I am 56 and my wife is 53. Our children are on their own. We are enrolled in a PPO plan for just the two of us through our employer (we work for the same company) and are required to pay full premium costs. Beginning January 2000, the insurance company raised our premium by 50 percent for no apparent reason. The premium went from $500 to $750 per month overnight. We are both healthy and have no extraordinary health problems whatsoever. I really suspect that because of our age they are trying to get rid of us. Our income is limited and we cannot afford these premiums! Are there any laws that protect us from this unscrupulous business practice?

A.L.

Before concluding that you are the victim of an unscrupulous business practice, it may be helpful to get a few more facts from your employer and the employer's insurance plan. Many employers have a person who administers employee benefits, and this would be a good person with whom to discuss concerns and questions regarding any aspect of employer-sponsored health insurance. The benefit administrator may also be able to refer you to the person who can answer your question regarding the insurance premium increase.
It may be helpful to see a few more pieces of the puzzle. In the first place, in an employer-sponsored health plan, the employer normally pays 50 percent or more of the premium cost. Group insurance carriers and state laws require an employer contribution to validate the group plan. Insurers would hesitate to write a group policy in the absence of a solid employer commitment to the insurance plan. Both small and large group insurance generally requires an employer contribution. A very large employer may have a self-insured plan, and this may require a more substantial contribution from the employee.

Second, in group insurance, the premium is generally the same for all employees. That is, the premium is averaged for the entire group, and each person pays the same amount. In other words, age is normally not a factor in calculating the employee portion of the insurance premium. Further, premiums are not determined on an individual basis, but on the basis of the whole group. Individual employees are not singled out for a premium increase different from anyone else's increase. In cases where premiums are not the same for all employees, they may be based on age in five- or 10-year increments. But again, the premium is assessed across the board, and not aimed at any single employee. In such a case, a person turning age 56 might notice a large increase due to the new age band, but would have seen only minimal increases due to higher medical costs for five years. Find out how your employer assesses premiums and whether age is a factor.

Third, in group insurance, the new year's premium is usually based on the group's claim experience for the previous year. Again, this is not assessed individually, but for the whole group. If the group had some extraordinary claims in the previous year, that would account for a sharp increase in the new premium. A premium increase cannot be implemented for no reason. There must be an actuarially sound reason for such a high increase.

Fourth, since premiums are not assessed on single employees, it is unlikely that someone is using premiums as a cause for attrition. The law guarantees renewability of insurance for those who follow the rules.

The benefit administrator should be able to answer several questions for you: Does the employer contribute to the cost of the health plan? If so, how much? Is this an insured plan or a self-insured plan? Are premiums averaged for all employees, or is age a factor? What is the reason for the sharp increase? If you feel you are being mistreated, call your state's insurance department and ask the same questions. If you are under a self-insured plan, your will need to call the federal Department of Labor.

Insurance is becoming more and more expensive, and you are among the many who are finding that it may be too expensive to maintain. If your employer is contributing to the plan, the high cost of insurance is a mutual concern. You may urge your employer to look for more affordable options through an insurance broker.