Health insurance approval often seems like a confusing track with twists of jargon and blind curves. But underwriting departments, the areas that decide on health insurance coverage, have rules of the road that carefully guide the process. For each client, the underwriters evaluate the risk of insuring individuals and then decide on appropriate coverage and costs.

Use this guide to help you navigate the process for your business.

The major arteries
In general, commercial insurance plans fall into three territories: individual, small group or large group. The state of Florida defines small groups as companies with 50 or fewer employees and large groups as businesses with 51 employees or more. Risk evaluation is also regulated by the state. Depending on the policies, insurance companies may review applicants’ medical backgrounds and decide whether to accept or deny applications.

Lone ranger: Individual insurance coverage.
Any individual can apply for individual insurance coverage. One key distinction between Individual medical insurance and group coverage is that insurance companies can deny an application for Individual coverage. High-risk individuals may not be able to get this type of insurance. Price for individual health care plans is primarily determined by age, gender, benefit level and geographic location. Sometimes applicants with health issues are accepted, but they may have to pay a higher rate. For example, someone with moderate asthma would pay more than someone who does not have asthma. Other times, health insurance providers will exclude a particular condition from coverage for a particular period of time.

Caravan journey: Small group insurance coverage.
In order to qualify for small group coverage, an employer must meet minimum requirements. These include whether an employer is a legitimate business and, most important, verification that the employees truly work at the company. Small group pricing is based on similar variables, including dependent coverage, as Individual medical coverage. The weighted average of individual employees risk profile is aggregated to arrive at a total premium. Florida regulations prevent insurance companies from denying coverage to individuals within small group plans based on medical conditions. In other words, an insurance carrier would not be permitted to deny coverage to one employee in a firm while accepting others. While an insurance company may not be able to deny coverage they are permitted to adjust premium rates based on medical conditions associated with the individuals in the group. Fortunately, the State provides limits to the range that rates can be adjusted. Rates can not be adjusted more than15 percent than the standard rate. Additionally, insurance carriers reward employer with a healthy population by potentially reducing rates a maximum of 15 percent less than the standard rate.

Healthy individuals could end up paying more in a small group plan than on an individual plan because the rates are determined by the composition of the whole group.

Rush hour: Large group insurance coverage.
Large group coverage has many similarities to small group coverage. Employers and employees need to satisfy similar eligibility requirements. Insurance companies are also prohibited from denying coverage to specific people within a large group plan because of a medical condition. Pricing within a large group is based on similar variables as small group in addition to consideration given to prior claims experience.

Improving your medical mileage
Business owners need to decide on their goals from a financial, employee retention/recruitment and social benefit standpoint and allow those objectives to guide their conclusions about company health care. Insurance prices can vary dramatically for similar coverage, so employers should shop around for the best value. Florida has historically enjoyed a competitive health insurance environment. The competitive environment provides for many choices and competitive rates.

Another consideration for business owners is what percentage of health care costs they want to take on versus how much they want their employees to pay. The more employees pay in monthly premiums and in out-of-pocket expenses, the less business owners need to pay. However, medical benefits can be used as a retention incentive, so it could be to an employer’s advantage to take on a large portion of medical costs.

Reaching your destination
As business owners decide on health care plans for their company, they should evaluate the products, services and costs of different insurance plans. Finding an insurance provider with a solid track record that will serve your business is crucial to the safe and smooth journey of your company through the maze of health insurance coverage.

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