If your group benefits renewal quote has increased, start by understanding what changed. Canadian employers can consider a Health Spending Account (HSA), request a rate review, compare providers, adjust plan design or revisit cost sharing.
The right choice depends on your budget, what employees need and how each option changes their access to care. Here are five options to review before accepting your renewal.
Why did your group benefits renewal increase?
An insurance premium increase for a small business can reflect several factors: higher healthcare costs, changes in your team, past claims and the provider’s pricing assumptions. The weight given to each factor depends on your plan.
For smaller groups, your own claims may have less influence on pricing. That means a year with fewer claims does not necessarily lead to a lower renewal. Ask your advisor how your rates were calculated and which factors contributed most to the increase.
1. Consider an HSA
A Health Spending Account lets an employer set an allowance for eligible medical and dental expenses. Employees submit claims, and approved amounts are reimbursed within their available allowance and plan terms.
At renewal, there are two ways to consider an HSA:
Add an HSA alongside existing benefits. Keep your core benefits and use an HSA to help with eligible expenses employees still pay themselves. This may include eligible balances left after another benefit plan has paid its share.
Switch to an HSA for health and dental expenses. You could also consider replacing some or all of your current health and dental benefits with an HSA. This shifts the arrangement to a set allowance, so compare the employer cost and what employees would pay after using their balance. Review employment commitments and provincial requirements before switching.
For either approach, a $500 annual allowance for 10 employees provides $5,000 in new annual HSA allowances. Your budget also needs to account for administration fees, applicable taxes, any carry-forward obligations and the cost of the benefits you retain.
Adding an HSA to an unchanged plan adds an employer commitment. Any potential savings from switching or revising your arrangement depend on the complete design and costs.
An HSA also has limits. A fixed allowance does not provide disability income or a life benefit, and it may be insufficient for high ongoing medical costs. Review those needs before reducing existing benefits. For employees in Quebec, any change must also account for the province’s prescription drug insurance requirements.
HSA reimbursement depends on expense eligibility, documentation and plan rules. Any intended tax treatment also depends on meeting the applicable CRA requirements for a Private Health Services Plan.
Employers and incorporated professionals can get started with Wellbytes through a quick, simple digital setup: enter your business details, set allowances and add employees where applicable.
2. Ask your current provider to review the renewal
Before changing your benefits, ask your advisor to review the proposed rates with your current provider.
Start with the information behind the quote. Confirm that employee numbers, benefit selections and other business details are current. Then request a breakdown showing which benefit categories increased and why.
For a more focused benefits renewal negotiation, ask:
- Which pricing assumptions or charges can be reviewed?
- Is a revised rate available with the same benefits?
- Would a lower quote require changes to the plan?
A review may identify room for an adjustment, but a reduction is not guaranteed. Get any revised offer in writing so you can compare its price and terms.
3. Compare other providers on the same basis
Alternative quotes can help you assess whether your current plan still offers suitable value. Give each provider the same employee information and benefit requirements so the comparison is meaningful.
Look beyond the opening price. Compare annual limits, eligible services, reimbursement levels, exclusions, fees and how future renewals will be calculated. Include the employee experience: submitting claims, getting support and tracking reimbursements.
Before switching, confirm the cancellation notice, new start date and handling of outstanding claims. Ask both providers how the transition would affect ongoing treatment and employees on leave. Do not assume every existing arrangement will transfer automatically.
4. Adjust the plan around what employees need
If the renewal is unaffordable, ask for specific plan changes to be priced separately.
Options might include changing annual limits, reimbursement percentages or the amount employees pay before reimbursement begins. Each can affect both the employer’s bill and employees’ out-of-pocket costs.
Use aggregate usage reports, where available, alongside anonymous employee feedback. A benefit with few claims may still matter to someone who needs it, so low usage alone is not a reason to remove it.
Ask your advisor to show the cost and employee impact of each proposed change. Be especially careful with limits affecting expensive medications or other significant medical needs.
5. Review how the cost is shared
Another option is to review the amount paid by the employer and employees, where your plan permits it.
Changing that split can reduce the employer’s contribution while keeping the benefit design intact. However, it transfers part of the cost to employees rather than reducing the total price of the plan.
Show the proposed change in dollars per pay period so employees can understand its effect. Check the plan terms, employment commitments, and payroll and tax implications before making changes.
This option deserves the same care as a benefit reduction: employees need to know what they will pay and when the change takes effect.
Compare the full commitment before you sign
Bring your preferred options into one comparison showing:
- Employer cost: the annual amount, including fees, taxes and any HSA commitment.
- Employee cost: payroll contributions and likely out-of-pocket expenses.
- Benefit changes: what stays, what changes and which needs may remain unmet.
- Implementation: notice deadlines, effective dates and what employees need to do.
A useful group benefits renewal decision balances the business budget with the practical effect on employees. Ask for a clear explanation of both before accepting a lower price.
