Health Insurance Renewal Up 10%+? Four Things to Review First

For many small businesses, health insurance renewal season brings an unwelcome surprise: another sizable premium increase.

Maybe your renewal is up 8%. Maybe it is 12%, 15%, or even more. When that happens, the natural reaction is often to look for the fastest way to offset the increase, whether that means raising employee contributions, increasing deductibles, or reducing benefits.

But a double-digit renewal does not automatically mean employees need to absorb a double-digit increase.

Before making changes that could affect employees’ paychecks or access to care, employers should take a closer look at the options available. A good renewal strategy is not simply about finding the lowest premium; it is about balancing cost, coverage, employee needs, and the long-term sustainability of the benefits program.

Here are four areas every small employer should review before accepting a health insurance renewal.

The first place to look is the structure of the plans you already offer.

Small adjustments to deductibles, copays, coinsurance, prescription benefits, or out-of-pocket maximums can sometimes reduce premiums without dramatically changing the employee experience. The important part is understanding what employees are actually giving up in exchange for the savings.

Some areas worth reviewing include:

• Deductibles and out-of-pocket maximums
• Office visit and specialist copays
• Prescription drug benefits
• HSA-compatible plan options
• The number of plans currently being offered

For example, increasing a deductible may lower the monthly premium, but the savings might not justify the additional financial exposure for employees. In other situations, adjusting office visit copays, offering an HSA-compatible plan, or changing the mix of plan options could create meaningful savings while still giving employees reasonable choices.

Employers should also consider whether every current plan is still serving a purpose. If most employees have migrated toward one or two options, simplifying the offering may make sense. On the other hand, adding a lower-cost alternative alongside the existing plan could give employees another choice without forcing the entire workforce into a higher-deductible option.

The goal is not to chase the lowest premium at all costs. It is to understand the tradeoffs behind each change and determine whether the savings are worth the impact on employees.

Renewal season is also a good time to determine whether your current carrier is still the right fit.

That does not necessarily mean moving to the least expensive carrier available. A plan that saves the company money but removes an important hospital system, physician group, or prescription from the network may create more problems than it solves.

Before changing carriers or networks, employers should ask:

• Are employees’ current doctors still in-network?
• Are the hospitals and health systems employees rely on included?
• Are there meaningful differences in prescription coverage?
• HSA-compatible plan options
• Is there a narrower-network option that could reduce premiums without creating major disruption?

Sometimes the best option is to remain with the current carrier. In other cases, putting the plan out to market can uncover a better combination of pricing, benefits, and network access.

Either way, employers should know what is available before simply accepting the renewal they receive.

Another common reaction to a large increase is to maintain the same employer contribution percentage and pass the remainder of the increase to employees. That approach is simple, but it is not always the best one.

Employers should look at the actual dollar impact on employee payroll deductions rather than focusing only on percentages. A change that appears modest on paper can feel very different when an employee sees the additional amount coming out of each paycheck, particularly for employees covering spouses or children.

Depending on the situation, it may make more sense to contribute a fixed dollar amount, adjust the contribution differently across plan options, or structure the employer contribution in a way that encourages enrollment in a more cost-effective plan. Employers should also keep applicable affordability requirements in mind when deciding how much employees will be expected to contribute.

The objective is not necessarily for the employer to absorb every increase. For many small businesses, that simply is not realistic. Instead, the goal is to find a contribution strategy that keeps the plan financially sustainable for the company without creating unnecessary financial pressure for employees.

Even the best-designed benefits package can fall short if employees do not understand it.

During open enrollment, employees often focus on two numbers: the deductible and the amount coming out of their paycheck. Those numbers matter, but they do not tell the whole story.

Employees should also understand:

• How copays and coinsurance work
• Whether their doctors are in-network
• How their prescriptions are covered
• What their maximum out-of-pocket exposure is
• Whether an HSA is available and how it works
• How payroll deductions compare across plan options

Without that context, it is easy to choose a plan that looks cheaper at first glance but ends up being a poor fit once healthcare expenses begin to occur.

Consider two plans where one costs an employee $100 less per month but carries a higher deductible. Depending on that employee’s healthcare usage, prescriptions, family situation, and ability to contribute to an HSA, the lower-premium plan could be a great choice — or an expensive mistake.

That is why employee education should be part of the renewal process rather than an afterthought. A short enrollment meeting, benefits guide, or one-on-one conversation can help employees make decisions based on how they actually use healthcare instead of simply selecting the plan with the lowest deductible.

Better education can also reduce frustration later in the year, when employees begin using their coverage and discover details they may not have fully understood during enrollment.

Receiving a 10%, 12%, or 15% renewal can be frustrating, particularly for a small employer trying to control expenses while continuing to offer competitive benefits.

But the renewal from your current carrier should be treated as a starting point for the conversation, not necessarily the final answer.

Before passing the increase directly to employees, review the plan design, compare the market, look carefully at provider networks, revisit how the employer contribution is structured, and make sure employees understand the options they are being asked to choose between.

There may not always be a way to eliminate an increase entirely, but there are often ways to manage it more thoughtfully.

At Altura Benefits, we help small businesses evaluate their health insurance options, understand the tradeoffs behind different strategies, and build benefits programs that work for both the employer and their employees.

If your renewal is coming up and you would like a second look at your options, contact us! We are more than happy to help you review your current plan and determine what alternatives may be available.