Under a normal underwriting arrangement, prescription drug plans and dental care benefits can be experience rated while the group life benefits are fully pooled. The benefits of life insurance and dependent life insurance are based on the age and volume distribution of the group plan.

When you are working with an experience rated basis the annual renewal action is based on the financial results that are generated by the utilization of each of the individual employee benefit plans under a given type of insurance. Where applicable, this takes into account the plan’s past performance and is also figured with the market conditions and the general market rates.

When looking at the enrollment of the plans there will be more emphasis placed on your individual experience. Of course the smaller the population is the less emphasis will be placed on the experience of the group and the pool of the insurer.

In a situation that is fully pooled the carrier of the plan will assume the entire financial risk and there will be no accountability of the premiums versus the claims and experience. When looking at the renewal premium rates these will be fully pooled benefits such as group life and group long-term disability. It is based on a combination of aggregate experience of the insurer’s pool similar to a business.

See below for examples. You will see that Plan B is approximately 25% lower in cost than Plan A.

In the examples below, Plan B is approximately 25% lower in cost than Plan A.