Factors Affecting the Cost of Group Health Insurance

For a better understanding, let us divide these factors into two; the age factor and type of plan.

The Age Factor

People or the group demographic is a major group health insurance cost factor for every business. This component includes the following:

1. Average Age: Typically, the younger your staff, the lesser the premium amount. Older employees are likely to have ongoing health issues, which rises the premium amount. So, if the average age of your workforce is between the age group of 19-25 years, then the premium amount would be much lesser vis-à-vis if the average age of the group were to be between 36-45 years.
2. Nature of the Job: Some jobs are exposed to higher risks, for example, people working in a factory are more prone to health risks than those who perform desk-based jobs. Higher the risk associated with the job, the higher the premium cost.
3. Inclusion of Dependents: Many group medical insurance policies cover employees and their immediate dependents. Adding dependents to the policy, and the number of dependents added, both factors lead to the increased cost of the group health insurance.
4. Past-claim Experience: Past claim history is considered during the group insurance renewal process. Based on the frequency and number of claims, the premium cost may be impacted. For example, if the previous record suggests a higher number of claims or frequent claims, the premium amount would be higher and vice versa.

Type of Plan

The second component that plays a part in determining the premium is the type of plan you wish to offer your employees.

1. Sum Insured: The sum insured is usually decided beforehand by the employer and the insurance company. It is a monetary limit up to which employees will be covered in a medical emergency. The higher the sum insured; the higher the cost of health insurance for employees.
2. Add-ons: An employee medical insurance covers hospitalization charges and ICU charges for the mentioned covered illnesses. However, when an organization wishes to include a few add-ons like health checkups, OPD consultations, fitness, and wellness benefits, etc., the cost of the insurance increases. Also, if an employer adds additional covers like personal accident cover or maternity benefit cover, etc., it would affect the premium amounts. It is to be noted that depending on the type of add-on selected, the premium amount may vary.

Conclusion

There is no denying that the costs of medical insurance for employees may seem like they are skyrocketing, but the employer needs to strike a balance between the need of his employees and the expenses incurred to offer this benefit. Having a good knowledge of the group health insurance cost factors can help make an informed decision.