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Benefits and renewalsWhy did our health insurance renewal go up so much?
A renewal increase usually comes from a few drivers: medical cost trend, the age and coverage mix of who's enrolled, plan or network changes, and, for some groups, your own claims experience. Which ones apply depends on your group size, state and how the plan is funded. To judge whether yours is reasonable, compare the current plan renewed as-is with real alternatives priced for your own enrolled employees.
Answered by Steve Taylor, founder of Thinq HR & Insurance Services. 15 years across benefits, HR, payroll, PEOs and insurance.
The main drivers
Medical cost trend
Healthcare costs rise every year, and that shows up in every renewal.
Who's enrolled
In many small-group markets, rates are set by age band, so your group's age and coverage mix moves the number.
Plan and network changes
Deductibles, copays and networks sometimes change inside the renewal itself.
Claims experience
For larger or level-funded groups, your own claims history can drive the renewal.
What you need in front of you
- Current rates versus renewal rates, by tier.
- Enrollment by tier: employee, spouse, children, family.
- Any plan design or network changes in the renewal.
- Your employer contribution strategy.
- Alternatives priced against your enrolled employees, not an aggregate figure.
What you can influence, and what you can't
| Usually within your control | Usually not |
|---|---|
| Plan design choices that lower premium without changing the network | Medical cost trend |
| Bundling dental, vision or life with the medical carrier | Your group's age mix |
| Contribution strategy, which shapes what employees choose | Past claims, where they apply |
| Moving to another carrier, when the full comparison supports it |
When moving carriers is worth it
There's no single percentage that makes a move worth it. Weigh the savings against network disruption, deductibles resetting for people mid-treatment, the employee experience, administration, and how comparable the alternative really is. Sometimes the right answer is to stay.
What to do twelve months out
Reconcile carrier invoices against enrollment every month, keep the census clean, and start the renewal process early. It's the unglamorous answer, and it's the one that makes next year's decision easier.
Common questions
How do I benchmark a benefits renewal?
Model your current plan renewed as-is against comparable plans from other carriers, priced for your actual enrolled employees and tiers. Compare total annual employer cost, not the employee-only rate.
Can we negotiate a renewal?
Sometimes, within limits. Plan design, bundling and contribution strategy are the usual levers. The rate itself may or may not move.
Should we switch to a level-funded plan?
It depends on your group, the stop-loss terms and how much year-to-year variability you can tolerate. It's a decision to model, not a rule.
How do we know if our PEO renewal is too high?
Separate the PEO's benefits premium from its admin fee and compare the premium with what your group could get outside the PEO.
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