There will come a time every year when you receive a letter from your insurance agent regarding the renewal of your company’s group health insurance. And most of the time, this letter will also include a notice which tells you that the premium you need to pay will be increasing for some reason or the other. Instead of blindly believing that this is a money making tactic, have you ever actually sat down and considered why premium rates go up? Well, in this article I am going to try and explain exactly why this happens when it comes to San Francisco group health insurance plans in California:
1. The biggest and most drastic of change in the premiums is basically because of the change in the base rate. This rate usually changes depending on the changes in drug prescription and medical costs in your area. It is only obvious that any increase in medical costs in your area will obviously impact your base rate and therefore the cost of your insurance.
2. The demographics of your employees also contribute to a change in premiums. If you have an insurance plan which makes use of age band rating, then your rates may increase since multiple employees may move into higher age bands. Most price brackets are broken into 5 years. This basically means that the older an employee gets, the more the insurance premium you will have to pay for him/her.
3. A change in the number of people you have working for you will obviously change your insurance premium amount. Since each employee is worth a little part of the premium, it is easily understandable why the premium will increase or decrease for every worker who joins or leaves your organization respectively.
4. The premium amount you are paying for your employees also depends on the area in which they are staying. So if you suddenly find yourself with a lot of employees that are living in a highly rated area, your insurance premium is bound to go up.
5. The type of business which you are running also influences the insurance premium amount. There is nothing much you can do about this though. Most insurance agencies usually have a fixed rate for each industry and if they revise the rate for your industry, you along with all your competitors will have to deal with the increased rate.
So now that you know the various points on the basis of which your insurance premium goes up it will surely be easy for you to work on bringing it down as well. All you need to do is keep the five above tips in mind at all times. If you can manage to run your organization while keeping the above tips in mind, you will not only be able to maintain a steady premium rate for multiple years but may also be able to reduce it. So what are you waiting for? Start working on your renewal today.
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