There are a few main differences between small-group and large-group health insurance. One of the main differences in these offerings is how pricing operates for small-group insurance in the open market.
When a plan is age-banded, its pricing is set by demographic factors, namely age. That means for these plans, every 25-year-old would pay the same price as every other 25-year-old, every 65-year-old would pay the same price as every other 65-year-old, etc., for that group.
Composite pricing takes into account all eligible members who will enroll in health insurance and creates one standardized premium rate for the group where every enrolling member pays the same price. For example, this means a 25-year-old and a 65-year-old employed at the same company would pay the same premium amount to be enrolled in the same plan.
Since this pricing structure is based on a composite of who enrolls, pricing is subject to shift depending on a company’s enrollment.
Pricing Variability and Updates
Health insurance carriers work with the state to negotiate pricing on a broad demographic level. Because of this, the cost variability tends to be more consistent than pricing on large-group health insurance. These rates are refreshed quarterly by the carriers though groups enrolled in small-group health insurance will have their rates locked in for a year until their annual renewal.
Interested in learning more about how large and small group health insurance operates on Justworks? Currently, using health insurance on Justworks and looking to learn more about the various options. Reach out to our Justworks Customer Success team!