There are two ways that health insurance carriers determine premiums:
Admins: If you already offer health insurance with Gusto, click here for steps to estimate a new hire's premiums.
Rates are based on the age, zip code, and in some states, the smoker’s status of the employees and their dependents. For small group insurance, these rates are public, so we can tell you exactly what your premium will be when you enroll.
Rates are calculated based on the average cost for all participating employees. This means that we can't know the exact premiums until open enrollment ends and the insurance carrier calculates the final rates. Once that’s done, we will tell you what your premiums will be for the year.
Composite rates for dependents
In some states (like Massachusetts), carriers set four different composite rates based on how many dependents are enrolling:
In other states (like Washington), some insurance carriers use just two composite rates:
What will the premium be for a newly hired employee who enrolls in the middle of the plan year?
If you offer benefits with Gusto, click here for steps to estimate a new hire's premiums.
Member-level rating: Depending on the carrier, premiums are based on the individual's age at either their start date or the company's start date.
Composite rating: Premiums are locked in for the year based on the average demographics at the time the company began their plan year. New hires will have those fixed rates apply until the company renews their contract.
When will I find out how much the premiums will cost with composite rating?
Once we hear back from the carrier with the final rate, we’ll let you know. This will be after your company completes open enrollment and before your start date.