As health insurance brokers in Houston, Texas, we often reach out to companies to provide better health insurance rates and benefits packages. However, one of the first things we have to ask is for that company’s current rates and benefits packages.

Not surprisingly, many folks ask us why we have to have that information. After all, can’t we just offer a solid rate without that information? Wouldn’t us having that information put our prospect at a disadvantage with securing the lowest possible rates and benefits?

Unfortunately, the way insurance carriers and brokers work aren’t as seamless as many assume. In order to retrieve better rates and benefits packages for our clients, we have to oblige by the requirements of insurance carriers. Of course, for small business owners, there is a lot of stress surrounding their benefits and insurance packages. Rising insurance premiums are a contributing factor to that stress, but with our help, we can secure the lowest possible rates for carriers in the state. The first step is calculating what offers are available and how to manage them to maximize your investment.

With all this in mind and knowing that carriers force brokers like us to ask you for your current rates and benefits numbers, we thought we would break down how carriers calculate their rates for potential prospects. We want to clear up any confusion surrounding this process and help you understand why you can expect us to ask for this information when shopping for a better rate for you. Let’s dive into why group health insurance rates vary and how your cooperation gets you a better result.

Why Carriers Need Your Current Rates and Benefits Information

It all starts by understanding how insurance premiums are calculated. Once we understand that, we begin to put a picture together to see how having this information ultimately benefits you as well as carriers.

How Group Rates and Premiums are Calculated

While every business is different, rates for employer-sponsored family health coverage premiums have reached $21,342, according to the KFF 2020 survey, with workers paying an average $5,588.  Factors that contribute to the cost of group rates and premiums include the following:

Age of your Group

Insurers can still use age when calculating the cost of premiums since the ACA doesn’t limit them in this arena. Rating by age is still legal as long as the highest cost adult age and the lowest-cost adult age group doesn’t have a ratio of more than 3:1. This means that you should expect the average age of your group to affect the total cost of your premiums.

The health of your Group

The health of your group can and will affect your premiums and rating quotes. The ACA does not allow insurers to charge or deny premiums based on a person’s pre-existing condition or general health status, in terms of group coverage it can be a factor. If the risk pool is greater for the carrier, then they can charge your group more.

Size of your Group

Another factor is the overall size of your group. In addition to employees, you have to think about your employee’s family members and whether or not they’ll be on the plan. More people are in your group plan, the lower your premium will be because health risks are lowered with larger groups.

Claims History of your Group

Visits to the doctor affect your insurance premiums as a group as well as an individual. The total number of claims you have and the expense of those claims play a role in adjusting your premiums over a given period of time. When you’re ready to renew your plan, carrier’s want to know this information so they can give you a more accurate premium estimate. That’s part of the reason why we have to request your current rates and benefits packages when providing alternative carrier options.

Plan Design for your Group

Very few group health plans are the same. Most vary in terms of the level of coverage they offer. For small business owners, getting by with the minimum is often the desired plan option. However, with benefits becoming increasingly important to new hires, providing a well-designed insurance plan is important. Offering plans with lower out of pocket expenses is more appealing to new hires, but it comes with a higher premium price tag. Add-ons like dental and vision plans will also increase your premiums but are nonetheless important to offer to stay competitive.

Visit the Texas Department of Insurance website to learn more about community ratings and insurance laws.

Why You Can Rest Easy Providing Your Current Rates

Now that we understand the basic elements of how plans and premiums are calculated, we wanted to touch on why you shouldn’t worry about providing your current rates.

As health insurance brokers, we are under an obligation from carriers to request current rates and benefits information. Additionally, our goal is to help you craft a better plan and benefits design that both saves you money and benefits your employees. We work for our clients to create that plan, but unfortunately, we cannot do that without some basic information such as what your ratings are now.

Additionally, we don’t want to waste your time. Time is one of the most precious resources we all have. Knowing your current rates and benefits up front prevents us from wasting your time if your plan is already well below the market average. Of course, we are still more than open to help you tweak your plan design to get more out of it, but that is another discussion.

In our situation, either the carrier doing the underwriting or the TPA and reinsurance carrier always require that we provide your current plan benefits and rates as a precondition. While it might seem like the carrier is getting the better deal, it actually requires that they work even harder to offer you a better deal.

Your goal is to have a lower rate and better benefits. Competitive rates are equally the goal of carriers. Together, when you share that information, you can create a more seamless insurance coverage experience that benefits your employees and your business.

For more information on obtaining current rates and benefits, please reach out to us directly. We would be happy to discuss your concerns and questions.