South Carolina answers this question structurally, and the answer is that a renewal increase is not one number. Under S.C. Code § 38-71-940(A)(3), the percentage increase in the renewal premium rate charged to a small employer for a new rating period may not exceed the sum of three named components: the change in the insurer’s new business premium rate across the rating period, an adjustment attributable to claim experience, health status, or duration of coverage, and any adjustment due to a change in coverage or in the employer’s case characteristics. Each component is constrained separately. So the useful question at renewal is not “why did it go up,” but “which of the three moved, and by how much.”
The statute builds the increase out of parts
The rating rules for South Carolina small-group coverage live in Subarticle 3 of Article 5, S.C. Code §§ 38-71-910 through 38-71-990, enacted by 1991 Act No. 131. This is worth knowing for a practical reason: the Small Employer Health Insurance Availability Act, which is where a reader goes looking, does not carry the bands itself. Its rating section at § 38-71-1350(A) delegates, providing that premium rates for plans subject to that article “are governed by the rating restrictions provided for in this chapter.” An employer reading only the availability article will find a cross-reference and no rule.
The subarticle that does carry the rule applies, under § 38-71-930(A), to any health insurance plan providing coverage to one or more employees of a small employer. Its renewal provision is the three-part sum above. Everything else below is an expansion of those parts.
Component one: what the insurer’s new business rate did
The first component is trend, and it is measured against the insurer’s own book rather than against the market. Section 38-71-940(A)(3)(a) sets it as “the percentage change in the new business premium rate measured from the first day of the prior rating period to the first day of the new rating period.” Where the insurer is not issuing new policies in that class of business, the statute substitutes the percentage change in the base premium rate.
Two definitions make that sentence readable. The new business premium rate, at § 38-71-920(8), is the lowest premium charged or offered — or which could have been charged or offered — to small employers with similar case characteristics for newly issued plans with the same or similar coverage. The base premium rate, at § 38-71-920(12), is the same idea applied to the existing rating system for that class. And the index rate, at § 38-71-920(13), is “the arithmetic average of the applicable base premium rate and the corresponding highest premium rate” for small employers with similar case characteristics.
This is the component least connected to anything a particular employer did. It moves because the insurer’s pricing for new sales moved.
Component two: the experience adjustment, and the line it crosses
The second component is the one employers feel personally, and it sits inside a distinction that is easy to blur.
South Carolina excludes health experience from the base rating factors. Section 38-71-920(5) defines case characteristics as age, gender, geographic area, industry, group size, and family composition, and then states directly: “Claim experience, health status, and duration of coverage since issue are not case characteristics for the purposes of this subarticle.”
And then § 38-71-940(A)(3)(b) permits a renewal adjustment “due to the claim experience, health status, or duration of coverage of the employees or dependents of the small employer as determined from the insurer’s rate manual for the class of business” — an adjustment the statute caps annually and requires to be prorated for rating periods of less than one year. In the 1991 statute, health experience is out of the base rate and into the renewal increment.
Two related provisions are worth reading alongside it. Section 38-71-860(B)(1) prevents an issuer from charging an individual a higher premium or contribution than a similarly situated individual on the basis of a health status-related factor — but § 38-71-860(B)(2)(a) says nothing in that protection restricts the amount an employer may be charged for coverage under a group health plan under applicable state law. And under § 38-93-30(B), an issuer may not adjust premium or contribution amounts for a group on the basis of genetic information, while the same section states that this does not limit an increase based on the manifestation of a disease or disorder in an enrolled individual, and that one person’s manifestation may not be treated as genetic information about other group members.
Component three: what changed on your side
The third component covers “any adjustment due to change in coverage or change in the case characteristics of the small employer as determined from the insurer’s rate manual for the class of business.”
Two different things live in there. A change in coverage is a plan-design change — a different deductible structure, a different network arrangement. The statute treats network structure as a real distinction: under § 38-71-940(A)(4), a plan with a restricted network provision is not considered similar coverage to a plan without one, provided the restriction produces substantial differences in claim costs.
A change in case characteristics is a change in the group itself: the ages on the census, family composition, group size, geography, industry. South Carolina requires that geographic areas smaller than a county not be used without prior approval of the Director or a designee, and that the adjustment for case characteristics “be objective and meet sound actuarial practices.” Where group size is used as a case characteristic, the statute separately constrains how far the highest rate factor for a size classification may sit from the lowest.
In practice this is the component an employer has the most visibility into, because it is made of facts the employer supplied.
What the insurer has to tell you
This is the most usable provision on the page. South Carolina requires small employer insurers to disclose, under § 38-71-960, the provisions concerning the insurer’s right to change premium rates and the factors, including case characteristics, that affect changes in premium rates; a description of the class of business in which the small employer is or will be included; and the extent to which premium rates for a specific small employer are established or adjusted due to case characteristics, family composition, class of business, and the claim experience, health status, or duration of coverage of the employees or dependents of the small employer.
Read against the three-part sum, that disclosure duty maps onto the components one for one. Separately, § 38-71-970(B) requires each small employer insurer to file an actuarial certification with the department each March first, certifying compliance with the rating section and that its rating methods are actuarially sound.
And the class you sit in is not freely reassignable. Section 38-71-940(C) bars an insurer from transferring a small employer involuntarily into or out of a class of business unless the employer no longer meets the criteria for that class, and bars a voluntary transfer offer unless it is made to every small employer in the class without regard to case characteristics, claim experience, health status, or duration since issue.
The bands are not permanent scenery
One sentence changes how the whole subarticle should be described. Under S.C. Code § 38-71-980, the Director or a designee “may suspend all or any part of Section 38-71-940 as to the premium rates applicable to one or more small employers for one or more rating periods,”
on a filing by the insurer and a finding that the suspension is reasonable in light of the insurer’s financial condition or that it would enhance the efficiency and fairness of the small employer market.
So the accurate statement is that the rating restrictions exist and are suspendable in stated circumstances by the regulator. They should never be written up as rules that always apply.
Two rulebooks sit on the books at the same time
South Carolina’s rating subarticle was enacted in 1991 and last amended in 1997. The federal rating rule at 45 C.F.R. § 147.102 permits a rate in the individual or small group market to vary only by whether the coverage is for an individual or family, rating area, age, and tobacco use — and then closes the list: “The rate must not vary with respect to the particular plan or coverage involved by any other factor not described in paragraph (a)(1) of this section.”
That federal section applies for plan years beginning on or after January 1, 2014, and does not apply to grandfathered plans.
The South Carolina list names gender, industry, and group size. The federal list does not. The South Carolina renewal provision contemplates an experience adjustment. The federal list does not include claim experience, health status, or duration of coverage.
Both instruments are published and in force as written. This page reports the tension and stops there: it does not assert that either displaces the other, and it does not tell a reader that the state bands are or are not applied to an ACA-compliant plan. What a reader can act on is narrower and more reliable — the rate actually charged is the one the issuer files and the department reviews, and the disclosure duty in § 38-71-960 is the lever for finding out how it was built.
What the published South Carolina figures describe
Background figures exist, and they answer a different question than a renewal does.
The federal Medical Expenditure Panel Survey Insurance Component publishes a South Carolina table for 2025, released in July 2026. Three qualifiers travel with every number in it. The survey is collected at the establishment level and sorted by the size of the firm that owns the establishment. Its “Less than 50 employees”
column is not South Carolina’s statutory small-employer test, which is written differently and treats affiliated companies as one employer. And every premium row is measured at establishments that offer health insurance — a minority, since MEPS reports that 21.2 percent of South Carolina private-sector establishments in firms with fewer than 50 employees offered health insurance in 2025.
Within those limits: MEPS puts the average total annual single premium per enrolled employee at those establishments at $9,020, and the average total annual family premium per enrolled employee at $23,531. These are total premiums, employer and employee combined. For single coverage, MEPS reports an average annual employee contribution of $1,881, and reports that employees contributed 20.8 percent of the total premium for single coverage, with the employer covering the rest. MEPS publishes no employer-share figure, so none is stated here.
None of that predicts a renewal. It describes a market average across establishments that already offer coverage, and a renewal is governed by the components above as applied to one group in one class of business.
Questions that move a renewal conversation
- Which of the three components in § 38-71-940(A)(3) accounts for the change, and what did each contribute?
- What is the class of business we are in, and has anything about our membership in it changed?
- What did the new business premium rate do across the rating period, and are you still issuing new policies in this class?
- Was any part of the increase attributed to claim experience, health status, or duration of coverage?
- What changed in our case characteristics or in the coverage itself since the last rating period?
- Can we see the disclosure required under § 38-71-960 in writing?
An employer who asks for the parts is asking the question the statute is written to answer. An employer who argues about the total is arguing with a figure the statute treats as a result rather than an input.
The bottom line
South Carolina’s renewal statute treats an increase as a sum of three named components, not as one number, and § 38-71-960 requires the insurer to disclose the factors behind a rate change. Ask which component moved before you argue about the total.
Frequently asked questions
Is there a cap on how much a small-group renewal can increase in South Carolina?
South Carolina’s statute does not work as a single flat cap. S.C. Code § 38-71-940(A)(3) constrains the percentage increase in the renewal premium rate to the sum of three named components: the percentage change in the insurer’s new business premium rate measured across the rating period, a separately capped adjustment due to the claim experience, health status, or duration of coverage of the employees or dependents, and any adjustment due to a change in coverage or in the employer’s case characteristics. Each piece is constrained on its own terms rather than the total being pinned to one figure. The statute also gives the Director authority under § 38-71-980 to suspend all or part of § 38-71-940 in stated circumstances, so it should never be described as a permanent ceiling.
Can our carrier raise our rate because of our claims?
South Carolina’s 1991 rating subarticle draws a line that surprises people. S.C. Code § 38-71-920(5) states that claim experience, health status, and duration of coverage since issue are not case characteristics, so they are excluded from the base rating factors. But § 38-71-940(A)(3)(b) then permits a renewal adjustment expressly due to the claim experience, health status, or duration of coverage of the employees or dependents of the small employer, capped annually and prorated for rating periods of less than one year. In the state statute, health experience is out of the base rate and into the renewal increment. Separately, the federal rule at 45 C.F.R. § 147.102 permits rate variation only by a closed list of factors that does not include claim experience or health status. Both texts are on the books; this page reports that and does not resolve it.
What is an index rate, and why does our insurer keep mentioning a class of business?
Under S.C. Code § 38-71-920(9), a class of business is all or a distinct grouping of small employers as shown on the insurer’s records, and the statute limits how such groupings may be established. For each class, § 38-71-920(12) defines the base premium rate as the lowest rate charged or chargeable to small employers with similar case characteristics for the same or similar coverage, and § 38-71-920(13) defines the index rate as the arithmetic average of that base premium rate and the corresponding highest premium rate. The class is the population your rate is measured against, which is why a renewal conversation that never mentions it is incomplete.
Can our insurer move us into a different class of business at renewal?
Not involuntarily. S.C. Code § 38-71-940(C) provides that unless the small employer no longer meets the criteria established for its existing class of business, a small employer insurer may not transfer a small employer involuntarily into or out of a class of business, and may not offer such a transfer unless the offer is made to all small employers in the class without regard to case characteristics, claim experience, health status, or duration since issue. Related conduct rules sit in § 38-71-1440, including that a denial of coverage to a small employer must be in writing and state the reasons for the denial.
What do published South Carolina premium figures actually describe?
They describe a minority of workplaces, measured in a specific way. The federal Medical Expenditure Panel Survey Insurance Component reports that 21.2 percent of South Carolina private-sector establishments in firms with fewer than 50 employees offered health insurance in 2025, and every premium row in that table is measured at establishments that offer health insurance. The survey is collected at the establishment level and classified by the size of the firm that owns the establishment, and its less-than-50 column is not South Carolina’s statutory small-employer test, which is written differently and counts affiliated companies as one employer. The figures are useful as background for a market, and they are not a prediction for any particular group.
About the author
Nate Jones, CPCU, is the founder of Wexford Insurance and Wexford Health Insurance, an independent agency placing small-business group benefits in 9 states. Wexford Health Insurance reads South Carolina small-group renewals apart into the statutory components the state’s rating subarticle names, so an employer can see which piece actually moved. Start with the Wexford Health Insurance quote form.