Mid-Year Hires and Composite Rates

If a company offers plans that use the composite rate premium structure, the premiums that are officially established by the carrier after they have confirmed enrollments will be set for the full year. This means that the set Employee Only, Employee + Spouse, Employee + Child, and Family rates will stay the same until the company's next Open Enrollment, regardless of the demographics of any mid-year new hires.

Employee Averages

When a carrier establishes the rates for a company and finds the average of all enrollees (for more information, see: Composite Rate Calculations), they can adjust these rates once all enrollments have been received.

However, once those rates are finalized and the plan year starts, those rates stay the same through the entire plan year, and all subsequent hires will pay that premium, regardless of risk factors that may otherwise adjust their premium. Keep in mind, some carriers have policies where they can re-adjust rates if the group's participation adjusts by a certain percentage.

Example:

  • At renewal, a company has 10 employees, all within the age range of 20-25.
  • The carrier finalizes their Employee Only premium at $250/month.
  • 6 months later, the company hires an employee age 52.
  • Under other rate structures, a 52-year-old employee will have a higher premium than someone aged 20-25.
  • However, because of the composite rate structure, this employee (and all employees hired up through the next renewal) will pay the same $250 premium as all other existing employees.

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