Rising Group Health Insurance Costs: What Employers Across the U.S. Should Know

By Stephanie DePaco, Vice President of Insurance Services

If you’re an employer watching group health insurance premiums rise year after year, you’re not imagining it. The average employee now pays thousands annually in healthcare-related expenses, and those costs continue to increase faster than most business budgets can keep up with. What many organizations don’t realize is that a portion of those increases can often be prevented.

After working with businesses of all sizes across the country, we’ve noticed the same trends repeatedly. The good news is that most of the costly missteps employers make are avoidable with the right strategy, data, and support.

Below are some of the most common challenges that drive up group health costs and how to approach them more effectively.

Focusing Only on Premiums

It’s tempting to gravitate toward the lowest monthly premium. But price alone rarely paints the full picture. Deductibles, network structure, provider access, copays, and out-of-pocket maximums all impact both employer and employee costs throughout the year.

A plan that seems cheaper upfront can actually cost more when employees delay care due to high deductibles or when claims surge later in the year.

Review the total cost of care, not just the monthly number. Evaluate how employees actually use healthcare and invest in coverage that supports long-term utilization rather than short-term savings.

Navigating Benefits Without Expert Guidance

Benefits professionals don’t cost employers anything. Carriers pay the commissions. Yet many organizations still attempt to shop, compare, renew, and manage benefits alone.

The market changes constantly. Carrier competitiveness varies by region. Plans evolve yearly. One wrong decision can ripple into increased claims, compliance issues, or employee dissatisfaction.

Partner with experienced benefits consultants such as our Insurance Services team at Payentry. We support you throughout the entire year, not just during open enrollment.

Overlooking Provider Network Changes

Hospital system consolidation is on the rise nationwide. As large networks acquire smaller facilities, prices often increase due to reduced competition. Employers who don’t monitor network shifts may experience sudden cost jumps on renewals.

Educate employees on where to seek care and reinforce the difference between urgent care and emergency care. Smart utilization can reduce claims significantly.

Accepting Poor Cost Transparency

If you can’t easily answer where your benefits dollars are going, or why premiums increased, it’s difficult to make strategic decisions. Many employers are stuck without access to the data they need to manage costs effectively.

Consider funding strategies that provide deeper visibility into claims trends. With transparent reporting, you can pinpoint what’s driving the spend and respond proactively.

Offering Only One Coverage Option

Your workforce spans different ages, life stages, and healthcare needs. A single plan can unintentionally over-insure some employees and under-insure others.

Offer multiple coverage options, or leverage a curated exchange model, so employees can select what fits their situation. You maintain cost control, and your team gets the flexibility they deserve.

Not Optimizing Eligibility Rules

Eligibility requirements impact participation, compliance, cost, and plan stability. Hours worked, contribution levels, and participation thresholds matter and can become audit concerns when mismanaged.

We recommend that you review eligibility annually, document policies clearly, and align with regulatory requirements. Accurate records today prevent compliance headaches tomorrow. We work with our client to help ensure compliance throughout your coverage period and as compliance, regulations and other factors evolve.

Failing to Plan for Renewals in Advance

Renewals happen every year. Waiting until the last minute often leads to rushed decisions and higher costs.

We recommend that you start evaluating your renewal 90 days before its effective date. Explore alternative contribution strategies, network models, plan designs, and communication methods so employees understand the value you’re providing.

Strategic Ways to Control Costs Without Cutting Coverage

Beyond avoiding common pitfalls, employers are increasingly adopting:

Fixed employer contributions
This approach provides budget predictability while allowing employees to upgrade coverage if they choose.

Value-added plan features
Services like flexible spending accounts (FSAs), dependent care benefits, COBRA administration, wellness tools, and discount programs can boost value without a significant cost increase.

Preventive care prioritization
Preventive services are typically covered at 100%. Encouraging routine care often reduces high-cost claims later.

Tiered plan offerings
Providing multiple metal tiers (Bronze, Silver, Gold, Platinum) helps employees match benefits to their health and financial needs.

You Can Rely on Our Team

Managing benefits isn’t just about insurance costs. It impacts recruiting, retention, productivity, compliance, and company culture. At Payentry, we understand how challenging it can be to balance rising healthcare expenses while delivering quality benefits to your employees.

That’s why we offer dedicated support across payroll, HR services, retirement plan administration, and insurance benefits. When your systems and strategies work together, everyone wins.

Your employees deserve access to great healthcare. Your business deserves a partner who understands the full picture. And you deserve peace of mind knowing you’re making informed, cost-conscious decisions.

If you’re looking to take control of healthcare spend without sacrificing coverage, we’re here to help. Reach out to our team with questions. We’re ready to learn more about your objectives and provide real answers, without the pressure.

We believe that benefits don’t just support your workforce, they strengthen your entire organization.

Need help getting started?

I invite you to reach out to our Insurance Services division today for a complimentary consultation. We’ll help you review your current offerings, evaluate new options, and execute a smooth, stress-free enrollment.

Need assistance with employer benefits or open enrollment now? Contact us for a complimentary conversation and learn how we can simplify benefits and open enrollment for you at 925.239.8142 and at benadmin@payentry.com. Health/Life licensed in AR AZ CA CO CT FL KS MA MI MO NC NM OH PA TN TX SC VA

Let’s Talk. Our personnel management professionals provide expert support in payroll, workforce management, human resources, benefits administration, and retirement planning services.

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* MPAY LLC dba Payentry (Company), is not a law firm. This article is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other Company materials does not create an attorney-client relationship. The Company is not responsible for any inadvertent errors that may occur in the publishing process.

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