Renewal Costs are Increasing Again

Renewal costs are increasing again. Here are steps I recommend taking before your bill arrives.

Each fall, clients are often surprised by unexpected renewal amounts and ask, “Mark, is this normal now?” The answer is yes, but you do not have to accept the carrier’s initial offer.

Why Everything Keeps Costing More

Several factors contribute to rising costs. Pharmacy expenses, particularly for specialty medications and new GLP-1 drugs, are increasing rapidly. Hospital mergers often result in higher prices. Additionally, delayed doctor visits and procedures are now being addressed, which increases overall usage.

Small and mid-sized businesses are more affected by these increases than larger companies. Limited buying power means a significant premium increase can impact your budget. I have seen this affect well-managed businesses.

However, employers who plan ahead rather than simply accepting the renewal letter have real leverage. I have seen this approach benefit many clients.

Four Things Worth Talking to Your Broker About

1. Review the market annually. Remaining with the same carrier out of habit can be costly. Comparing your current plan to other carriers and funding options helps ensure a fair renewal.

2. Consider level-funded or self-funded plans. If your group has a strong claims history, moving from a fully insured plan can reduce costs. These options also provide greater transparency into healthcare spending, which standard plans often lack.

3. Evaluate your plan design, not just the price. Adjusting deductibles with HSA contributions or selecting a better network tier can lower premiums without negatively affecting employees’ experience.

4. Review your pharmacy benefits. Spending on specialty and GLP-1 drugs is increasing in nearly every claims report I see. A pharmacy carve-out or a transparent PBM can have a significant impact. Also, consider voluntary and ancillary benefits such as life insurance and disability. These options often cost little or nothing while providing valuable financial protection for employees, which is important when offering a leaner medical plan.

The Real Trick Is Starting Early

The most common mistake is treating benefits as a last-minute task. Successful businesses begin planning their renewal strategy six to nine months in advance. They review claims data, benchmark against similar companies, and test different plan designs before deadlines. Waiting until sixty days before renewal often results in fewer options and higher costs.

Let’s Look at This Together

For over 30 years, I have assisted small and mid-sized businesses in Blue Bell, Philadelphia, and surrounding areas with these decisions. My team works directly with your HR staff or office manager, treating every client as a partner rather than a policy number. We manage compliance and carrier negotiations so you can focus on your business.

If you would like a second opinion or want your plan reviewed before your next renewal, please contact us. Having someone double-check the numbers can be valuable. This article is for general information only and does not constitute financial, legal, or tax advice.