(Editor's note: This blog has been republished here with permission from Zane Benefits. This is part three of an ongoing series. You can check out part one here and you can read the original, in its entirety, here.)

If you work for a small or medium-sized employer with group health insurance, if one employee has a baby, a surgery, or is diagnosed with a chronic illness, you are likely to see a large premium rate increase at renewal time. That's because the insurance company needs to recover their losses from a relatively small group of people.

Group health insurance is misleading because insurance means spreading the risk among a large group of people or organizations so that no single entity bears the cost of a catastrophic illness. However, that's not how group health insurance works. Each time an insured employee in your organization runs up large medical bills, your organization ends up paying these costs the following year via an increase in its annual health insurance premium. The insurance employers pay for is actually little more than a delayed bill-paying mechanism.