What Drives Group Benefit Costs? Let’s Break It Down

Group benefits are a smart investment in your team. But when renewal season hits and rates go up, it’s natural to ask: what happened?

This guide explains what drives group benefit costs, why you might still be out of pocket even with 100% coverage, and how to make smarter decisions about your plan. If you’re a business owner, HR professional, or plan administrator in Canada, this is for you.

Dental Fee Guides: The Menu Behind Your 100% Coverage

Let’s start with one of the most common misconceptions: “I have 100% dental coverage. Why did I still have to pay out of pocket?”

The answer? Fee guides.

Across Canada, provincial dental associations release annual fee guides, which lists suggested prices for common procedures. Dental plans reimburse based on the provincial fee guide, however, dentists can (and often do) charge more. If they charge more than the guide, the difference comes out of the plan members pocket.

Think of it this way:

Your plan covers a $4 coffee.
But your dentist serves a $6 oat milk latte.
You pay the $2 difference.

🔗 See the 2025 Alberta Dental Fee Guide

The truth is, your plan might offer 100% coverage based on the provincial fee guide, but if your provider charges above that fee, you’re paying the difference.

Claims Experience & Patterns

Another factor that affects your plan’s renewal rates is your group’s claims experience, also known as your group’s benefits usage.

“Experience reports highlight claims patterns that drive rate adjustments at renewal. Understanding your company usage is the first step to controlling costs.”
— Emma Nieuwenhuizen, COO – Navigate Benefit Solutions

Think of your plan like a financial partnership with your carrier. The more your employees claim, the more your renewal may increase. And, if your employees are using the plan heavily or if high-cost items are frequently claimed, expect that to be reflected in your next renewal.

Contributing factors include:

• Volume of claims (especially high-cost drugs or dental procedures)

• Type of claims (prescription drugs, dental, paramedical, etc.)

• Consistency or volatility year over year

👀 Want to know how your usage stacks up?
📌 Check out our blog: Six Essential Questions to Ask During Your Next Benefits Renewal Meeting

Pooling Charges: Your Plan’s Safety Net Comes at a Cost

Pooling charges often go unnoticed—but they’re one of the biggest contributors to rising premiums.

What is pooling?

Pooling is an arrangement that protects your plan from financial strain caused by large, unexpected claims (like unique treatments or specialty drugs). Instead of making your plan absorb the full cost, the claims are “pooled” once they reach an outlined stop-loss level (often $10,000 or $15,000).

While this protection is helpful for risk, pooling charges can be a big reason your premiums increase. And most clients don’t realize they can question or renegotiate these charges.

“Pooling charges are one of the biggest drivers of surprise increases. Reviewing these—and understanding whether they’re fair—is critical to managing costs.”
— Jason Probe, President – Navigate Benefit Solutions

Pooling charges vary between carriers and can be negotiated, especially if you’re part of a preferred pricing block.

While there is a lot to understand around pooling charges, our navigators can help you break them down. Check out our blog for an in depth guide to understanding pooling charges.

What Else Drives Group Benefit Costs?

Understanding what drives group benefit costs goes beyond claims. Here are a few more plan elements that often fly under the radar:

• Inflation in the healthcare and dental markets

• Plan design and benefit limits

• Voluntary vs. mandatory generic drug plans

• Demographics including age, industry and location of your workforce

Each of these has a direct or indirect impact on your plan’s performance and your renewal rate. The challenge? Most aren’t obvious unless you ask (or have a consultant who knows where to look😉). Even small misunderstandings around these elements can lead to higher costs or confused employees.

What Can Employers Do to Stay in Control

A fair and sustainable benefits plan doesn’t come from cutting coverage. It comes from understanding the details and using them to make smart decisions. Here’s five things you can do to take control of your benefit costs (without cutting valuable coverage):

1. Review your claims experience report with your navigator (benefits consultant) annually

2. Educate your workforce on the difference between your plan’s dental coverage, the provincial guide and actual provider charges

3. Ask about pooling charges and opportunities for negotiation.

4. Educate employees on how plan usage impacts pricing to reduce confusion and potential for over-claiming

5. Work with a knowledgeable, expert-led firm like Navigate to stay informed and supported

📌 Check out our article on Navigating the Key Responsibilities of Successful Benefit Plan Administration

Final Thoughts: Ask, Understand, Act

You don’t need a background in insurance to understand your plan. But you do need someone who will explain the “why” behind the cost. Knowing what drives group benefit costs helps you protect your budget and deliver a great employee experience.

At Navigate, we help simplify those details. From transparent renewal support to education for plan admins and members, we’re your go-to for all things group benefits.

🧭 Need a second opinion on your plan costs? Let’s talk.
👉 Book a 15-minute call with a Navigate advisor