Renewals Decoded Book a review
A guide for employers facing a health plan renewal

Renewals Decoded

I built this site to help employers take control and reshape the trajectory of their healthcare spend. Healthcare is a top three expense on most employers' P&L, and it is the one expense most employers feel they cannot control. I am here to challenge the status quo and help employers realize they can control it with the right strategy. That is what is clearly missing for most: a true strategy altogether.

A renewal notice is the carrier's opening offer, not the final word. This guide explains what is happening in the market, how underwriters build your number, and the moves that change the outcome before your deadline and build a sustainable, multiyear approach.

+9.5%

Projected rise in U.S. employer health care costs for 2027, pushing the average above $19,000 per employee.

2027 industry projection

This is a national average that includes the largest employers. For the middle market, renewals have been significantly more volatile, because risk is spread across far fewer members.

Cory ThurstonVice President, NFP, an Aon company I help employers break healthcare management down into a five step approach, so every decision is grounded in data. Read my story

I am Cory Thurston.

I am a Vice President at NFP, an Aon company, where I lead client strategy execution and stewardship. I partner with C-suite executives, HR, finance, and business leaders to navigate complex challenges and design customized insurance solutions that align with both short term and long term goals.

I have spent almost 10 years in employee benefits, working with organizations across diverse industries and sizes. I spend much of my time with employers breaking healthcare management down into a five step approach I personally built. It turns a complex, often reactive renewal into a disciplined, data driven plan across five phases: Foundation, building the right funding strategy; Insights, identifying cost drivers with data; Action, implementing targeted cost containment programs; Engagement, driving employee engagement; and Optimization, measuring, refining, and improving year after year. My expertise spans funding models, cost containment, communication strategy, well-being initiatives, technology integration, and innovative benefit solutions. I take a collaborative approach that builds trust, because the best results come from long term partnerships, not one renewal at a time.

Before joining NFP, I founded and led multiple successful service businesses that were later acquired. That entrepreneurial background shapes how I help clients tackle complexity and achieve meaningful results.

I am an Austin native and a graduate of Texas State University. My wife, Shelby, and I are passionate about our faith, fitness, family, and friends. We love traveling the world, golfing, competing in Hyrox and marathon races, and knowing all the new spots in the Austin food scene.

01

Trendline

Market Conditions & Trends

Before looking at your own renewal, it helps to know what every employer is facing. The market sets the floor your renewal starts from.

9.5%

Projected 2027 increase in employer health care cost, before plan changes. The fourth straight year near double digits.

8.8%

Actual employer cost increase in 2026, up from 3.7% in 2022.

$19K+

Projected average employer cost per employee in 2027.

$5,297

What the average employee spent in 2026: $3,130 in paycheck premiums plus $2,167 out of pocket.

The trendline

Five straight years of acceleration

Actual employer cost increases have grown every year since 2022, and 2027 is projected to be higher still.

Actual employer cost increase 2027 projection
The 2027 forecasts

Every major 2027 forecast lands between 8% and 11%

Before employers make changes, the major consultancies project 2027 increases between 9.2% and 11.1%, and Lockton expects claims costs to rise 8% to 10%. They measure slightly different things, but they agree on direction.

0%3%6%9%12%
Premiums are outrunning paychecks

Annual change, 2025 KFF survey period

0%2%4%6%
Milliman Medical Index, 2026 $37,824

Total 2026 cost of care for a family of four on an average employer plan, up 7.2%. This adds deductibles, copays, and coinsurance on top of the premium, so it runs higher than the premium alone. Pharmacy costs rose 14.8%.

What is driving it

Six forces behind the market increase

About 1 pt of 2027 trend

GLP-1 drugs

Use is expanding beyond diabetes and weight loss into cardiovascular disease, sleep apnea, and chronic kidney disease. Plans that covered GLP-1s for weight loss saw drug trend of 18.3% in 2025, versus 10.5% for plans that did not.

25% of total spend

Specialty drugs

Pharmacy is now a quarter of large employers' health spend. New therapies often cost more than the treatments they replace, and drug trend is projected above 11% for 2027.

62% of employers cite it

Hospital pricing

Labor and supply costs, plus consolidation into fewer, larger health systems, give hospitals more leverage when they negotiate with carriers.

About 1 pt of 2027 trend

AI assisted billing

Providers are adopting AI enhanced documentation and coding, which captures more billable services per visit.

About 1 pt of 2027 trend

Surprise billing disputes

The No Surprises Act dispute process has been favoring providers, and those awards flow back into premiums.

Rising

More care, more often

Utilization, chronic conditions, and the number of high cost claims are all growing, especially in outpatient and behavioral health services.

02

Underwriting Anatomy

Breaking down how underwriters calculate your renewal

Carriers rarely show their math, but almost every renewal is built the same way. Once you know the parts, you know which ones can be challenged.

Start here

Your group size decides which rules apply

How much your own claims matter depends on how the carrier rates your group.

Under 50 employees

Fully insured: ACA small group

Rates come from the carrier's filed rate tables. Your price depends on employee ages, location, and tobacco use. Your claims do not matter to your rate unless you are level funded.

Weight of your own claims
50 to several hundred

Fully insured: experience rated

The underwriter blends your actual claims with the carrier's standard rates. The bigger the group, the more your own claims count.

Weight of your own claims
Level or self fundedBiggest opportunity

Claims driven

You get better access to your data and more control over medical and pharmacy spend, including rebates. Because your claims set most of the cost, this is the biggest opportunity to drive change through care navigation, care management, and employee education, while capping risk from large claims with stop loss insurance.

Weight of your own claims
The formula

How an experience rated renewal is built

The driverYour claimsLast 24 months, adjusted
×
TrendProjected cost growth
+
Pooling chargeYour share of large claim risk
÷
Target loss ratioLeaves room for admin, fees, margin
=
Required premiumCompared to today's rate

Your claims are the base everything else is built on. Yet most renewal strategies focus on shopping the market and changing plan designs. Those moves can reset the price or shift cost to employees, but they leave the driving factor untouched. Lower your claims, and every renewal after that starts from a lower number.

  1. Pull the experience period

    Usually 24 months of claims, often ending three or four months before your renewal date.

  2. Carve out large claims

    Claims above the carrier's pooling point are removed and replaced with a flat pooling charge.

  3. Complete the claims

    Add an estimate for care that happened but has not been billed yet. This factor is often generous.

  4. Apply trend

    Project costs forward from the middle of the experience period to the middle of your new plan year, often 18 to 24 months of trend.

  5. Blend with manual rates

    Mix your projected claims with the carrier's standard rates, weighted by how credible your group's data is.

  6. Adjust for demographics

    Account for changes in age, gender, family size, and location since the last renewal.

  7. Add retention

    Admin, taxes, fees, and margin. The ACA requires large group plans to spend at least 85% of premium on care (80% for small group).

  8. Compare and cap

    Divide by current premium to get the increase. Carriers may cap it, or load it, based on competitive pressure.

Example breakdown

A renewal is several increases stacked together

Example renewal

Points of increase by driver

+14.2%
07.114.2 pts

    In this example, 8 of the 14.2 points come from market trend, which every group gets. The other 6.2 points are specific to this group, and that is where negotiation happens.

    ?

    Claims experience: was there a large claim that has since ended? A resolved claim should not be priced as if it continues.

    ?

    Trend: is the carrier using more months of trend than the calendar supports, or a trend rate above its own filings?

    ?

    Demographics: does the census used reflect who is actually enrolled today?

    Read the rate exhibit

    What to look at on the renewal notice itself

    Renewal Rate Exhibit Example
    Group
    Sample Company, 40 enrolled
    Effective
    01/01/2027
    Rate guarantee
    12 months 3
    TierCurrentRenewalChange
    Employee only$712$813+14.2%
    Employee + spouse$1,496$1,708+14.2%
    Employee + child(ren)$1,318$1,505+14.2%
    Family$2,137$2,440+14.2%
    Monthly total 1$48,000$54,816+$6,816 2
    1

    Look at total dollars, not just the percent. A 14% increase on this group is about $82,000 more per year.

    2

    Ask what built the number. Request the breakdown between trend, claims, and demographics. Each piece can be questioned.

    3

    Check the fine print. Participation minimums, rate guarantees, and "subject to" clauses can change the deal after you sign.

    Underwriter vocabulary

    Terms you will see on the renewal

    Loss ratio
    Claims paid divided by premiums collected. Above about 85% usually means the carrier sees your group as costly.
    Trend
    The carrier's projection of how much care costs will rise, applied to every group.
    Pooling point
    The claim size above which a single large claim is shared across the carrier's book instead of charged fully to you.
    Credibility
    How much weight the underwriter gives your own claims versus standard rates. Grows with group size.
    Manual rate
    The carrier's standard rate for a group like yours, before your own claims are considered.
    IBNR
    Incurred but not reported. The estimate of claims that happened but have not been billed yet.
    Rate guarantee
    How long the renewal rates are locked. Usually 12 months, sometimes with conditions.
    Participation requirement
    The minimum share of eligible employees who must enroll for the carrier to keep offering the plan.
    Composite vs. age rated
    Composite rates charge one price per tier. Age rated plans price each person by age, then roll up.
    Questions to ask

    Take this list into your renewal meeting

    Check them off as you get answers. Your progress stays on this device.

    0 of 0 answered

    About your claims

    About cost drivers

    About pharmacy

    About alternatives

    About programs and vendors

    About the increase

    About the terms

    About your employees

    About your broker

    03

    Strategy Playbook

    5 Steps for Cost Containment & ROI Calculator

    A renewal is a negotiation with a deadline. These steps put you in control of both, and the calculator shows what each move is worth.

    When to act

    Managing healthcare cost is a year round job

    The renewal arrives in one month, but the work that changes it happens all year. Waiting until the notice lands leaves only shopping and cost shifting on the table. Here is how the year looks for a plan renewing January 1.

    1. February

      Stewardship

      Review last year's results: claims, plan performance, and program engagement. Set goals for the year ahead.

    2. June

      Strategy

      Dig into claims and cost drivers. Evaluate funding, network, pharmacy, and program options while there is time to act.

    3. August

      Pre-renewal

      Project the renewal from your own claims and trend. Model scenarios and decide whether to go to market.

    4. September

      Renewal

      Review the renewal against the projection, negotiate, compare options, and make decisions.

    5. October and November

      Employee education

      Communicate changes, run open enrollment, and help employees use their benefits wisely.

      See a digital benefits guide

    Key action items, month by month

    For a plan renewing January 1. Some items apply only to self funded plans.
    1. January
      • New plan year begins
      • Confirm enrollment and eligibility with carriers and vendors
      • Resolve ID card and enrollment issues
      • Prepare ACA reporting (Forms 1094 and 1095)
    2. FebruaryStewardship
      • Review prior year claims and plan performance
      • Set goals and KPIs for the year
      • Send ACA Forms 1095 to employees
      • File Medicare Part D disclosure with CMS
    3. March
      • File ACA forms with the IRS
      • Launch wellness and preventive care campaigns
      • Stop loss runout and claims reconciliation (self funded)
    4. April
      • Quarterly review: first quarter claims and KPIs
      • Vendor and program performance check
      • Large claimant review
    5. May
      • Employee benefits survey and feedback
      • Review program engagement and utilization
      • Compliance check: plan documents and SPDs
    6. JuneStrategy
      • Deep dive into claims and cost drivers
      • Evaluate funding, network, pharmacy, and programs
      • Build the multiyear strategy
    7. July
      • Quarterly review: second quarter claims and KPIs
      • File Form 5500 and pay PCORI fee (due July 31)
      • Request claims data and updated census for renewal
      • Vet additional point solutions for cost containment and plan improvement
    8. AugustPre-renewal
      • Project the renewal from claims and trend
      • Model plan design and contribution scenarios
      • Go to market for medical, stop loss, and PBM if needed
    9. SeptemberRenewal
      • Review renewal against the projection
      • Negotiate and compare options
      • Finalize plans and employee contributions
    10. OctoberEducation
      • Quarterly review: third quarter claims and KPIs
      • Send Medicare Part D notices (by October 15)
      • Build open enrollment materials and campaign
    11. NovemberEducation
      • Run open enrollment meetings and communications
      • Decision support for employees
      • Distribute SBCs and required notices
    12. December
      • Submit elections to carriers and vendors
      • Confirm ID cards and new plan setup
      • Update plan documents for the new year
    The five steps

    Our five step cost containment framework

    Rather than deploying point solutions in isolation, we follow a disciplined framework so every solution is data driven, practical, and sustainable. We start by understanding your organization's risk profile, cost drivers, and employee population, then apply the most effective levers.

    A data driven strategy to improve employee experience while controlling healthcare costs.

      01Step 1 deep dive: FoundationSelf-funded vs. fully insured, explained
      The funding spectrum

      More options than fully insured or self funded

      Funding is a spectrum. Moving to the right trades some predictability for more control over your data, your claims, and the savings.

      Funding model landscape

      Where your premium dollar goes under each funding model

      The same claims can be paid three different ways. What changes is how much of your spend is fixed, and who keeps the savings when claims run lower than expected.

      Fixed costVariable cost
      Funding by group size

      How many employers are self-funded vs. fully insured?

      Self-funding is no longer just for the largest employers. More than half of mid-market groups already self-fund, and the share climbs with size.

      Self-funded Fully insured
      Inside a self-funded plan

      Four parts, and where the money goes

      A self-funded plan unbundles what a carrier packages together. Claims make up most of the budget, which is why managing them drives the outcome.

      02Step 2 deep dive: InsightsThe data behind a smarter renewal
      Claims data

      Claims data is where the story is

      Every renewal is built on claims. Using advanced analytics platforms, we evaluate claims frequency, severity, gaps in care, and utilization patterns to find the primary drivers of spend. That moves the conversation beyond assumptions to where costs are actually occurring, so cost containment strategies are prioritized by measurable opportunity, not by trends or point solution sales pressure.

      Employers see de-identified, aggregated data that protects member privacy under HIPAA.

      Cost concentration

      Large claims

      Members whose claims pass a set threshold, often $50,000 or $100,000 a year. A small share of members typically drives a large share of total spend.

      Why it matters: shows whether big claims are ongoing or resolved, which is key when challenging a renewal and setting stop loss.

      Population health

      Chronic conditions

      How many members have diabetes, heart disease, high blood pressure, asthma, COPD, depression, or musculoskeletal conditions, and what each costs compared to benchmarks.

      Why it matters: chronic conditions drive steady, predictable cost that the right programs can manage.

      Forecasting

      Predictive modeling

      Uses diagnoses, prescriptions, and utilization to score each member's future risk and forecast next year's costs.

      Why it matters: finds rising risk members before they become large claims, and gives an early read on the next renewal.

      Quality of care

      Gaps in care

      Members who are not getting recommended care, such as a diabetic without an A1c test, a missed cancer screening, or a stopped medication.

      Why it matters: closing gaps prevents avoidable complications and higher cost claims later.

      Pharmacy

      Specialty drugs and GLP-1s

      High cost medications for cancer, autoimmune disease, weight loss, and more. A small share of prescriptions, but a large and growing share of pharmacy spend.

      Why it matters: points to where site of care, biosimilars, and PBM strategy can save the most.

      Pharmacy

      Pharmacy utilization

      Generic vs. brand use, formulary compliance, medication adherence, and cost per prescription.

      Why it matters: reveals savings from formulary and plan design changes that members barely notice.

      Utilization

      Site of care

      Emergency room visits, hospital admissions, imaging, and surgeries, and whether they happened in high or lower cost settings.

      Why it matters: the same MRI or procedure can cost several times more at a hospital than at a freestanding center.

      Network

      Provider and network use

      In network vs. out of network spend, which providers and facilities members use, and how they compare on cost and quality.

      Why it matters: guides steerage and high value network decisions.

      Fully insured groups, especially smaller ones, often receive limited claims reporting from their carrier. Self-funded and level funded plans own their claims data, which is one more reason Step 1 and Step 2 go together.

      Beyond claims

      Four more data sources that complete the picture

      Network Analysis

      Under the Consolidated Appropriations Act, hospitals, carriers, and payers must make their negotiated prices public. For the first time, employers can compare pricing across the healthcare landscape. NFP's TPNet tool benchmarks providers, facilities, and carriers by procedure, cost, and quality against the best negotiated plans in the country, paired with a disruption analysis of your members' doctors.

      Which network gives our employees the best price without losing their doctors?

      Benchmarking and Plan Modeling

      Custom benchmark reporting through NFP MedFactor and Mployer shows how your costs, plan designs, and employee contributions compare to peers of similar size, industry, and region. It covers medical plus ancillary lines, leave, and retirement benefits, and models plan changes before you make them.

      Are we paying more, or offering less, than employers like us?

      Demographics

      An interactive snapshot of your workforce by generation: average age, tenure, salary, and share of eligible employees, alongside what each group values most. Demographics drive rates, especially on age rated plans, and shape which plan designs and communications land.

      How will changes in our workforce affect cost and plan fit?

      Gap Analysis

      Compares the benefits you offer today with the benefits you aim to provide, to find gaps that could hurt attracting, retaining, and motivating employees. For example, a disability analysis can show how many higher earners would receive well under 60% of pay because of the plan's maximum benefit.

      Where are we spending on benefits that do not land, and what is missing?

      03Step 3 deep dive: ActionCost containment strategies and renewal moves
      Cost containment strategies

      Cost containment strategies, across four categories

      Targeted strategies that address the highest impact cost drivers while improving quality and access. These are the same strategies you can model in the ROI calculator.

      Overall outcome

      Integrated strategies across these four categories create a compounding impact, reducing total cost of care while enhancing the employee experience.

      04Step 4 deep dive: EngagementHow we drive employee engagement
      Our process

      The LASSO process

      Engagement is not a one time open enrollment push. LASSO is a continuous cycle that keeps your communication strategy aligned with your goals and your employees' needs.

      1. L
        Listen

        Audit your current strategy and goals.

      2. A
        Assess

        Review employee feedback and results.

      3. S
        Strategize

        Build the approach and strategy.

      4. S
        Start

        Execute the approach and strategy.

      5. O
        Optimize

        Review results and enhance, then begin the cycle again.

      How we reach employees

      A custom multi-channel campaign

      Employees take in information differently. We meet them where they are, with a mix of channels built around your workforce, before, during, and after open enrollment.

        05Step 5 deep dive: OptimizationReporting that keeps the plan on track all year
        Reporting cadence

        You should never be surprised by your renewal

        Through NFP Connect, plan performance is reported on a set schedule, so trends and large claims surface months before the renewal does.

        Monthly
        • Claims analysis
        • Budget performance analysis
        • Inflationary trend information
        Quarterly
        • Financial overview
        • Claim utilization
        • Claim trend analysis
        • Reserve analysis
        • Stop loss deductible and attachment point tracking
        Mid-term
        • Budget projections
        • Rate promulgations
        • Reserve adjustment analysis
        • Actuarial opinions
        Year end
        • Full financial review
        • Reserve calculation with actuarial opinion
        • Cost comparisons, historical and industry wide
        • Budget and rate update and review
        • Deficit and surplus analysis
        Outcomes delivered
        ROI calculator

        Model cost containment against doing nothing

        Enter your premium, pick the strategies that fit your group, and set the savings you expect each year. Example values are filled in; replace them with yours. Nothing you type leaves this page.

        Your group

        Inputs
        2027 forecasts run 9% to 11%.
        Only this share can be reduced. The rest is carrier overhead.
        Deducted from savings every year.

        Cost containment strategies

        0 selected

        Select the strategies that fit, then set the expected savings for each year. Savings begin the year after the start year, which serves as the baseline.

        Net savings$0After strategy costs
        Return on strategy cost0xNet savings per $1 spent
        Final year net savings$0Compared to doing nothing
        Do nothing$0Total premium
        Cost containment$0Total premium
        Gross savings$0Before strategy costs
        Total strategy cost$0$0 per year
        PEPY, do nothing$0Avg cost per employee per year
        PEPY, containment$0Avg cost per employee per year
        PEPY net savings$0Avg savings per employee per year
        Current premium$0Starting point

        Premium projection

        Do nothing Cost containment Savings

        Year by year projection

        Illustrative only. Actual savings depend on your claims, plan design, vendors, and employee participation. The strategy cost applies every year, including the baseline year while programs are put in place.

        Get a second opinion

        Send us your renewal. We will decode it with you.

        A free, no obligation review. We review your renewal, claims data, demographics, plan designs, and rates, then provide an analysis of how you benchmark against the market, along with the solutions we believe can help you build a more successful and sustainable benefits strategy.

        • Renewal
        • Claims data
        • Demographics
        • Plan designs
        • Rates
        Book a renewal review
        Cory Thurston, Vice President, NFP
        Cory.thurston@nfp.com
        (512) 213-9011