What to Do When You Get a Double-Digit Renewal Increase

You open the envelope or the email from your broker. Your health insurance renewal is in. And the number is not good.

Fourteen percent. Maybe eighteen. Maybe higher.

Your first reaction is frustration. Your second reaction is to wonder whether there is anything you can actually do about it.

There is. But you need to act quickly, ask the right questions, and be willing to explore options that your current broker may not be presenting.

Here is your playbook.

Do Not Accept It Immediately

This may sound obvious, but it is the most important step. A surprising number of employers receive a double-digit renewal increase and simply sign off on it because they feel like they have no choice or because their broker tells them it is "the best they could do."

A renewal is a proposal. It is the carrier's opening offer. And like any opening offer, there is almost always room to negotiate.

Tell your broker you want to see alternatives before making a decision. If your renewal date is approaching quickly, you may need to move fast, but even a few weeks of exploration can yield meaningful savings.

Demand a Claims Data Breakdown

The first thing you need to understand is why your increase is so high. There are several possible explanations, and each one calls for a different response.

If the increase is driven by one or two large claims, there is a reasonable chance your rates will normalize next year. The question becomes whether you can absorb the increase for one year or whether you need to make changes now.

If the increase is driven by overall high utilization across your group, you may need to look at plan design changes, employee education, or wellness initiatives.

If the increase is driven by medical trend and carrier pricing, you may simply be with the wrong carrier or in the wrong funding arrangement.

Without claims data, you are negotiating blind. Insist on getting it.

Get Competitive Quotes

The most powerful tool you have in a renewal negotiation is a credible alternative. Ask your broker to market your group to at least three other carriers.

If your broker is reluctant to do this, pay attention to that. Some brokers have preferred carrier relationships that may not align with your best interests. A broker who is truly working for you will welcome the opportunity to show you they are getting you the best deal.

When comparing quotes, make sure you are comparing apples to apples. Look at the network, the plan design, the out-of-pocket costs for employees, and the overall value — not just the premium number.

Explore Alternative Funding

If you have been fully insured and you are consistently seeing double-digit increases, it may be time to consider a different funding model.

Level funded plans are designed for employers who believe their group is healthier than average. You pay a fixed monthly amount that includes a claims fund, stop-loss insurance, and administrative costs. If your actual claims come in below the funded amount, you get money back. If they come in above, the stop-loss insurance covers the excess.

For many employers with 25 to 200 employees, level funding can reduce costs by 10 to 25 percent compared to fully insured rates — especially if the group has favorable claims history.

Self-funded plans offer even more flexibility but require more risk tolerance and administrative infrastructure. They are worth exploring for employers with 100 or more employees.

The point is that fully insured is not your only option, and staying in a fully insured plan by default is one of the most common and costly mistakes employers make.

Adjust Your Plan Design

Sometimes you can significantly reduce your renewal by making targeted adjustments to your plan design rather than switching carriers entirely.

Consider adding a high-deductible health plan option alongside your current plan. This gives employees a choice and often reduces the employer's overall cost. Look at your prescription drug formulary and tier structure. Pharmacy costs are one of the fastest-growing components of health insurance, and small formulary changes can have a big impact. Review your employee contribution strategy. Are you contributing the same percentage across all plan tiers? Adjusting contributions for dependent coverage can meaningfully change your cost structure.

A good broker will model three to five plan design alternatives and show you the projected cost impact of each one.

Consider a Pharmacy Carve-Out

Many employers do not realize that pharmacy benefits can be separated from the medical plan and managed independently through a pharmacy benefit manager.

Carving out pharmacy benefits gives you more transparency into drug pricing, more control over your formulary, and often better pricing — especially for specialty medications, which are the single largest driver of pharmacy cost increases.

This is not the right move for every employer, but for groups spending more than a certain threshold on pharmacy, it is worth exploring.

Negotiate Directly

If you have done your homework — you have claims data, competitive quotes, and alternative plan designs — you are in a strong position to negotiate directly with your carrier.

Present the competitive quotes to your current carrier and ask them to match or beat the pricing. Many carriers will reduce their initial renewal offer by two to five percentage points rather than lose the group entirely.

You can also negotiate on non-price terms like rate guarantees, wellness program credits, and plan design flexibility.

Get a Second Opinion

If your broker presented the renewal, shrugged, and told you there was not much they could do, consider getting a second opinion from an independent benefits advisor.

A fresh set of eyes on your benefits program can often identify opportunities that your current broker has missed or ignored. This is especially true if you have been with the same broker for several years and your program has not been thoroughly reviewed.

A second opinion is typically free and carries no obligation. The worst case is that you confirm you are already in a good position. The best case is that you find significant savings.

The Bottom Line

A double-digit renewal increase is not a death sentence for your benefits budget. It is a signal that something in your current arrangement needs to change — whether that is your carrier, your funding strategy, your plan design, your broker, or some combination of all four.

The employers who get the best outcomes are the ones who refuse to accept the first number they are given and instead treat the renewal as an opportunity to optimize their entire benefits program.

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Facing a big renewal increase? Schedule a free strategy review and we will help you evaluate your options before you make a decision.