How Your Group Health Premiums Are Calculated

How Your Group Health Premiums Are Calculated text overlaying image of a ben and calculator on a white table In 2023, group health plans for one person cost an average of $7,739 and plans for a family cost an average of $22,463. Those numbers are expected to have up to a 7% increase in 2024. However, there are ways to lower how much you pay for health insurance. It all depends on how your premiums are calculated. If you know what factors affect your bottom line, you can take steps to lower your total premium.


For group health insurance, premiums are calculated for each worker who signs up for the plan, plus the costs of adding a spouse or children. The total price for the group plan is calculated by adding all of the individual premiums up. Most companies have their employees pay a portion of their plan cost. Then the company takes those payments and then pays the rest of the cost to the insurance company every month.

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How Group Health Insurance Works

Since the risk is spread out among more people. The cost of group health insurance is generally much lower than the cost of individual plans. Once the company decides on a plan, employees can choose whether or not to sign up for coverage. However, group health plans usually need at least 70% of a company’s employees to partake, in order to be effective. Companies usually offer different levels of plans so that enrollees can choose between basic coverage or more advanced coverage with add-ons. Depending on the plan, the premiums are then split between the company and its employees. Businesses can offer further protection by allowing their employees to add their spouse or children to the plan. Although doing this typically means the plan becomes more expensive.

The Factors

Since every business is different, your premium could be higher or lower based on a number of factors that are used to figure out how much your plan will cost. It also depends heavily on the group being insured.


  • Fully insured with less than 50 employees – Premiums are based on how many people in your area, not just from your business, are signed up for the same plan with the same insurance company. The cost of the insurance is also based on how old the enrollees are. So, everyone the same age with the same insurance plan from the same company will pay the same price. The rates go up every year based on their age. Some of the annual renewal increase at your company will come from the fact that your workers are getting older.
  • Fully insured with more than 50 employees – Premiums are calculated based on the age, gender, location (zip code), and medical conditions (expected healthcare costs) of your workers and their dependents who are covered by the plan. 
  • More than 100 employees – Groups with more than 100 workers are counted the same way as businesses with more than 50 workers. Rates are based on the age, gender, location (zip code). And medical conditions (expected healthcare costs) of your insured workers and their dependents.

Other factors are included in calculating your premiums such as:

Size of The Group

How much you pay can depend on how many people are on your group plan. This number includes both your employees who choose to join your plan and their family members who join through an employee. By spreading the health risks of a few people over a larger group, a bigger group can help you pay less for your insurance.

Health of The Group

Your rate is affected by how healthy the group as a whole is. Even though the Affordable Care Act says that insurers can’t change premiums or refuse coverage based on a person’s pre-existing conditions or general health. The American Academy of Actuaries says that the health of the group as a whole can play a role in figuring out premiums. If a risk group has a lot of people with higher expected claims, the average premiums will be higher. This can be good for your business, as the Academy also says that premiums will be lower if a risk group avoids people who are likely to make more claims. Or if it can cover the costs of people who are likely to make more claims by signing up a lot of people with lower costs.

Average Age

The Affordable Care Act (ACA) says that insurers can’t change rates based on things like gender, but they can still take age into account. Rating by age is still legal as long as the ratio of the most expensive adult age band to the least expensive adult age band doesn’t go above 3:1. This means that in a group plan, the average age of your group can affect how much you pay.

Claims History

Going to the doctor often can add up. Insurance companies make changes to your prices over time based on how many claims have been made and how much they cost. When it’s time to renew your insurance, an insurer will look at how often your group has filed claims and make changes based on that. If a few of your employees had health problems that required them to go to the doctor often or spend a lot of money. That may be represented in your updated premium cost.

Tobacco Use

The Affordable Care Act (ACA) says that group health plans can charge people who smoke up to 50% more for their health insurance rates than people who don’t smoke. This is called a “tobacco surcharge.”


Different jobs have different amounts of danger. Your insurance company may change your rates based on what your workers do for a living. For example, office workers don’t face the same health risks as people who work in factories, buildings, or offshore. So their insurance premiums may be lower than those of people in other jobs.

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Coverage Amount

Group health plans are not all the same. How much you and your workers pay will depend a lot on how much coverage you get. When you have better coverage and lower out-of-pocket costs, your premiums may go up. Due to the extra covering, adding on extras like dental and vision plans can also raise your premiums.

Can My Employees Be Denied?

A person with a medical problem can’t be kicked out of a group health plan. The health insurance must either cover everyone in the group or not cover anyone. They can’t choose one or more people. A fully-funded health insurance plan cannot be turned down by a company with less than 50 workers. Carrier participation rates are based on a ratio of the number of employees who are insured to the total number of employees who are qualified. This number is different for each insurance company, so you should talk to your health insurance agent about it.

Saving on Group Health Premiums

For a small business owner, health insurance rates can be expensive, but you don’t have to accept what your company is being charged. You might be able to use certain strategies to lower your costs and make your workers healthier.

Start a Wellness Program

Since the number of claims has a direct effect on your premiums. It can pay to make sure that all of your workers are in good health. Through health education and wellness practices, a customized workplace wellness program can help people choose to live healthier lives. This can lead to a healthier, more active workforce. And lower overall rates by reducing the number of doctor visits caused by diseases that could have been prevented. It can also help attract and keep good employees because they know their employer cares about their health and safety. 

Telemedicine Access 

Giving your workers access to a mobile doctor 24/7 is another way to cut down on the number of trips to the doctor. With telemedicine services, your employees can talk to a real doctor by phone, video chat, or online chat. This lets them get the answers they need without making an in-person visit with the doctor. This means they don’t have to pay a copay and your plan doesn’t have to pay for an extra claim.

Economy Scale

Depending on where you get your insurance, you might be able to use the “economy of scale” to your advantage. Larger businesses have more workers and more buying power. But smaller businesses don’t have as many employees to save money through economy of scale.

How To Enroll

There are countless group health plan providers and plans to choose from so choosing can be difficult. But we’re here to help! You can call EZ for a personal agent to help you sort through your plan options, get free quotes, or to simply find out more about group health insurance plans. Our experts can help you save hundreds of dollars a year by finding the best plan for your business. You can reach one of our highly trained agents at 877-670-3531, or enter your zip code in the box below for free instant quotes.

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Preparing For Health Insurance Open Enrollment: Employer Checklist for Open Enrollment

Open Enrollment for health insurance has begun. This period gives employers and employees the opportunity to change their benefit options, and many companies use this time to review their employees’ health insurance plans to see if they can find ways to save money or improve coverage. The opportunity for business owners to save money during Open Enrollment is especially important this year because the coronavirus has hit many companies hard financially. Now is the time to speak to an EZ agent to see if you should renew your current plan or switch to a more affordable plan that offers just as many benefits

As you review your options, you also have to be aware of any legal changes affecting the design and administration of your current plan or any other plan you choose. Go through the following checklist, share it with your employees, and use it to help you choose your plan for the coming year.

change written on many freen arrow signs pointing in different directions.
Healthcare plans change every year, including the price and coverage, so you need to be aware to be better prepared.

Plan Design Changes

Healthcare plans and the rules surrounding them change every year. The cost of your plan may go up, so you need to be aware of changes to your costs. But you also need to be aware of changes to certain limits in your plan. Some changes to know for 2021 include:

  • Affordable Care Act (ACA) affordability standard– The affordability percentage for 2021 is 9.83%. Employer-sponsored coverage for next year’s plan will be considered affordable under the employer shared responsibility rule if the employee’s required contribution for self-only coverage does not exceed 9.83% of the employee’s household income for the tax year.
  • Out-of-pocket maximum– The annual out-of-pocket maximum limit for 2021 is $8,550 for self-only coverage and $17,100 for family coverage.
  • FSA contribution limit: This has not been announced yet, so watch for IRS guidance on the FSA contribution limit for the 2021 plan year.
  • High deductible health plan (HDHP) and health savings account (HSA) rules for 2021:
    • HSA contribution limits: $3,600 for individuals and $7,200 for families
    • HDHP minimum deductible: $1,400 for individuals and $2,800 for families
    • HDHP out-of-pocket-maximum: $7,000 for individuals and $14,000 for families

Make sure to confirm that your plan’s out-of-pocket maximum complies with the ACA’s limits for next year. If you offer a HDHP, make sure that the plan’s deductible and out-of-pocket maximum are also in compliance with next year’s rules. Remember  to communicate these changes to your employees. 

Notices To Pass On To Employees

You should provide certain benefits notices to your employees during the Open Enrollment Period. Benefit notices that you should review and provide to your employees include:caucasian woman standing and handing a caucasian man a piece of paper in an office room setting with other people sitting at the desk

  • Summary of Benefits and Coverage– The ACA requires healthcare plans and health insurance issuers to provide a summary of benefits and coverage to enrollees. This has to be given to your employees who enroll or re-enroll during Open Enrollment.
  • Summary Plan Description (SPD)– Plan administrators have to provide a SPD to new participants within 90 days after plan coverage begins. In addition, any changes that are made to the plan should be communicated to employees in an updated SPD booklet.
  • COBRA General Notice– Group health plan administrators have to provide an initial COBRA notice to new participants and certain dependents within 90 days after plan coverage begins. It can be included in the SPD.
  • Grandfathered Plan Notice– If you have a grandfathered plan, then make sure that you provide any information about the plan’s status and any changes to the plan. 
  • Children’s Health Insurance Program (CHIP) Notice– Group health plans that cover residents in a state that provides assistance subsidies under a Medicaid plan or CHIP have to send an annual notice about the available assistance to all employees residing in that state.
  • Notice of Patient Protections– This notice needs to be provided if you are offering non-grandfathered group health plans that require designation of a participating primary care provider. If a non-grandfathered plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice.
  • Individual coverage HRA (ICHRA)– This applies to employers who sponsor ICHRAs for specific classes of employees, or all employees. You must provide the written notice to each participant at least 90 days before the beginning of each plan year.
  • HIPAA Privacy Notice– Employers with self-insured health plans are required to maintain and provide their own Privacy Notices. Special rules apply for fully insured plans. Under these rules, the health insurance issuer, and not the health plan itself, is primarily responsible for the Privacy Notice.
  • Wellness Program Notices- There are 2 notices that you will need to provide employees if you offer a workplace wellness program:
    • HIPAA Wellness Program Notice– HIPAA imposes a notice requirement on health-contingent wellness programs that are offered under group health plans. Health-contingent wellness plans require individuals to satisfy standards related to health factors (for example, not smoking) in order to obtain rewards.
    • Americans with Disabilities Act (ADA) Wellness Program Notice– Employers with 15 or more employees are subject to the ADA. Wellness programs that include health-related questions or medical exams must comply with the ADA’s requirements, including an employee notice requirement.

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Comparing plans with an EZ agent can help you save hundreds of dollars a year!

Finding An Affordable Plan

Whether you are considering renewing your current group plan, or finding a new plan or insurance company to work with, you will have to do some researching and comparing. There are hundreds of group insurance plans to compare in order to find the one that best suits you and your employees. By combing through these plans, you will be able to save hundreds, and maybe even thousands of dollars a year! The first step in figuring out what kind of plan to look for is to conduct an employee health survey.

Next, you should speak to an EZ agent. It can be time consuming to sit down and compare plans, and with Open Enrollment coming to an end soon, the whole process can become overwhelming. Running a business means that you have a lot on your plate, so let EZ.Insure do all the work for you. You can speak to one of our agents free of charge. They will ask you questions regarding your budget and employees, and will then begin comparing quotes. EZ will present you with the best option that will offer the most benefits and savings. To get instant quotes, simply enter your zip code in the bar above, or to speak directly to a licensed agent, call 888-998-2027.

Keep Your Employees Healthy & Happy With EZ

Did you know that 56% of employees would prefer health insurance over an increase in pay? Offering health insurance also means recruiting the best candidate for a job – most job seekers will not look twice at a posting if an employer does not offer health insurance. Having the right benefits plays a big role in your employees’ job satisfaction and productivity. Your employees will feel more valued, and will be able to stay healthier when they are insured. A healthcare plan is a small price to pay for the success of your business. group of people sitting in a circle smiling

Healthy Employees = Happy Employees = Productive Employees

Studies show that small business health insurance plans increase employee loyalty and decrease turnover. There’s scientific proof that purchasing insurance for your employees can increase retention and aid in recruitment of new employees.

Employees who aren’t provided health insurance are more likely to avoid seeking medical attention when they are sick, and less likely to go to the doctor for routine preventative care. In short, they are at greater risk of being unhealthy. When you offer health insurance, you offer your employees an opportunity to remain healthy and happy. And when employees are healthy and happy they are more likely to come to work and not call out sick. According to a Willis survey, 93% of employers say that healthier employees are more productive employees. 

Workplace Wellness Programs

One way to make sure that your employees remain healthy is by offering a workplace wellness program as part of your healthcare plan. These programs give incentives for employees to meet their health goals, like quitting smoking, or getting more exercise. Encouraging even small changes in employees’ lifestyles can make a big difference in productivity.  In fact, one survey found that employees who eat healthy are 25% more likely to have higher job performance. Your wellness program can also include perks like discounts on gym memberships, which can go a long way in not only promoting better health, but also greater job satisfaction. 

The Cost

piggy bank with little characters carrying money and handing it off to the next until it reaches the piggy bank.
You can still save money while offering insurance to your employees. 

Happiness is not cheap. Group health insurance can be costly, but the trade-off is a healthier, more productive workforce and less employee turnover, which can save you money in the long run. And remember, the more employees you have, and the more employees that participate in your health plan (offering perks can help with that!), the lower the cost of providing benefits. When you have a lot of employees in a pool, there are more options available at a lower price.

You also save money with the tax benefits of offering group health insurance:

  • Employer contributions are tax-deductible
  • Employer payroll taxes are reduced by 7.65% of employee contributions
  • Employer workers compensation premiums are reduced

We get that trying to find a group insurance plan for your employees isn’t easy. There are a lot of different plans to choose from and you may not be sure which benefits you should offer your employees. One way to help you  figure it all out is to have your employees complete a health insurance survey. After obtaining the results of the survey and deciding which direction you want to go in, come to EZ.Insure. We will make the process easy and pain-free. You will be provided with a highly trained agent who will compare all available plans and help you decide which plan is best for your business. To get free quotes on plan, enter your zip code in the bar above, or to speak with an agent, call 888-998-2027.

ATTN Small Business Owners: 6 Reasons You Should Give Your Employees Insurance

Not convinced small business coverage is worth it?  Find out why we think it is.

1. It’s Cake.

As a business owner, your greatest currency is time. So the last thing you want is to waste that on looking for the right group plan.

When you hire an agent, you hire a full-time tour guide committed to navigating you through the selection process. With demographics, health concerns, and company size to consider, there are plenty of factors that must be included in your final decision.  An agent can explain the nitty-gritty details of selecting a plan that fits your company’s needs, instead of you spending an unbelievable amount of time trying to digest the vast sea of information. Consider them

Cartoon of a man in a suit sitting on a chair with papers in his hand, with another hand in the picture giving paperwork to man sitting down.
An agent can explain the nitty-gritty details of selecting a plan that fits your company’s needs, instead of you spending a large amount of time trying to figure it all out

your “sparknotes” of insurance plans.

This connection is 1-to-1, because trust us – we hate spam calls as much as you do.

Connect With a Personal Agent Now

2. Less Money (From You), Less Problems.

One of the biggest misconceptions about purchasing insurance is the hefty price tag that comes along with it.  And that can be true, if you go about the process in the wrong way. So we’re here to dispel that myth. 

Compared to individual health insurance, high costs of one insured person have a smaller effect in a larger pool – in other words, more people are paying to support the few who use the benefits of being covered to their full extent.

With comparison shopping, you avoid that. You are guaranteed to find the right plan at an affordable price.  You can contribute nothing to a plan – and it will still be beneficial for your employees. No risk is necessary.

It is important to keep in mind that you are not only the owner of your company; you are the owner of the plan selection. 

Checking out your options is a great place to start.

3. “I Want YOU To Buy Health Insurance!”

Little figurines of people passing money to each other from a pile down a line towrds a yellow piggy bank.
You end up saving money by offering employees group insurance. Employer contributions are tax-deductible, employer payroll taxes are reduced by 7.65% of employee contributions, and more!

If you still don’t believe in the affordability of group health coverage, consider this – it’s on Uncle Sam.  Two words for you: Tax. Benefits

Here are the tax savings you get by offering group health insurance:

  • Employer contributions are tax-deductible
  • Employer payroll taxes are reduced by 7.65% of employee contributions
  • Employer workers compensation premiums are reduced
  • No payroll taxes and workers compensation premiums on money used towards health benefits. 

And here are the tax savings your employees get by receiving group health insurance:

  • When employees buy health insurance on their own, they have to use post-tax dollars to buy it. They make money, the government taxes that money, and then they take the remaining amount to buy what they need.
  • When employees buy health insurance through a group plan, they pay for the insurance with pre-tax dollars. That can save them up to 30 to 45% on their health insurance premiums.

4. Healthy Employees = Happy Employees

You might not be able to buy the Beatles’ love, but you can buy your employees’.  

Studies show that small business health insurance plans increase employee loyalty and decrease turnover. There’s scientific proof that purchasing insurance for your employees can increase retention and aid in recruitment.  Mic drop. 

In all seriousness, health insurance is a big deal for both employees and job seekers.  For some, it’s even the deciding 

factor between job offers. 

A group of employees standing in a circle with their hands on top of one another. Camera view is looking up at their palms.
Healthy employees means less visits, less appointments, and less sick days. What this means is more productivity in the workplace.

Providing health insurance, despite not being a large corporate powerhouse, shows how much you value your potential and current employees.  Which – if you’re a good boss – is a lot.

5. And Happy Employees = Happy Boss

You can imagine that an employee with a burst appendix or an inflamed wisdom tooth might be a little distracted when calculating the day’s revenue.  But only a little.

Employees who aren’t provided health insurance have an increased likelihood of avoiding doctor appointments or hospital visits. In short, they have an increased likelihood of being unhealthy.

Additionally, healthy employees means less visits, less appointments, and less sick days.  If you focus on “saving money” at the cost of your employees’ health, we’re tellin’ ya, it’s just going to come back and bite you in the bottom. 

Or your bottom line.

6. The Gift That Keeps on Giving

Cobra isn’t just a snake.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a health insurance program that allows an eligible employee and his or her dependents the continued benefits of health insurance coverage in the case that employee loses his or her job or experiences a reduction of work hours. 

Ready to Get Your Cost-free Quote? 

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