Massachusetts Health & Accident Insurance Practice Exam

Which factors influence group health insurance premiums?

1. Only the age of participants

2. The size of the group and claims experiences

3. The level of coverage selected

4. The geographic location of the group

The correct answer is: The size of the group and claims experiences

The correct option focuses on key elements that directly impact group health insurance premiums: the size of the group and the claims experience. In group health insurance, larger groups typically benefit from lower premiums due to the principle of risk pooling. With more participants, there is a broader distribution of risk, which can lead to more stable claims and ultimately lower costs. Additionally, the claims experience of the group—essentially the history of claims made by its members—also plays a crucial role. If a group has a history of high claims costs, this can drive premiums up because the insurer anticipates needing to pay more in claims than a group with a lower claims history. While the other factors mentioned in the question may have some influence, they do not encompass the primary drivers of premium determination as effectively as group size and claims experience do. For instance, the age of participants is relevant but not the only determinant. Similarly, the level of coverage selected and geographic location come into play, but they are secondary compared to the overall risk assessment formed by the size and claims history of the group.