how are group health insurance premiums calculated

How are Group Health Insurance Premiums Calculated?

Group health insurance premiums are dependent on a range of factors that determine how much your company pays for your employees’ health coverage. It is important to fully understand what these factors are. This serves as a path to minimize the premiums of your corporate health insurance policy in the future.   

So what are some factors that affect employee health insurance premiums? 

Type of Health Insurance Policy 

Group health insurance policies that cover chronic conditions will have higher premiums than those that are able to cover only more acute diseases or mild medical conditions. If the group medical insurance policy has more dependents, that would mean higher premiums for your employee medical insurance policy

Number of Employees 

The lower number of employees your company has, the lower the life insurance premiums of your company will be. This is simply because more people means a higher chance of making claims which in turn leads to a higher risk for the life insurers. 


As a matter of fact, the younger your employees are, the less expensive your corporate health insurance premiums will be.  

This is simply due to a risk calculation of health insurance. The older your employees are, the higher chance that you are getting ill and likely to file more claims which pose a higher risk for the health insurer. Therefore, your group health insurance premiums go up in this case. 


As a golden rule, women pay less for health insurance than men because women typically live longer on average than men. This is why ladies are perceived as a lower health insurance risk than men by health insurance companies. Apart from the lifespan, men tend to have more hazardous jobs and higher-risk hobbies such as drinking alcohol and taking drugs or even driving beyond speed limits. It is true that not every gent has a construction-related job and has an alcoholic issue. However, health insurance premiums are calculated based on averages, not individually.  

Medical history (Pre-existing Medical Conditions) 

The healthier your employees are, the lower your corporate medical insurance premiums will be. A health insurance policy with the requirement of a medical exam is typically less expensive than the simplified one where no medical exam is needed because in this case the health insurance provider is taking an unidentified risk so premiums are higher accordingly. 

You and your employees are advised to be open and honest about your medical history by declaring all of your diagnosis, surgery and prescription. If the health insurance company found out that you did not do so, your medical claim would not get approved.   


If your company is in a country with a high risk that involves war, terrorism or natural disaster or tropical diseases, your company’s health insurance premiums will become higher in this regard. 

Payment schedule 

The fewer payments that your company is able to make, the lower your health insurance premium will be. If possible, select the option of paying premiums on an annual basis or a quarterly basis to save on your health insurance cost.  

Our advice 

Always make sure you examine financial and medical conditions whether they are in line with the level of coverage on your company’s current health insurance policy, otherwise switch it to the one that perfectly matches your specific health coverage requirements and those of your loved ones. After all, it is never too late to plan for saving on your company’s health insurance premium you deserve. 

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