Turn your renewal increase into dollars
Total premium (company plus employee) divided by enrolled employees.
Use the total monthly premium per enrolled employee: the company's share plus the employee's, divided by the number of enrolled employees. If your renewal quotes separate rates for single and family coverage, the blended average is close enough for a first look. For a tier-by-tier view, use the employer health insurance cost calculator with the old and new rates.
A renewal letter gives you a percentage. This calculator turns it into dollars: how much more the company will pay next year, and how much more each employee will see taken out of their paycheck if you keep the same split. Employers in Mercer's 2026 survey expect health benefit costs per employee to rise 8.2% in 2027 after planned changes, and about 11% if they change nothing. For a 20-person team at $900 a month each, a 9% renewal is about $19,400 a year.
- Expected 2027 cost rise (Mercer)
- 8.2% after changes, ~11% without
- PwC 2027 medical cost trend
- 9%
- Notice before renewal
- Usually 30 to 90 days
- Best time to shop
- 90 to 120 days before renewal
Worked examples
Why renewals go up
A renewal increase is the carrier's new price for next year, and it usually combines several things. Knowing which ones apply to you tells you how much room you have to negotiate.
- Medical trend. Prices for hospitals, doctors and drugs rise every year. PwC projects a 9% group medical cost trend for 2027.
- Aging. Small-group premiums are rated by age. A team that's a year older costs more even if nothing else changes.
- Claims. Larger groups and level-funded plans are rated partly on their own claims. A few expensive claims can push a small group's renewal well above trend.
- Specialty drugs. GLP-1s and other high-cost drugs are a growing share of costs. Mercer attributes about a full percentage point of 2027 cost growth to GLP-1 use alone.
- Plan changes and taxes. New state mandates, carrier fees and benefit changes all flow into the rate.
For the full breakdown, see why did our health insurance renewal go up.
What to do with a high renewal
- Ask for the renewal early Small-group renewals often arrive 30 to 60 days before the date. Asking your broker or carrier for it at 90 to 120 days gives you time to shop.
- Ask what drove the number Trend, age, claims and plan changes call for different responses. A claims-driven increase on a level-funded plan, for example, may be worth moving away from.
- Get at least two alternative quotes Compare the same benefits across carriers and funding types. Our guide on how to compare health insurance quotes shows what to line up.
- Model plan changes before cutting contributions Raising the deductible or narrowing the network lowers the premium, but shifts costs to employees who use care. Run the HDHP vs PPO calculator to see who wins and who loses.
- Decide how to split the increase Passing it through at the same percentage keeps things simple. Absorbing it signals that benefits matter, and is often cheaper than replacing one employee who leaves.
Passing the increase on to employees
When the company pays a fixed percentage, employees' contributions rise by the same percentage as the premium. When the company pays a fixed dollar amount, employees absorb the whole increase, which can be a surprise: on a $900 premium with the company paying a flat $750, a 9% renewal raises the employee's share from $150 to $231 a month, a 54% jump.
For most small teams, I'd keep the percentage split and explain the renewal in plain numbers at open enrollment. Our open enrollment email templates include one for a premium increase.
How to read your renewal letter
A renewal letter usually has more in it than the headline percentage. Before reacting to the number, check these:
- Rates by tier or by age. Small-group plans in most states are priced per person by age. A renewal showing "+9%" may mean +6% in base rates and +3% from everyone being a year older.
- Plan changes. Carriers sometimes retire a plan and "map" you to a similar one with a different deductible or network. Compare the summary of benefits, not just the name.
- Rate guarantee. Most small-group renewals lock rates for 12 months. Level-funded plans may also show a separate change in fees and stop-loss.
- Census used. Renewals are priced on the employees enrolled at the time. If people have joined or left, ask for a re-rate.
- Deadline. The date by which you have to accept or make changes, usually a few weeks before the renewal date.
How your group's size and funding shape the renewal
| Plan type | Typical group | What sets the renewal |
|---|---|---|
| Fully insured small group (ACA) | 1 to 50 employees (100 in some states) | Carrier's filed rates, ages and location; your claims don't count |
| Fully insured large group | 51+ (or 101+) | Partly your own claims, more so as you grow |
| Level-funded | Often 10 to 100 | Your claims, stop-loss pricing and fees |
| Self-funded | Usually larger | Your claims directly, plus stop-loss |
| PEO plan | Any size | The PEO's pool and its own pricing |
This is why the same 9% can mean different things. On an ACA small-group plan, it's mostly the market and your ages; switching carriers can help, but there's little to negotiate on the same plan. On a level-funded plan, a high renewal often follows a bad claims year, and the next year may look the same. Our guide to level-funded, self-funded and fully insured plans explains the trade-offs.
Questions to ask your broker or carrier
- How much of this increase is age, and how much is the base rate?
- Are we being moved to a different plan, and what changed in it?
- What would the same benefits cost with two other carriers, and with a different funding type?
- Is there a plan with a slightly higher deductible that keeps our network, and what does it save?
- When exactly do you need our decision, and what happens if we miss it?
Write the answers down next to the numbers from this calculator. Having the dollar impact, the reason for the increase and at least one alternative in one place makes the decision, and the conversation with your team, much easier.
A renewal is a good time to compare
Most of the companies that come to us arrive with a renewal letter in hand. We quote Diamond against the renewal so you can see the difference in the same terms: total premium, company share and employee cost.
Put an actual proposal next to the renewal increase
Use your current employee census, family tiers and contribution policy. Keep changes in enrollment separate from changes in price when comparing the written alternative.
