Health insurance companies have 2 methods for determining premiums: member-level rating and composite rating. In member-level rating, premiums are assigned based on each member's individual risk level, based on factors such as age and zip code. Composite rating allows insurance companies to assign rates based on the overall risk profile of a whole company.
Composite rates are calculated in a unique manner. Instead of assigning each employee a rate based on the individual age and zip code, the carrier takes an average of premiums for all enrolling employees to determine one rate for each enrollment type. Most commonly, composite rates are expressed as distinct rates for the following enrollment types:
- Employee Only
- Employee + Spouse
- Employee + Child
- Employee + Family
This means anyone enrolling in the company with a spouse only will pay the same rate, regardless of where they live or how old they are. Similarly, all people enrolling as individuals will pay the same rate, and so on.
This article is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines.
This article may contain hyperlinks to websites operated by parties other than TriNet. Such hyperlinks are provided for reference only. TriNet does not control such web sites and is not responsible for their content. Inclusion of such hyperlinks on TriNet.com does not necessarily imply any endorsement of the material on such websites or association with their operators.
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