Are You Overpaying for Group Benefits? 7 Questions to Ask

1. Are You Comparing Coverage, Not Just Cost?

A competitor's lower premium does not necessarily mean your company is overpaying.

Another plan may have lower reimbursement rates, lower annual maximums, more exclusions, or higher employee contributions.

For a meaningful comparison, look at the coverage itself, including:

• Prescription drug coverage
• Dental coverage
• Paramedical services
• Mental health coverage
• Vision care
• Life insurance
• Disability coverage
• Deductibles and coinsurance
• Annual maximums and coverage limits
• Employer and employee contributions

The lowest premium is not automatically the best value. Make sure you are comparing plans with similar coverage and conditions.

2. Do You Understand Your Claims Experience?

Your claims experience can help explain how your benefits plan is performing and what may be driving renewal costs.

Look for patterns in your claims data:

• Is one benefit category responsible for a significant portion of the increase?
• Are high-cost claims affecting the overall results?
• Has utilization increased consistently, or was there a one-year spike?
• Are rising costs related to your plan's experience or broader market trends?

Understanding these factors can help you have a more informed conversation with your broker about your renewal and potential options.

3. Can Your Broker Explain Your Renewal?

Do you understand how your renewal premium was calculated?

Depending on your benefits plan and insurance arrangement, renewal pricing may consider claims experience, manual rates, pooling charges, projected claims trends, and other pricing factors.

You do not need to be an actuary to understand your renewal.

However, your broker should be able to explain the main factors behind the proposed increase, identify significant cost pressures, and outline any reasonable options for managing them.

If the explanation is unclear, ask for a breakdown.

4. What Are Your Employees Actually Paying?

Your company's benefits costs are only part of the picture.

If employees contribute a significant portion of the premiums, the plan may appear affordable to the employer while placing a considerable financial burden on employees.

Review the total cost of the plan, including both employer and employee contributions.

Consider whether the current cost-sharing arrangement remains appropriate for your workforce and compensation structure.

A benefits plan should be evaluated from both perspectives: what the employer can sustainably afford and what employees receive for their contributions.

5. Are Your Benefits Aligned With Employee Needs?

A benefits plan can become expensive without necessarily providing the right coverage for your workforce.

Some benefits may have limited utilization, while others may be highly valued by employees. However, low utilization alone does not mean a benefit should be removed. Certain coverages provide important protection when employees need them most.

Review employee feedback, utilization patterns, and coverage gaps before making changes.

The goal is not to offer the longest list of benefits. It is to build a plan that supports your employees while remaining financially sustainable.

6. Have You Compared the Market Recently?

A market review can help answer an important question:

What would another insurance company charge for comparable coverage?

Depending on your plan and circumstances, obtaining alternative quotes may help you assess whether your current pricing and coverage remain competitive.

However, switching insurance companies every year is not necessarily the right approach. Changes can involve administrative work, employee communication, differences in coverage, and potential disruption.

A market review should consider more than the premium. Compare coverage, contract terms, service, claims administration, and the overall value offered.

The objective is to make an informed decision, whether that means staying with your current insurer or exploring alternatives.

7. What Is the Cost of Doing Nothing?

Avoiding change may seem like the easiest option, but it can mean missing opportunities to improve your benefits plan.

An outdated plan may no longer reflect your employees' needs. Rising premiums may also place increasing pressure on your company's budget.

That does not mean every renewal increase can be avoided or that changing insurers will automatically save money.

It does mean your current arrangement deserves periodic review.

Consider whether adjustments to plan design, cost-sharing, coverage levels, or insurer arrangements could improve the balance between cost and value.

The important question is not simply whether making changes is inconvenient. It is whether your current plan remains appropriate for your business and employees.

A Simple Group Benefits Value Check

Start with these five questions:

1. Is our plan competitively priced for its level of coverage?
2. Does the plan reflect our employees' needs?
3. Do we understand how employees use their benefits?
4. Are the main drivers of our renewal costs clear?
5. Have we reviewed our options recently?

If you cannot confidently answer several of these questions, it may be time to take a closer look at your group benefits plan.

The Bottom Line

You do not necessarily need the cheapest group benefits plan. You need one that offers appropriate coverage, competitive pricing, and long-term sustainability.

That requires more than looking at your renewal percentage. It means understanding the numbers, evaluating employee needs, and comparing meaningful alternatives when appropriate.

Next Benefits can help you review your existing group benefits plan, understand potential cost pressures, and determine whether a market review or plan adjustment makes sense for your business.

Contact Next Benefits to discuss your current plan and explore your options.