There are several factors that play a role in determining the rates of your employee benefits plan. Let’s look at each factor and how it might impact the rating of your plan:

Plan design. The structure of your benefits plan has the single most impact on your rates as it determines how much risk the benefits provider will bear. For example, a basic plan inclusive of $25,000 of Life Insurance, and 80% coinsurance for basic Health and Dental benefits might be relatively inexpensive. Should that same group choose to add optional benefits such as Vision and Long-Term Disability, the cost will rise.

Size. The law of large numbers plays a significant role in the pricing of your benefits plan. Generally, a group with 50 employees will have a lower cost per employee than a group of five employees because the risk is spread across a larger sample size, making it easier for the benefits provider to predict claims utilization and price your plan accordingly.

Industry and Occupation. Through experience, benefit providers have been able to better predict risk levels for most industries and occupations and will use such factors when determining your rates. Industry and occupation are more commonly used to determine life insurance and disability benefits.

Employee Demographics. What is the average age of your workforce? How many of your employees have families? Do any employees have coverage through their spouse? Answers to these questions can play a significant role in determining rates.

Employer/Employee Cost Sharing. One of the initial questions a business owner must answer is: who will fund the plan? Some employers might be in a position to fund 100% of the plan while others may land on a 50/50 split between employer and employee.

Some of these factors discussed are in your control and others simply are not. The key is to remember that there are affordable solutions to meet the needs of your business and your employees. With the help of an experienced broker you can begin to navigate the right plan for your organization.