Why group health insurance feels broken, and what employers can do about it.
People search “group health insurance sucks” for a reason. Premiums rise every year, the plan is hard to read, and the person explaining it is usually HR. Most of those complaints have a specific cause, and several have an ordinary fix.
Six complaints, each with a real cause.
None of them is imaginary. Each one comes from something specific in how group plans are priced, designed and explained.
The Cost Keeps Rising
Renewal increases are built from several parts: medical and pharmacy cost trend, the group’s own claims experience where it is large enough to count, and the carrier’s pooling and fixed costs. Only some of those are in an employer’s hands.
The Plan Is Hard to Understand
Deductible, coinsurance, copay and out-of-pocket maximum are four different ideas, and most employees meet them for the first time when a bill arrives. See how to avoid plan confusion.
The Network Feels Narrow
Networks are built around cost and carrier contracts, not around where any one employee already goes. A plan can look generous on paper and still leave a favorite doctor out.
Surprise Bills Happen
Out-of-network charges, separately billed services and facility fees are common causes. Federal rules now limit some surprise bills, but not every kind.
Claims Get Denied
Denials often come from missing information, coding errors or coverage rules the employee never saw. Many can be appealed, and the deadlines are real. See denied claims and appeals.
Nobody Explains It
Many brokers place the plan and move on. HR is left to explain a product it did not design, to employees who only pay attention when something goes wrong.
A renewal is not one decision made by one carrier.
An increase has parts, and the parts respond to different levers.
Medical and pharmacy trend moves the whole market and is largely out of any one employer’s control. The group’s own claims matter more as the group gets larger. Plan design, contribution strategy, funding model and how the renewal is marketed are the parts an employer can actually change.
A fair read of a renewal separates those pieces before anyone argues about the total. Our guide to reading a renewal shows how.
Five levers that move cost and satisfaction.
Market the Renewal Like for Like
Compare carriers on the same plan design, the same contribution and the same census, so the result is a true comparison instead of a lower number with a thinner plan. See trend versus group experience.
Revisit Plan Design and Contributions
Deductibles, copays, tiers and the employer’s share of premium all move cost. Small changes to how much the employer pays by tier can change both the budget and which plan employees choose. Our cost control playbook lays out the options.
Look at the Funding Model
Fully insured, level-funded and self-funded with stop-loss shift risk and reward differently. They are not right for every group, and the comparison should use your own claims data. See the models compared.
Audit the Pharmacy Benefit
Pharmacy is a large and often poorly understood share of spend. We perform pharmacy benefit manager claims audits for clients to check pricing, rebates and what the contract actually delivers.
Invest in Explaining the Plan
Employees who understand the plan choose better, use it better and trust it more. That means plain-language materials, plan-fit calls at enrollment and help when a claim goes wrong. See benefits communication and navigation and advocacy.
What group health insurance does well, and where it falls short.
Both halves are true, and most frustration comes from the second half being left unexplained.
What Group Coverage Does Well
It pools risk across a workforce, so one employee’s large claim does not set that employee’s price. Employer contributions are generally excluded from an employee’s taxable income, which is hard for an individual plan to match. A single plan is also simpler for HR to run and explain than many different ones, and it is a real part of recruiting and keeping people.
Where It Falls Short
Employees get the plan the employer chose, with little room to tailor it. Renewals can move sharply when the group’s own claims or the market move. Deductibles have climbed, networks can be narrow, and coverage ends when the job does. None of these is a reason to walk away on its own, but each is a reason to ask harder questions.
What The Numbers Look Like
The KFF 2025 Employer Health Benefits Survey puts the average annual premium for employer coverage at about $9,325 for single coverage and about $26,993 for family coverage in 2025, up roughly 5 and 6 percent from the year before. Workers contributed an average of about $1,440 toward single coverage and about $6,850 toward family coverage, and the average general annual deductible for single coverage was about $1,886, with most covered workers facing a deductible.
Averages hide a wide range, and your group is not the average. The useful comparison is your own premium, contribution and deductible against what your group’s claims support.
Group, level-funded, or an individual coverage allowance.
Each fits some employers and not others. Here is the honest version.
Fully Insured Group Plan
The carrier takes the claims risk for a fixed premium. It is the simplest to run and the most predictable month to month. The trade-off is that renewals reflect the market and, as a group grows, its own experience, so a bad year can show up in the price.
Level-Funded Plan
The employer pays a fixed monthly amount that covers expected claims, stop-loss protection and fees, and may receive a refund if claims run low. Carriers price these on the group’s own health, so groups with higher expected claims may see less favorable terms or no offer at all, and a bad year can still carry a cost at renewal.
Individual Coverage Allowance
An individual coverage HRA gives each employee a set monthly allowance toward coverage they choose on their own. It gives the employer a fixed budget and can suit a workforce spread across many states. Employees shop for themselves, networks and plans vary person to person, and the employer gives up the group-level bargaining and plan design that a group plan allows.
No option is right for every group, and a sales pitch for any one of them should be tested against your numbers. For a side-by-side of the funding models, see fully insured, level-funded and self-funded plans compared, and we are glad to run the comparison on your own renewal.
When group coverage is still the right answer, and when to look harder.
We would rather show you the numbers than sell you a conclusion.
For many employers, group coverage remains the most efficient way to offer health benefits. Employer contributions are generally excluded from an employee’s taxable income, and a plan is a real part of recruiting and keeping people.
It is worth looking harder when increases keep outrunning the budget, when employees do not use the plan well, or when the group’s own claims suggest the pricing no longer fits. Options then include a different plan design, a different funding model, or a different arrangement entirely. The answer depends on the group, and the comparison should be made on your data.
Send us your renewal and we will tell you whether it looks competitive and where we see opportunity.
Five questions that show how much work is being done.
When did you last market this plan, and what did you compare? Marketing should be a real, like-for-like exercise, not a phone call.
What would you change about the plan design, and why? A broker with no opinion about your plan is not reading it.
Who explains the plan to my employees? If the answer is “your HR team,” the explaining is not part of the service.
What happens when an employee’s claim is denied? You want a name and a process.
How will we know the plan is working? Look for measures beyond premium, such as plan usage, employee questions and renewal movement against the market.
What employers ask when group coverage feels broken.
Ten plain answers to the questions behind the complaint.
Why is group health insurance so expensive?
Because health care is expensive and group premiums pass that cost through. Premium reflects medical and pharmacy trend, how much care the group uses, the plan design, and the carrier’s own costs. Employers can influence the last three, and rarely the first.
Why does my group plan cost more every year?
Medical and pharmacy costs have risen for years, and renewals reflect that trend plus the group’s own claims where they are credible. A renewal that moves far more than the market is worth questioning line by line.
Why are employee deductibles getting higher?
Plan designs have shifted cost to employees to hold premiums down, which is why deductibles and out-of-pocket maximums have risen. Whether that trade makes sense depends on the group and on how well employees understand it.
How can I tell if my renewal is fair?
Separate it into trend, the group’s experience and fixed costs, then compare against what the market is quoting for the same plan and census. A fair read is a comparison, not an opinion about the total.
Can a broker actually lower my renewal?
A broker cannot change what care costs. A broker can market the renewal, test the plan design and contribution strategy, and compare funding models, and those steps sometimes reduce cost and sometimes confirm the renewal is competitive. We will tell you which.
Is level-funded insurance riskier than fully insured?
It changes where risk sits. The employer pays a fixed monthly amount that covers expected claims, administration and stop-loss, and stop-loss limits exposure if claims run high. Depending on the plan, some of the money may come back if claims run low. It suits some groups and not others.
Do I have to offer group health insurance?
Not as a small employer. Under the Affordable Care Act, employers with 50 or more full-time employees, including full-time equivalents, must offer affordable coverage or may owe a penalty. Smaller employers are not required to offer a plan.
Is group health insurance worth it for a small business?
Often, yes, because employer contributions are generally tax-advantaged and a plan helps with hiring and retention. A plan can be set up with as few as one W-2 employee. Whether it is worth it for you depends on the group and the alternatives.
Can I offer a plan without paying toward it?
Yes. An employer can offer an employee-paid plan with no employer contribution. Employees get access to group coverage and the employer carries little cost, though the plan will then work differently than one the employer subsidizes.
What do I do when employees keep saying the plan is bad?
Find out which complaint it is. Cost, network, confusion and denied claims each have a different fix. A short employee survey and a review of the questions HR keeps getting usually point to the answer.
What is the major disadvantage of group health insurance?
Limited choice and cost that moves with renewals. The employer picks the plan, employees cannot tailor it, the price can rise sharply when claims or the market do, and coverage is tied to the job. Good plan design and clear communication reduce the sting, but they do not remove it.
Which health insurance has the most complaints?
No single carrier or plan type owns the complaints. They cluster around denied claims, narrow networks, surprise bills and high deductibles, and many trace back to a plan that was never explained rather than a plan that is bad. Finding which complaint your employees have decides the fix.
Is $400 a month for health insurance a lot?
It depends on what it covers. The 2025 KFF survey put the average worker contribution at about $120 a month for single coverage and about $571 a month for family coverage. So $400 as an employee’s share of single coverage is well above average, while $400 toward family coverage is below it.
Is health insurance a rip-off?
Premiums mostly pass through the cost of care, so the price is rarely profit alone. The frustration is fair when what you pay does not match how you use the plan, or when no one explained it. A review of the plan, the contribution and the group’s claims shows whether it is working.
Ready? Upload your renewal, or talk it through with someone first. No cost, no obligation.
General information about group health insurance, not legal or tax advice. Questions about your own plan belong with your plan documents, and we will help you read them.
Related guides.
Avoiding Plan Confusion
The four terms behind most employee surprises, with a worked example. Read the Guide
What Influences the Cost of Group Health Insurance
The factors that move premium, and which ones you can change. Read the Guide
Group Health Insurance in Michigan
How group health coverage works for Michigan employers. Read the Guide
Where the Rules Come From.
The laws named on this page link to the statute they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
Employer Shared Responsibility (26 U.S.C. 4980H)
Requires applicable large employers, generally those with 50 or more full-time employees including full-time equivalents, to offer affordable coverage or potentially owe a penalty.
Employer Contributions (26 U.S.C. 106)
Generally excludes employer-provided accident and health coverage from an employee’s gross income.
Surprise Billing Protections (42 U.S.C. 300gg-111)
Limits out-of-network billing for certain emergency and related services under group health plans.
Average Premiums And Contributions (KFF)
Annual survey of employer health benefits, source of the 2025 premium, contribution and deductible averages on this page.
Individual Coverage HRAs (26 CFR 54.9802-4)
The federal rule that lets an employer reimburse employees for individual health insurance coverage under a defined set of conditions.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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