Zorro sends allowance proposals to clients in September. Below is the sample format of the proposal.
Your Zorro 2026 allowance model
We’re extremely excited to launch Open Enrollment 2026 with you! We are honored to have served you this past year and look forward to a successful year ahead.
2025 recap
In 2025:
Employees: you had an average of 500 eligible employees and 400 enrolled, representing a 80% participation rate.
Costs:
Annual premiums totaled approximately $6M
$1.5M paid by employees (25%)
$4.5M paid by you (75%)
Renewal rates
With individual health plans, each carrier submits a proposed rate change to each state’s Department of Insurance. Below are the proposed rate changes for the carriers within your employee population. We calculate these according to the classes you have in place today and the carriers that your employees have chosen, with the objective of increasing allowances by the same rate as premiums will be going up should all employees make the same plan choices
Your general monthly allowance increase:
CA
Rate increase: +12.2%
Total premiums: $250,000 → $280,500
NJ
Rate increase: 17.3%
Total premiums: $250,000 → $293,250
Combined total:
Rate increase average: +14.8%
$500,000 → $573,750
Employer share (75%): ≈ $430,312
Employee share (25%): ≈ $143,438
❗It’s important to note that there is always a delta between proposed rates and those that ultimately get approved. This delta can be between 1% and 5%, and therefore. Making your allowance decision based on these rates will guarantee better buy-in from employees.
2026 allowances
Assuming you would like to keep the same contribution levels and pay the same share of employees’ plans, we propose an increase in allowances of 12.2% in CA and 14.8% in NJ, which would align employer contributions with the expected increases in each state. This ensures employees have sufficient purchasing power to renew their existing plans or select alternatives without absorbing the full impact of the carrier-driven rate hikes.
Appendix
The rate change per each state is a weighted average of the different carrier rate changes in that state.
California (CA)
Carrier | Number of employees | Proposed rate change | MONTHLY Premiums today | MONTHLY Potential premiums in 2026 |
BlueCross | 5 | 12% | $62,500 | $70,000 |
Aetna | 2 | 7% | $45,833 | $49,043 |
Kaiser | 3 | 15% | $37,500 | $43,125 |
United | 6 | 20% | $15,000 | $45,000 |
Cigna | 4 | 10% | $66,667 | $73,333 |
Total / Weighted Avg | 20 | 12.2% | $250,000 | $280,500 |
New Jersey (NJ)
Carrier | Number of employees | Proposed rate change | MONTHLY Premiums today | MONTHLY Potential premiums in 2026 |
Oscar | 3 | 15% | $37,500 | $43,125 |
Aetna | 5 | 9% | $62,500 | $68,125 |
Ambetter | 2 | 18% | $25,000 | $29,500 |
United | 10 | 22% | $125,000 | $152,500 |
Total / Weighted Avg | 20 | 17.3% | $250,000 | $293,250 |