Factors That Affect Employee Insurance Costs

Insurance companies are not allowed to refuse health coverage to an individual within a company, regardless of their specific medical requirements. To compensate, group health insurance plans are based on factors affecting the group as a whole such as the number of members and health insurance types and packages, along with demographics such as the type of business and health risks associated with it.

Employer Participation

• The level at which your employer contributes to the plan will have a large impact on the costs paid by employees. Some employers will pay a set percentage of your health insurance premiums, others will offer to sponsor pennies on the dollar that you spend, and others offer no contribution at all or have special benefits packages that pay the premiums completely.

Employee Participation

• Even when health insurance is offered, not all employees will enroll. The number of employees that work for the company and how many of those participate in the health care plan both cause the amount of the insurance payments to change. The more employees enrolled, the lower the overall cost of membership will be, and vice versa.

Type of Insurance

• What type of insurance plan is being offered will affect the costs of insurance. In general, an HMO plan is less expensive, but does not support medical practices performed out-of-network. A PPO plan costs more, but accepts out-of-network medical visits as long as the patient agrees to pay any of the costs above what the procedure would cost within the network.

Demographics

• What kind of business the company performs is also a factor in employee insurance costs. High risk businesses such as construction make more insurance claims, increasing the cost of insurance for employees. Working in an office or retail center is less of a risk, with the savings passed on to the employees in the form of lower insurance costs. Companies that employ a majority of one gender may receive higher or lower overall rates, such as a company that specializes in providing employment opportunities for pregnant women. Gender has a very specific impact on insurance costs, and is used in determining insurance rates of all types, including automobile and life insurance coverages. Health insurance for women is more costly than for men until after middle age. In their 50's, the cost of health care for men surpasses the costs for women.

Insurance Packages

• The exact package of options you choose will affect how much insurance will cost. Rates increase for family coverage over insurance for an individual. Some insurance plans offer supplemental income or other services when the employee is temporarily disabled or suffers an extended illness. The employee can modify the packages to make premiums and other insurance costs more affordable.