By Where does the gap between group and employee increases come from?
| Cause | What happens |
|---|---|
| Your benchmark contribution | If the company contributes a fixed amount tied to one plan, everything above it lands on the employee. |
| A plan buy-up | An employee on a richer plan than the benchmark absorbs more of the increase. |
| Age-banded pricing | Each person's rate moves with their age, so individual increases differ from the group average. |
| Dependent cost sharing | If what the company covers for dependents changed from last year, family deductions move differently from employee-only ones. |
How should you prepare before announcing a renewal?
This happens in open enrollment constantly. Leadership says, "Great news, we only got a 10% increase," and someone on the other end of the call is asking why theirs went up 27%. That can really upset people. Before you announce the renewal:
- Model what each employee's deduction will actually be, not just the group average.
- Find the people whose increase is far above the group number, and know why.
- Write the answers to "why is mine higher?" before anyone asks.
What can an employer control at renewal?
The premiums come from a state-approved rate table you can't control. What you can control is your contribution strategy and which plan designs make the most sense for your group.
The rate table sets the price.
The census builds the premium.
The contribution strategy decides who pays what, the employer or the employee.
Is a health insurance renewal a compensation decision?
Yes. Every dollar the company puts toward benefits is compensation, and it belongs in each employee's total compensation statement. That value only counts if employees understand it and see it. A renewal is therefore part of your compensation strategy, your retention strategy, and how you think about total rewards at your company.
Common questions
Why did my paycheck deduction go up more than the company's renewal?
Because of how contributions are set, which plan you're on, your age band, and how dependent costs are shared. The group average hides all of that.
What can an employer control at renewal?
Contribution strategy and plan design. The age-banded rates themselves are state-approved.
How should we announce a renewal increase?
Model every employee's actual deduction first, and prepare answers for the people whose increase is well above the group number.
Are employer health contributions part of compensation?
Yes. They belong on a total compensation statement, and they only have value if employees can see them.
How can a 10% renewal feel like 27%?
If one employee's payroll deduction rises from $100 to $127, that employee sees a 27% increase even though the group premium rose 10%.
Steve Taylor, founder of Thinq HR & Insurance Services, has 15 years in employee benefits, HR, payroll, PEOs and insurance, including time inside Paychex, ADP and TriNet. He runs this analysis for client groups every renewal cycle.