Why Group Insurance Premiums Keep Rising and What Your Company Can Do About It

Every renewal season, many employers face an all-too-familiar challenge — increasing group insurance premiums. Whether it’s medical, dental, or disability coverage, the cost of employee benefits continues to climb faster than inflation. At Patterson-Bryant, we believe understanding why these costs are increasing — and what you can do to manage them — is the key to maintaining a strong and sustainable benefits program. 

The Main Reasons Behind Rising Group Insurance Costs 

1. Escalating Healthcare Costs 

Healthcare inflation continues to outpace general inflation. Hospitals, doctors, and pharmaceutical companies are charging more for services and medications, which in turn increases insurance claims costs and drives premiums higher. 

2. Higher Utilization of Care 

Employees are using their benefits more frequently, especially for preventive visits, elective procedures, and mental health care. While this increased usage is a positive sign for overall wellness, it also raises total claims paid by insurers. 

3. An Aging Workforce 

As the average age of employees increases, so does the likelihood of chronic conditions and ongoing treatments. Even a small demographic shift toward an older workforce can significantly affect claims experience — and premiums. 

4. Prescription Drug Costs 

Prescription medications, particularly specialty drugs used to treat complex or chronic conditions, continue to represent one of the fastest-growing cost drivers. These drugs can cost thousands of dollars per month per patient. 

5. Adverse Claim Experience 

Even a few large claims can impact premiums for smaller or mid-sized groups. When claims exceed expected levels, insurers adjust renewal rates to balance future risk. 

6. New Regulatory Requirements 

Government mandates, such as expanded mental health parity laws or preventive service coverage requirements, improve access to care but also add to overall plan costs. 

How Employers Can Manage Rising Premiums 

At Patterson-Bryant, we help businesses take proactive steps to control costs without sacrificing quality or employee satisfaction. Here are some effective strategies: 

1. Reevaluate Plan Design 

Making small adjustments to plan design — such as deductible levels, copays, or coinsurance — can help balance cost and coverage. Employers may also explore network options, like tiered or narrow networks, to achieve savings while maintaining provider choice. 

2. Invest in Wellness and Preventive Programs 

Healthy employees mean lower claims. Wellness initiatives such as health screenings, fitness challenges, and employee assistance programs can reduce long-term costs by preventing chronic conditions and improving overall wellbeing. 

3. Educate Employees on Cost-Conscious Choices 

Providing employees with resources to make informed healthcare decisions can significantly reduce claims. Examples include promoting telemedicine, urgent care centers over ER visits, and mail-order prescription programs. 

4. Explore Alternative Funding Arrangements 

Depending on company size and risk tolerance, self-funding or level-funded plans may offer more flexibility, transparency, and potential savings compared to traditional fully insured plans. 

5. Leverage Broker Expertise 

Partnering with an experienced benefits consultant like Patterson-Bryant ensures your plan is reviewed annually for competitiveness. We negotiate with carriers, identify cost-saving opportunities, and benchmark your benefits against industry peers. 

6. Develop a Multi-Year Benefits Strategy 

Instead of reacting to rate hikes each renewal season, we recommend building a multi-year benefits strategy focused on cost management, employee engagement, and long-term financial predictability. 

The Bottom Line 

While rising group insurance premiums are a reality, employers don’t have to face them alone. With the right strategy and guidance, companies can control costs while continuing to offer benefits that attract and retain top talent. 

At Patterson-Bryant, our mission is to help you navigate the changing benefits landscape with data-driven insights, personalized strategies, and a commitment to your long-term success. Call us at 248-433-1902, we are ready to help you reduce your benefit costs.