About Small Business Health Insurance Rates

If you own a small business, your employees probably want you to offer health insurance benefits. Understanding small business health insurance rates will help you make the best choice for your business.

Risk Pool

Insurance companies rely on large risk pools to sustain profitability: A larger pool of insured people dilutes the risk. Because small businesses represent smaller risk pools, insurers charge higher premiums to compensate for employee medical claims.

Group Plan Experience

Health insurance rates are determined by the dollar amount of claims the insurance company pays on behalf of your employees. Better claims experience leads to lower premium rates.

Wellness Programs

Some insurance companies offer lower premium rates to employers that offer wellness programs, health screenings and other preventive health maintenance options.

Deductibles

You can help keep rates low for your employees by choosing a higher-deductible plan. Although your employees will pay higher out-of-pocket expenses, they will save money on monthly health insurance premiums.

Professional Employer Organizations

Small-business owners sometimes can reduce health insurance premiums by finding insurance through a professional employer organization. This increases the size of the risk pool, which helps the insurance company maintain profitability and often leads to lower rates.

References

• NCSL: Small Business and Health Insurance
• Busienss.com: Small Business Health Insurance