Composite rate (health premium)
A composite rate charges every enrolled employee in a coverage tier the same health premium, instead of pricing each person by age.
Small-group health insurance is normally age-rated under the ACA: each employee’s premium reflects their age, so a 26-year-old and a 62-year-old on the same plan carry very different prices. Composite rating averages the group into flat tier rates (employee only, employee plus spouse, family), which is administratively simpler and common in large-group and PEO billing.
When comparing a composite-rated PEO quote against age-rated small-group quotes, the averages can mislead in both directions. A young workforce may be cheaper age-rated than under a composite rate built on an older book; an older workforce may see the reverse. Run the comparison on your actual census, person by person, and ask how the composite rate is rebuilt at renewal, because hiring older or younger staff during the year changes next year’s average.
Composite rating also hides individual premium detail that you may need later. If you leave the arrangement, small-group carriers will quote your group age-rated, so ask the PEO for census-level premium equivalents annually to keep an exit comparison possible.