Group Health Insurance and Your Location:

Did you know that the physical location of your business can greatly affect the rates that you will pay for group health insurance? This can be particularly confusing if you have several businesses, even if they are in the same state. Your zip code may in fact determine how much your premiums will be.

Let's take a look at why this happens and how it will affect your business.

Zip Code Pricing

When an insurance company figures out the rates that you will pay for your insurance policy, they use zip codes to determine risk. For example, if your business is located in an urban area that frequently has accidents or health risks, your insurance premiums would cost more than they would in a suburban area that faces less risk. Risk is the number one reason insurance premiums go up, and is figured in when you purchase your policy.

If you have several locations, spread throughout one city or state, this means that each location will need to be figured separately. You may need to purchase separate policies for each location, depending on the insurance company's preferences.

You can limit the amount you will have to pay by comparison-shopping among several group health insurance companies. Certain companies may figure risk in different ways and may use different adjusting tables. Try to find the company that offers the best coverage at the lowest price for your particular location.

In some cases, you may even need to have several different group health insurance policies with more than one company. Although this can increase the amount of paperwork and it can lead to confusion, it may be the most cost effective step you can take.

Provider Location

If your group health plan uses a network of providers, this can also affect your group health insurance premiums. Different areas will have different provider networks. A provider network is comprised of several physicians who have agreed to provide health care for an insurance company's policyholders at a specific rate.

If your particular location has a network of physicians that charge more, this means that your insurance premiums would be higher. This may be figured by zip code, or in smaller areas, by the city in which your business is located.

It is more difficult to get around this particular problem, but if you do take the time to look at several different group health plans, you may be able to find a different provider group that offers better rates.

If your employees prefer a health plan that does not limit them to specific network of providers, this can be beneficial to your premium rates. However, even PPO plans use networks to some degree, so you will be somewhat limited in your choices for a better rate.

Moving Considerations

If you are planning on changing your business' location, this may affect your existing group health policy. If your insurance company does figure their premiums based on zip codes, this means that your premiums may go up or down, depending on your new location. It is important to consult with your insurance representative before finalizing your decision to move your location so that you are aware of all of your options.

There isn't much that you can do about the physical location of your business. It normally is not an option to move simply because insurance rates are too high. However, you can experience tax benefits since small businesses are allowed to write off 100% of the premiums that they pay for their group health insurance policies. In the end, the important point is that you offer your employees a group health plan, no matter how expensive it may be.

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