Adjust co-pays and maximums
Changing these can reduce premiums, though employees then carry more of the cost.
Group Benefits Cost
What Drives the Cost of Group Benefits
The cost of a plan depends on who is covered, what it pays for, how the group has claimed and how the insurer prices risk. Here is how each driver works, and which ones you can influence.
The Short Answer
How much does a group benefits plan cost?
It depends on the number and ages of your employees, the coverage levels and how you share the cost, so the only figure you can rely on is a quote for your group.
One published benchmark: the 2025 Canadian group benefits benchmarking report from Benefits by Design shows average annual premiums of $3,603 per employee on fully insured plans, about 5% of average earnings. It draws on 3,000 small and medium-sized employers in that provider's own business, so treat it as a reference point, not a market average or a quote.
Ranges elsewhere online mostly come from brokers and vendors and vary widely. We quote a few plan designs side by side so you can see numbers for your team. Building a first plan? See small business group benefits.
What moves the price
- Who is coveredGroup size, ages, gender mix and occupations
- What the plan paysMaximums, co-pays and drug coverage
- What the group claimsMainly health, dental and short term disability
- How risk is sharedPooling and experience rating
Cost Drivers
What drives the cost of group benefits?
Some drivers come from who works for you. Others are choices you make in the plan design.
| Driver | How it affects cost | Can you influence it? |
|---|---|---|
| Group size | Your own claims carry more weight as a group grows. Small groups rely more on demographics and standard rates | Not directly |
| Age and gender mix | Age and sex are rating factors, especially for pooled benefits such as life | Not directly |
| Industry and occupation | Your industry and the work your team does are rating inputs | Not directly |
| Location and taxes | Location is a rating input, and Ontario adds 8% retail sales tax to taxable group premiums | Not directly |
| Claims | Health and dental renewals often reflect what the group claimed | Partly, through plan design |
| Benefit design | Higher maximums, lower co-pays and more benefit types generally cost more | Yes. This is your main lever |
| Cost sharing | Changes who pays the premium more than what the plan costs overall | Yes |
How Insurers Price Risk
How do pooling and experience rating affect your cost?
Experience rating ties part of your rate to your own claims. Pooling spreads certain costs across many employers. Many plans use both.
Experience-rated benefits
Usually health, dental and short term disability. Rates are based partly on your own claims, to the extent the insurer considers them credible. Larger groups and longer histories generally carry more weight.
Pooled benefits
Usually life and long term disability. Claims go into a large pool, so rates rest on demographics and the insurer's standard rating rather than your own claims.
Large-claim pooling
Also called stop-loss. Once one person's claims pass a set yearly threshold, the excess moves to a shared pool. You pay a pooling premium based on the pool's results, so it can rise even if your group had no large claim.
High-cost drug pooling
Many insurers also pool very expensive drug claims through the Canadian Drug Insurance Pooling Corporation. The Canadian Life and Health Insurance Association (CLHIA) reports that this helped almost 19,000 small and medium-sized employers in 2025.
Rising Costs
Why do premiums rise even when we claim very little?
Because a renewal reflects more than your own claims. It also builds in expected increases in the cost and use of care, plus pooling charges and insurer expenses.
CLHIA reports that insurers paid $42.5 billion in supplementary health benefits in 2025, including $18.1 billion for drugs, the largest share. It also reports that drug claims grew about 7% and paramedical claims 9% that year, and that some medications can cost upwards of $50,000 annually.
At renewal, ask what's behind the number. Our guide to switching group benefits providers covers how renewals work and when to compare.
Controlling the Cost
How can you control group benefits costs?
Start with plan design, then look at how the cost is shared and whether the renewal holds up.
Review drug coverage
Ask what options exist, such as generic substitution, and keep protection for high-cost drugs.
Add a spending account
A health spending account caps what each person can claim. Pair it with core insured coverage to keep protection for larger claims.
Rethink cost sharing
In the same 2025 benchmark, 57% of groups had the employer pay all health and dental premiums, and 69% had employees pay all long term disability premiums.
Review before renewal
Send us the renewal notice and plan booklet about 60 days ahead, so there's time to negotiate or compare.
Keep records current
You pay for the people listed, so report hires, departures and family changes promptly.
Trade-Offs
Who should review their costs, and what should they watch for?
Every saving moves cost or risk somewhere. The aim is a plan you can sustain.
A cost review fits
- Owners comparing a first quote against a budget
- Employers facing an increase nobody has explained
- Employers ready to review a renewal before accepting it
Be careful with
- Cutting large-claim coverage, which moves the biggest risks to employees
- A low first-year rate that may not hold at the next renewal
- Dropping benefits your team values, which can undo the reason for having a plan
- Changing who pays for disability coverage without checking how benefits are taxed
Common Questions
Questions about group benefits cost
It depends on your team and plan design. One published benchmark, the Benefits by Design 2025 report, showed average annual premiums of $3,603 per employee on fully insured plans. That's a reference point, not a quote.
A renewal reflects more than your own claims. It also includes expected increases in health costs, pooling charges and insurer expenses. Ask your insurer to show how the number was calculated.
Experience-rated benefits, usually health, dental and short term disability, are priced partly on your group's own claims. Pooled benefits, usually life and long term disability, are priced on demographics and the insurer's standard rating, because claims go into a large shared pool.
It's what your plan pays to move very large claims into a shared pool. The charge is based on the pool's overall results, so it can rise even if nobody in your group had a large claim.
Yes. Ontario retail sales tax of 8% applies to taxable group insurance premiums, depending on where the employer and employees are located. A separate 2% premium tax also applies to accident, sickness and life insurance.
We work with clients across Burlington, Oakville, Milton, Mississauga and Hamilton. Many first conversations start with a call to 289.339.8100.
This information is general in nature and is not tax, legal, accounting, insurance or investment advice. It is based on current Canadian tax legislation, which can change. Any strategy should be designed and reviewed with your accountant and legal advisors based on your circumstances. Rates, rating methods and plan terms vary by insurer and contract. Benchmarks are for general reference and are not quotes.
Group benefits reviews in Burlington, Oakville, Milton, Mississauga and Hamilton
Get Real Numbers
See what a plan would cost your team
A short conversation is the easiest way to get numbers for your team, and to see what's driving them.
Prefer to talk? Call 289.339.8100
Thanks, your message has been received. We will review it and follow up with clear next steps. No pressure, no confusing insurance jargon.