Not thinking about plan structure and the impact of claims

Some group insurance plans are experience-rated and some are pooled. The difference decides how much your claims move your price.

Experience-rated plans

An experience-rated plan works a lot like car insurance. What would happen to your price next year if you got into three car accidents and five speeding tickets this year? It would jump. Experience-rated group plans can work the same way: when your employees submit claims, your price rises at renewal.

Pooled plans

Pooled plans work the way you would expect insurance to work. Everyone shares in the premium and shares in the risk. You choose from standard plan designs, the price is set for that plan, and regardless of your usage you get the same renewal as everyone else. The insurer won't single you out for your claims.

Which achieves more stability? A plan that swings like a rollercoaster when your employees or their families submit claims, or one where a larger group of clients shares the risk and has a history of stability?