Key Group Health Insurance Premium Factors to Consider

Factors affecting Group Health Insurance Premium

Your group health insurance premium rates will be determined depending on multiple variables and situations. Knowing these variables or factors that affect the cost of your premiums can help you make an informed decision. Let us go through each of these factors one by one.

Age and Size of the Group:

The insurance premium is significantly influenced by factors such as the size of the group, the average age of the employees, employment type etc. Therefore, the premium for a group medical insurance policy for a larger group or a group with a lesser average age is generally lower compared to their counterparts.

Employment Type:

Employees engaged in fieldwork or working in manufacturing units, airlines, hospitals, etc. are considered to be exposed to high-risk jobs. These jobs typically attract higher premium rates. Alternatively, individuals involved in administration work are exposed to lower levels of risks, and thus may have lower premiums.

Sum insured:

Your group health insurance premium will also be impacted by the amount of coverage or the sum insured that you choose. A employer employee insurance with a lesser sum insured typically has a lower premium and vice versa.

Habits and Lifestyle:

One of the key group health insurance premium factors includes your daily habits and lifestyle. Indulging in habits like smoking, chewing tobacco, etc. increases the chances of higher premium rates because these habits make the person prone to getting sick. 

Medical history:

Your past medical history is very important in determining the premium cost. Your premium will be greater if you have a history of illness or disease. However, without any pre-existing disease or following a healthy lifestyle increases your chances of lower group health insurance premium rates.

Policy Tenure:

Policy tenure or duration is also a crucial group health insurance premium factor that is taken into consideration. The cost of the premium will be lower if you select insurance with a longer term. In the case of a policy with a shorter period, the premium might be higher.

Add-On Coverage:

Until recently employers have been offering their employees a conventional group insurance policy. However, with the changing scenario, employers now have the option to choose from various add-ons and features to offer a more comprehensive package.

The group health insurance premium for such comprehensive policies may be higher compared to the traditional ones. OPD (Outpatient Department) Coverage and consumables coverage are two common add-ons that are generally provided by insurers. Employer-funded group health plans now offer wellness benefits too. Such programmes are intended to keep employees both physically and mentally healthy.

Case Study: Group Medical Insurance Premiums Vary Based on Group Size and Average Age

Vikas Madhukar and Kareena Bisht are former classmates who have joined two different organisations. Vikas joined a start-up, whereas Kareena joined a major FMCG company with around 12,000 people throughout India.

Vikas’ organisation similar to that of Kareena’s offers group health insurance for their employees. However, due to a smaller workforce, the premium offered by the insurer differs. The organization with a lower workforce (Vikas’ firm) has to pay a higher premium amount as compared to Kareena’s.

Conclusion

The cost of group health insurance premiums is increasing due to the increase in demand for this product. The employer thus needs to understand the major group health insurance premium factors in order to strike a balance between the premium rates and the offering.