How your insurance rates are set

Coverage, quality care and service are all critical to employer-sponsored health insurance. But we’ll bet your business or organization keeps a close eye on rates, too.

Although the numbers are easy to read on a page, you may wonder exactly how we decide what those numbers will be. Here’s a look at what goes into setting insurance rates.

Factoring in the factors

To figure out what to charge, we need to get an idea of how much insurance your employees might use. To do this, we consider three main factors:

• Where your business or organization is located. We use a community rating system. This means we have set rates for all groups within certain areas of the state. For example, there is one community rate for Wayne, Oakland and Macomb counties. But we also factor in your specific geographic location.
• Who’s in your business or organization. This includes the average age of your employees, in some cases their gender, how many employees you have and how many enroll in the insurance you offer.
• What your business or organization does. We base this on the Standard Industrial Classification code, or SIC, for your business.

Making adjustments

Once we know the where, who and what, we can figure out your insurance rates. We start with the community rate set for each specific benefit (medical, drug, dental, etc.) of a plan.

When these amounts are combined, we get a base rate that’s adjusted for the other factors—geographic area, number of employees, age, SIC code.

For example, if your employees are mostly young and healthy, your rate will be adjusted down. But if they’re working with heavy machinery, which has more risk than working at a computer in an office, your rate will go up.

There’s one factor that won’t change: our dedication to offering competitive rates for high-quality care and service. If you have any questions about your insurance rates, please call your sales representative or independent agent. They’ll be happy to help you.