How to Reduce Your 2027 Health Insurance Renewal: 4 Strategies Every Employer Should Consider

Healthcare costs are projected to increase 9% in 2027. Here’s how employers can get ahead of their renewal before costs spiral.

If you’re responsible for your company’s benefits budget, 2027 is shaping up to be another challenging year.

According to PwC’s Medical Cost Trend: Behind the Numbers report, employer-sponsored health plans are projected to see a 9% medical cost trend in 2027—the highest increase in 17 years. Rising prescription drug costs, provider reimbursement rates, and continued demand for healthcare services are all contributing to higher employer costs.

Read PwC’s report →

While employers can’t control market conditions, they can control how they prepare for renewal. Companies that start early and evaluate multiple options often achieve better outcomes than those who simply renew with their current carrier.

Here are the four strategies we recommend evaluating before your next renewal.

1 Start Your Renewal Process Earlier

One of the biggest mistakes employers make is waiting until they receive their renewal to explore alternatives. By then, you’re negotiating against the calendar.

Instead, begin your review 120–150 days before renewal. That gives you time to:

• Benchmark your current plan
• Collect underwriting information
• Compare multiple options
• Negotiate with your current carrier
• Educate employees if changes are needed

2 Benchmark More Than Just Your Current Carrier

Many employers assume their renewal is competitive because they’ve worked with the same broker or carrier for years. The reality? Your current renewal is only one option.

A complete market review should compare:

• Traditional fully insured plans
• Level-funded plans
• Professional Employer Organizations (PEOs)
• Alternative funding strategies

Not every solution fits every business, but comparing multiple approaches gives you confidence that you’re making the best decision—not just the easiest one.

3 Review Your Plan Design Before Cutting Benefits

Reducing benefits is rarely the first answer. Small adjustments to your plan design can often improve affordability while maintaining a competitive employee experience.

Areas worth reviewing include:

• Employee contribution strategy
• Deductibles and out-of-pocket maximums
• Pharmacy benefit management
• Provider network options
• Health Savings Account (HSA) compatibility

Many employers are surprised by the savings available through smarter plan design rather than simply shifting costs to employees.

4 Consider Alternative Funding Options

Today’s employers have more choices than ever. Depending on your workforce and claims history, options like level-funded plans, PEO-sponsored health plans, or Individual Coverage Health Reimbursement Arrangements (ICHRAs) may offer advantages over a traditional fully insured renewal.

Here’s a quick comparison:

The right solution depends on your workforce – not just your renewal increase.

Final Thoughts

Healthcare costs aren’t expected to slow down anytime soon, but employers still have meaningful opportunities to control their renewal.

By starting early, benchmarking the market, optimizing plan design, and evaluating alternative funding strategies, you can make informed decisions that protect both your budget and your employees.

At Stream HR, we help employers evaluate every available option—from traditional health plans to PEOs and alternative funding strategies—so they can choose the solution that best fits their business, not just the one they’re offered.

Stream HR — Independent PEO & benefits advisors. We work for you, never for the carrier.