Why Your Renewal Jumped and What Your Broker Can't Always Tell You

Whether it’s your first, second or tenth time managing a benefits renewal, opening a notice with a double-digit increase is jarring.  

Small-group employers are feeling the pressure. An analysis of preliminary rate filings found that the median proposed premium increase for ACA-compliant small-group plans was 11% in 2026.  

For 2027, that number is climbing. A more recent analysis of filings from nearly 300 small-group insurers projects a median increase of 14%.

For small businesses already operating lean, that kind of increase lands differently; there isn’t much room to absorb it. When a company is under 50 employees, fixed rates are set by the carrier based on regulated factors like age, geography, and plan design. As you approach or exceed 50, claims history starts to impact the cost. In either case, the need for a clearer, more proactive conversation remains the same.  

Most employers don’t get a clear breakdown of what went into that number until the renewal notice is already in front of them. By then, there are only a few weeks to compare alternatives, evaluate tradeoffs and communicate changes to employees. Ideally, that conversation should have started months ago.

Five Reasons Why Your Renewal May Have Increased 

A renewal rate is the result of several forces working together. Here’s what’s driving the numbers today:

1. Provider costs and hospital consolidations

When a broker says "medical trend," they mean the expected increase in healthcare spending from one year to the next. It is an industry term that covers a lot of ground: higher hospital prices, physician costs, outpatient procedures, emergency care, and the growing cost of managing chronic conditions.

Hospital consolidation is also one of the biggest drivers right now. As health systems merge into larger regional networks, they gain more leverage over insurance carriers when negotiating reimbursement rates. In many markets, there are simply fewer alternatives to choose from. When hospitals push rates up, those costs move through the carrier and land on your premium. It compounds every renewal cycle and is largely outside of a broker's ability to negotiate.

2. Specialty pharmacy and GLP-1 medications

Prescription drug costs are one of the fastest-moving parts of employer health spending. Specialty medications—including oncology drugs, autoimmune treatments, and GLP-1 medications for diabetes and weight management—carry price tags that can run tens of thousands of dollars annually per person.

Even if no one on your team is using these medications, the costs still reach you. Carriers price small-group plans against a broader risk pool, not just your employee’s individual claims. As a result, your premium isn’t a reflection of your employees' health; it’s a reflection of everyone in that pool. That means a workforce that is relatively young and healthy can still absorb premium increases driven by what’s happening across the group.

3. Mental health utilization rising

Mental health claims have risen steadily over the past several years, and small employers are feeling it too. Therapy, psychiatric care, and outpatient behavioral health services are being used at higher rates across nearly every age group. Carriers factor that utilization into how they price plans.

For business owners and HR leaders at small companies, this one tends to be invisible. Mental health isn’t the benefit employees typically talk about openly, but it is often among the most used. If your plan has strong mental health coverage, that is worth protecting. If it has gaps, those gaps may be generating higher costs in other parts of the plan than you realize.

4. Undertreated conditions showing up later

At smaller or earlier stage companies, employees might feel the need to stay heads down. Appointments get pushed, referrals sit unscheduled, or a symptom a team member has been managing turns into a condition that can't be ignored.  

That pattern costs money. Conditions caught early and managed consistently are far less expensive to treat than conditions that have progressed. When employees delay or skip care, they tend to enter the healthcare system at a more acute stage: an ER visit rather than a primary care appointment, a specialist rather than preventive management.

It is worth asking whether your current plan makes it easy for employees to access care before something becomes urgent. The answer is not always about culture; sometimes it is about access, cost-sharing design, or simply whether employees know what their benefits cover.

5. Shifting group demographics

Small-group premiums are largely driven by regulated rating factors: employee age, geography, plan design, and family size. For a 10-person company, the addition or departure of only a few people can meaningfully shift the average age of the group or the number of covered dependents. That alone can move your renewal even when nothing else about your benefits strategy changes.

You may have also enriched the plan to stay competitive, added dependent coverage, or increased what the company contributes. Each of those decisions affects your total cost on its own, separate from what the carrier is doing in the market. Understanding which part of the increase belongs to each factor is the first step toward knowing what you can actually control.

Why Your Broker Might Not Explain All of This Proactively

Most brokers genuinely want to retain clients and help them manage the costs of their benefits. But the traditional small-group and annual renewal model creates limitations.

Why your broker can’t just negotiate the rate down

For many small employers, especially those in the ACA-small group market, the same carrier plan will generally have the same filed rate regardless of which broker presents it. That means the renewal number your broker presents is largely set before the conversation starts. The real question is not whether your broker “got you a better rate,” but whether they helped you understand the increase, compare meaningful alternatives, and make smart decisions across plan design, contributions, and employee experience.  

As your company approaches 50 employees, claims history starts to influence renewal pricing and there may be more room for a broker to advocate on your behalf. However, more leverage does not mean less conversation. The strategic advisory standard is worth holding them to at any size.

The challenge of the traditional broker model

For many small businesses, benefits work happens in a concentrated window. The broker reaches out shortly before renewal, gathers updated census information, presents a few plan options, and helps the company complete enrollment.

For a business owner, office manager, or HR leader managing benefits alongside five other priorities, that window is often the only touchpoint in the entire year. And the way most brokers are compensated does not change that dynamic. Many are paid by carriers through commissions based on a percentage of premiums.  

Research from the Johns Hopkins Bloomberg School of Public Health has found that broker compensation is positively associated with plan premiums, with the relationship particularly relevant for smaller plans. When the primary revenue event is tied to placing or renewing coverage, there's less built-in incentive to stay engaged between renewals.

That doesn't mean your broker isn't trying. It means the model wasn't designed for a market where costs move this fast. The result is a pattern many small employers recognize:

1. The renewal arrives.
2. The broker explains that the market is up.
3. A few plan options are presented.
4. The employer picks the least disruptive one.
5. The same process repeats next year.

That is not a strategy; it’s an annual transaction. In a market where premiums are rising quickly, that approach is no longer enough.

Five Questions to Ask Before You Sign

You do not need to become an insurance expert to have a better renewal conversation. You just need to ask the right questions.

1. What is actually driving the increase?  

Ask your broker to separate the carrier's overall rate action from changes in your employee census and plan design. Market-wide increases and company-specific changes require different responses. 

2. What factors did the carrier use to calculate our renewal?

In small-group plans, the carrier sets rates based on regulated factors, not your company's claims history. Ask your broker to walk through what specifically drove your renewal: workforce age, geography, and plan design changes. Ask what benchmarking or carrier reporting is available for your group. If your company is approaching or exceeding 50 employees, ask how that may be changing your renewal calculation.  

3. Did you evaluate our program options and strategy?

Ask your broker to walk through which carriers, networks, plan designs, and contribution structures were compared and how those options were presented in the context of your overall program needs. If the conversation was limited to a few carrier quotes, that is worth pushing on.

4. What are we giving up to lower the cost?  

At a small company, benefits changes are personal. Employees notice when their doctor is no longer in network, when their deductible goes up, or when a prescription costs more. Before choosing a lower-cost plan, understand exactly what is changing for your team and whether the savings are worth the tradeoff. A plan that cuts costs on paper but drives turnover ends up costing more.

5. What should we be doing before the next renewal?  

Ask your broker to put a midyear check-in on the calendar now or explore options that give you year-round visibility and advisory for benefits and people spend. The best time to manage a renewal is six months before it arrives, not the week the notice lands.

Your Renewal Notice is a Starting Point

A double-digit increase does not automatically mean your broker failed or that the carrier is overcharging you. But it does mean you should expect more than a one-line explanation and a few weeks to make a decision that affects your entire team.

The traditional small-group broker model was designed for a market where premiums moved gradually, and the annual renewal was mostly an administrative event. But benefits have become a recurring business decision about cost, access, and employee experience. An advisor who looks at the full program — medical, dental, vision, life, disability, and wellbeing — and stays engaged year-round is how small employers get ahead of the problem rather than starting from scratch every fall.  

That is why the strongest benefits strategies are not built around reviewing medical plans once a year. They include year-round visibility into people spend, proactive renewal planning, contribution modeling, employee support, and a clear view of how each benefit decision affects cost, access, and experience

If you are approaching renewal and want to understand what that looks like for a company at your stage, get in touch with one of our experts today.

Sources

• Peterson-KFF, Why Premiums are Going Up for Small Businesses in 2026
• Peterson-KFF, Why Premiums are Going Up for Small Businesses in 2027

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