This article is for admins who offer or plan to offer health insurance through Gusto.
Health insurance carriers use one of two methods to set premiums: member-level rating or composite rating. If you already offer health insurance with Gusto, learn how to estimate a new hire’s premiums.
Member-level rating sets premiums based on the age, zip code, and, in some states, smoker status of employees and their dependents. For small group insurance, these rates are public, so we can tell you the exact premium when you enroll.
The composite rating calculates premiums using the average cost for all participating employees at the time the plan started. Because of this, we cannot know the exact premiums until open enrollment ends and the carrier calculates the final rates. After that, we’ll let you know your premiums 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:
Employee-only rate
Employee + spouse rate
Employee + child rate
Employee + family rate
In other states (like Washington), some carriers use just two composite rates:
Over 21 years old rate
Under 21 years old rate
Q: What will the premium be for a new hire who enrolls in the middle of the plan year?
A: If you offer benefits with Gusto, learn how 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 start of the company’s plan year. New hires get those fixed rates until the company renews its contract.
Q: When will I find out how much the premiums are with a composite rating?
A: Once open enrollment ends and the carrier calculates the final rates, we’ll let you know before your start date.