The “Hidden Pay Raise” Your Broker Forgot to Mention

It happens every year. Your renewal notice arrives with a double-digit increase, and your broker, who probably hasn’t been seen since last year’s enrollment, gives you two choices: absorb the hit or in some cases, suggests you jump ship to a PEO (Professional Employer Organization).

One leads to a bleeding bottom line; the other leads to a loss of control to some degree, and administrative fees you will have to spend way too much time trying to track.

Recently, we sat down with a business owner in this exact position. Their broker was “playing it safe” by sticking with a traditional, high-premium renewal. The logic? “It’s a rich plan; your employees will love the low deductible.”

But when we actually crunched the numbers, we found that this plan was actually making the employees poorer every single week, and as a healthy group, they were over-insuring.

The Benchmarking Breakthrough: Level-Funding

Instead of just looking at the deductible, we looked at the total cost of ownership. We performed a deep-dive benchmarking analysis to see what happens when you stop over-insuring for the small stuff.

The solution wasn’t a bare-bones plan, it was a Level-Funded strategy with a major national carrier. This gave the team the same expansive networks and high-level access they were used to, with only minor plan adjustments that practically evened out when compared to the old structure.

By moving away from a reactive renewal, we didn’t just save the company money, we gave every single employee more money in their pocket with every weekly paycheck.

Finding “Found Money” in the Paycheck

In this specific scenario, the employer contributes 51% of the premium. By right-sizing the plan, our proposed plan would lower the weekly cost for every member of the team.

When you break it down by paycheck, the savings stop being abstract and start feeling like real life. Here is what that “Hidden Pay Raise” looked like:

• For Individuals: We put approximately $57 back into their pocket every week—that’s nearly $3,000 a year in found money.
• For Couples/Small Families: Savings of approximately $108 to $116 per week. That is roughly $5,600 to $6,000 back in their household budget annually.
• For Full Families: A massive $167 back per week—a staggering $8,690+ annual boost to the employee’s take-home pay.

From Paying a Bill to Managing an Asset

The shift to a level-funded arrangement lowers premiums today and it changes the rules of the game for the employer.

Under the old traditional model, if your employees had a healthy year, the insurance carrier kept every extra penny. In this new level-funded model, the company is eligible to share in 50% of any year-end surplus. Furthermore, the employer now has access to claims data. Instead of flying blind into every renewal, you gain the transparency needed to see exactly where your healthcare dollars are going, allowing you to manage costs proactively rather than reacting to a spreadsheet once a year.

Why Waiting Until Next Month is a Risky Move

Many employers see these numbers and think, “This looks great, let’s look at it again in a few months.” In the insurance world, that’s a dangerous game.

Insurance quotes are a snapshot in time. If you wait for a different calendar month, the entire group may need to be re-quoted. In that window, a single change to your employee census, whether it be a new hire or a change in family status, can negatively impact your premiums and cause those savings to evaporate.

When savings of this magnitude present themselves, the time to act is now. You aren’t locked in forever; you can always re-evaluate in the future. But passing up a $3,000 to $8,600 raise for your staff today is a missed opportunity you can’t get back.

Is Your Broker Managing Your Plan or Just Reporting the Weather?

A PEO or a traditional broker often offers simplicity, but simplicity is usually just a mask for expense. True benchmarking isn’t about finding the cheapest plan; it’s about finding the most efficient way to protect your team and your P&L.

For this business owner, the result was over $36,000 in annual employer savings and a team that felt the immediate benefit of a lower weekly cost.

If your renewal strategy feels like a choice between “bad” and “worse,” it’s time to stop looking at the carrier and start looking at the strategy. Let’s find that money for you. Contact us to learn more about NARFA and our strategic approach to employee benefits.