Composite Rate Quotes and Adjustments
Composite rates are one way an insurance carrier decides on the premiums for employees at a company at time of enrollment. Composite Rates are calculated twice:
- Once when the initial proposal or renewal is generated by the carrier, and
- Again when all employees have either enrolled in or declined coverage.
For more information on how composite rates are calculated, see: Composite Rate Calculations.
The Initial Quote
The carrier will generate the first quote according to the employee information they have for a company.
- For groups signing up for new insurance, this will be the employee information on the group census.
- For groups going through Open Enrollment, the quote will be based on the employee list they have at the time they generate the renewal packet.
If all employees on the initial quote enroll, their individual costs and the cost to the company will match the initial quote provided by the carrier -- give or take a few adjustment dollars. However, if any employees on that list decline coverage, the entire group's rates will adjust to account for fewer enrollees.
- Initial quote lists 10 employees at $100/ month each, for a monthly total of $1000 for the employer.
- Only 8 of those 10 employees actually elect to enroll in coverage, making the monthly total $800.
- The carrier will recalculate all rates (Employee Only, Employee + Spouse, Employee + Child, Family) as a result of the two employees declining.
- The premium for each of the 8 enrolling employees will adjust collectively based on their enrollment type and the new rate based on the carrier's recalculations.
The carrier will provide the initial quote that includes expected dependent enrollments for employees, either from the group census or the renewal packet. In the event that an employee adds or removes a dependent that is not expected by the carrier, this will adjust the overall rate structure for all enrollment types to account for the extra or reduced premium (based on whether an unexpected dependent was added or an expected dependent removed).
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