’s a beneficial option for employers and employees. Employees can extend coverage to their family members at lesser costs, and employers can enjoy tax benefits.

Based on your organization’s needs, you can pick from any of the following types of coverage:

  • Employee only cover (E plan)
  • Employee, spouse, and up to four dependent children (ESC plan)
  • Employee, spouse, up to four dependent children, and two parents (ESCP plan)  

These plans are not set in stone and are easily customizable at Loop Health based on your every need. For instance, you can pick the ESCP plan for top-level management and the ESC plan for middle-level employees. The premium for both plans is different and will naturally add to your costs accordingly. Needless to say, the more dependents you add, the higher the cost will be.  

5. Add-ons to the coverage

Not all group health insurance policies are the same. And sometimes, your valuable employees are looking for something more. So, to give your employees more than they deserve, your organization has the autonomy to cherry-pick distinct add-on features like dental or vision plans.

These add-ons are a prominent solution to expand primary insurance and gain additional coverage benefits at lower costs. It helps target specific terms and conditions that don’t fall under the primary policy. Depending on which ones you choose, the cost of the premium varies.

Other than an add-on, as compared to individual insurance, group health insurance has a host of benefits that your employees can enjoy.

  • With no waiting period, employees can access the benefits of group health insurance almost instantly.
  • Cover for pre-existing diseases unlike regular insurance, which does not cover a bunch of pre-existing diseases like diabetes.
  • Mothers can relax knowing normal or cesarean delivery charges are covered along with newborn baby expenses.

We hope you have gained a thorough understanding of how are large group health insurance premiums calculated, as well as all the factors that influence the cost of group health insurance premiums.

Furthermore, when you sign up with Loop Health, in addition to customization, our high-quality group health insurance policies come with a bunch of benefits for free. Your employees have access to free tele or virtual consultations with specialists anytime, any number of times! Anything small or big, they can always consult with a doctor.   

Insurance For Assurance

It’s amazing how effective benefits are, and a little goes a long way. Benefits show your employees you care about them not just as workers but as a whole person. Group health insurance supports employees’ future finances and health, which contribute to overall productivity and satisfaction. With Loop Health, you can lock in on a secure future in terms of employee health and company success.

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