Group health insurance is a type of insurance coverage that some employers offer their employees.
Instead of being on their own to find health insurance,
employees of one company come together as a 'group' for coverage
purposes. Employees enrolling in the group plan will benefit from the
coverage they receive for themselves, as well as each individual of
their family.
This can be a huge advantage to family members with no other
means of being able to receive any other type of insurance coverage.
Group health insurance is generally offered to groups of employees of various companies and organizations
How is the cost of group health insurance calculated?
The cost of having group health insurance coverage is
typically divided among each of the members that belong to the specific
group. There are premiums that each member will be responsible to pay
that quite often are taken out of their checks on a monthly or bi-weekly
basis. The premium is subject to change each year.
A few factors are generally taken into consideration to
determine the premium amount that each individual member of the group
will be responsible in paying each year.
Three of the most common factors that are considered to determine annual premium costs are:
¨ Each of the participant's history of claims that they have made over a period of time.
¨ The company's group history of over-all claims that have been made through a specific time-period.
¨ The changes that have to do with the over-all costs the
company is responsible in paying each year. These costs can be affected
by inflation as well as changes in the laws, which govern insurance
coverage.
All of these important factors have to be taken into
consideration every single year by the insurance company that is
offering the group policy to come up with the price to cover the group.
The company will then be told what has to be paid to insure all the
employees and will pay the percentage they have decided to contribute,
leaving the employee to pay the balance in the form of premiums.
