How Do You Read a Group Health Insurance Renewal?
Start with the eight lines that move the number, not the total. A renewal is a rate, a method for arriving at it, and a set of changes that may not be labeled as changes.
Eight lines to find on the renewal
If a line is missing from your renewal, ask for it. A carrier or broker who cannot show it has told you something too.
The rate by plan and tier, old and new
Compare each plan and each tier (employee, employee plus spouse, employee plus children, family) separately. An average hides the plan that jumped and the one that did not. Multiply by enrollment to see the dollar change for the year.
The enrollment the rate assumes
Renewal rates rest on a census. Check that it matches who is actually enrolled, including terminations and new hires. A stale census can overstate or understate the rate.
How the rate was set
At small-group size, rates generally move with age, geography, tobacco use and plan rather than your own claims. As a group grows, carriers may blend in your own claims experience, with more weight the larger and steadier your claims are. Ask which applies to you.
The trend assumption
Trend is the carrier’s projection of how much claims costs will rise. It is a market-wide number that sits inside every renewal. Ask what it is, and compare it with what other carriers use for the same year.
Large claims and pooling
A few large claims can drive a renewal, and carriers often spread them across a pool with a pooling charge. Ask whether any individual claims were capped and what the charge is, so one event is not read as a permanent trend.
Plan and network changes
A deductible, copay, coinsurance, formulary or network change can arrive inside a renewal that looks like a modest rate change. Compare the benefit summaries line by line, not only the premiums.
The rate guarantee
Know how long the rates hold, and what can change them mid-year, such as a shift in enrollment or a regulatory change. A longer guarantee has value. Ask what it costs.
The deadline and the default
Renewals usually have an acceptance date and a default if you do nothing. Find both, then work backward to the date by which you would need a decision to move to another carrier.
Four things to do before you accept it
Convert it to dollars
Multiply the new rates by actual enrollment, apply the contribution you make for each tier, and compare the annual total with last year. The percentage is what the carrier shows. The dollars are what you pay.
Ask what the market says
Have your broker approach other carriers with the same census and plan designs, and ask for the results in writing, including any that declined.
Compare the benefits, not only the price
A cheaper plan with a higher deductible moves cost to employees. Put the options side by side on what an employee pays in a typical year.
Decide the contribution separately
How much of the cost the company absorbs is its own decision. A renewal does not make it for you, and different contribution choices can change what employees pay without changing the plan.
Questions employers ask about renewals.
What is a normal renewal increase?
There is no single normal. It depends on your size, claims, plan and carrier. Published 2027 figures give a starting range, but the only meaningful number is yours, read against your own claims.
Why did our renewal go up when we had few claims?
Trend and other costs that are not specific to you still apply, and at some sizes your own claims carry little weight in the rate. A good claims year can still produce an increase.
Can we negotiate a renewal?
Sometimes, especially when there is claims data or a competing offer to point to. Asking for the rate development in writing is the first step, since it shows what can reasonably be questioned.
How early should we start?
As early as the carrier will release the renewal, because each week gives you time to market it. Work back from the acceptance date and allow time for quotes, enrollment changes and employee communication.
What is the difference between a renewal and a quote?
A renewal is the incumbent carrier’s proposal for the next period. A quote is a new carrier’s offer. They rest on different assumptions, so compare plan designs, networks and guarantees, not only price.
Do we have to accept the renewal as offered?
No. You can ask for changes, move to a different plan with the same carrier, or move to a different carrier. Each has its own deadline, so ask for the dates early.
Ready? Upload your renewal, or talk it through with someone first. No cost, no obligation.
General information, not legal advice. Plan-specific questions belong with ERISA counsel, and we will bring them in.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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