Before You Accept Your 2027 Renewal, Understand Your Own Numbers

If your health plan renews on January 1, the real work starts now, not when the renewal letter lands. The paperwork may be a month or two away, but the fall is when a prepared business owner starts digging in. Wait for the letter and you are reacting. Start now and you walk into the conversation with something to work with.

Here is what that looks like heading into a hard market.

The market is up. That is real, but it is not the whole story.

Costs are climbing across the board, and in higher-cost states it is sharper. Nationally, employers are bracing for another year of increases near double digits, the fourth year in a row. Closer to home it is worse. In Massachusetts, small businesses are facing double digit increases for the second straight year. In Connecticut, small group carriers are seeking increases well into the double digits, some north of 20 percent, in a market now down to just a couple of carriers. If you are fully insured, that trend is going to shape how your carrier builds your rate.

But your business is not the entire market. Broad medical trend is one piece of your renewal. Your own experience is the other, and that is the piece you can actually do something about.

Start with your own numbers

If you have access to your claims data, use it. The questions that matter are simple:

• How are your claims running compared to what you pay in premium?
• Did one or two large claims drive a rough year, and are they expected to continue?
• What does your prescription drug spend look like, and is it growing?
• Have you strung together several good years in a row?

There is almost always more to the story than “health care costs are going up.” Two businesses in the same industry, in the same state, can get very different renewals based on their own claims. If your workforce is healthy, you may even be paying for risk you do not carry. Knowing which one you are changes the whole conversation.

What if you cannot get your claims data?

For a lot of smaller employers, that is the reality. Below a certain size, carriers may not hand over detailed claims information, which makes it harder to see what is behind your number. That does not mean you go in blind.

Ask your broker what the carrier can share without compromising employee privacy:

• Can they give you an overall loss ratio or a general read on how the plan is performing?
• Is the renewal being driven mainly by your own experience or by broader medical trend?
• Were there large claims that moved the number, and are they considered ongoing?
• Is pharmacy having a meaningful impact?

Even without exact claim detail, there is usually enough to give you some footing. At a minimum, your broker should be able to tell you why you got the increase you did, not just hand you a percentage.

One bad year does not tell the whole story

A business can have a clean claims year and then a brutal one. That is the nature of insurance. But there is a big difference between a single catastrophic claim that spiked one year and several ongoing high-cost conditions expected to continue. The first is noise. The second is a trend. You want to know which one you are looking at before you make a decision.

The same logic runs the other way. If you are fully insured and you have paid far more in premium than the carrier has paid out in claims, year after year, it is worth asking where that money is going and whether taking on some level of risk could make sense. That does not automatically mean a different structure is the answer. It means the conversation is worth having.

Let the data pick the structure, not the other way around

There is no single health insurance setup that is right for every business. For some, fully insured is exactly right. You pay the premium, hand the risk to the carrier, and get budget certainty. For others, the claims picture points toward taking on some risk in exchange for keeping the savings from a healthy group. A larger group arrangement can offer a middle path, sharing risk across a bigger pool while still protecting each business against a catastrophic claim.

Be cautious anytime the conversation opens with a product before anyone has looked at your data and your appetite for risk. The right answer starts with your numbers, not with whatever someone is selling.

Numbers are only half of it

Understanding your costs is the first move. Having somewhere stable to take them is the second. NARFA members buy through an association nearly a century old, with an open access PPO and a national network, so your people keep the freedom to choose their own doctors while your business shares risk across a large group instead of standing alone against the market.

And here is the part we mean plainly. If we look at your situation and your current plan is the right one, we will tell you that. If your data shows there is a better path, we will show it to you side by side with what you have now. Either way, you walk into your renewal informed instead of cornered.

Start the conversation now

If you have 25 or more employees and a renewal coming, do not wait for the letter. Send us your current plan design and your renewal date, and we will help you understand where you actually stand while there is still time to do something about it.

Get started at narfa.com or call 800-258-5318.