Top Challenges: Why Health Benefits Renewal Rates Keep Rising and What You Can Do

For many employers, health benefits renewal season starts the same way every year. A notice arrives with next year's rates, those rates are higher than last year's, and the window to respond is short. In a matter of weeks, you're expected to compare options, decide how much to contribute, and explain any changes to your team.

It's a pattern we hear about constantly, and our own research reflects it. In our recent health benefits survey, 85% of businesses that offer benefits said higher premiums were their biggest challenge over the past year. As one respondent put it, "Premiums increase 10–25% annually with no added value. It is not sustainable."

Why are health benefits renewal rates going up?

If your renewal numbers keep climbing, you're not alone. Average family premiums for employer coverage rose 6% in 2025 to nearly $27,000, according to KFF, and surveys from Business Group on Health and Marsh (formerly Mercer) project increases of around 8% for 2027, among the largest in more than two decades.

The causes, from rising hospital prices to costly specialty drugs and new cancer treatments, are largely outside any one employer's control.

What you can control is how you respond. Many employers plan to manage 2027 increases with higher deductibles or larger employee contributions, which moves more of the cost onto their teams. Those are significant decisions, and they deserve more than a few rushed weeks at the end of the year. For more ways to approach this, see our guide on how to tackle rising healthcare costs.

Can a few large claims change your renewal?

Yes, depending on how your plan is set up. Your renewal may reflect your own group's claims history. That's common for larger employers and many self-funded and level-funded arrangements. In a smaller group, a single major surgery or new specialty medication can shift the numbers for everyone.

That unpredictability is often the hardest part of renewal season. You can't plan for claims you don't see coming, and when they hit, the choices look familiar: absorb the increase, pass it to employees, cut coverage, or shop on a deadline.

Is shopping once a year limiting your options?

Often, yes. In our survey, 74% of businesses that offer benefits said they shop for coverage once a year, usually when the renewal notice arrives. That leaves little time to compare plan types, rethink contributions, or ask employees what they value.

It also leaves important questions unanswered. Among those businesses, 36% weren't sure whether their benefits were helping or hurting hiring and retention efforts, and 47% said fewer than half of their employees participate in their current health benefits offering.

If your renewal is already on the calendar, our practical checklist for renewing employer-paid health benefits walks through what to review and when.

What should you look for in a benefits partner at renewal?

Whether you work with a broker, PEO, or another health benefits solutions provider, these are fair questions to consider before your next renewal:

• When does your benefits partner start the renewal conversation? Ideally, well before the renewal notice arrives.
• Can your benefits partner clearly explain what’s changed? You should understand what's behind a new rate, not just see it.
• Does your benefits partner offer options? Options should be more than just "renew or switch carriers," and new options should reflect your budget, workforce, and goals.
• What support is available to employees? Someone on the benefits partner side should be available to answer coverage and claims questions from your employees.
• What happens after enrollment? Support should continue all year, not just at renewal.

If the honest answer to most of these is "not really," it may be time to look at a different kind of partner.

Why Meridio might be a good fit at renewal time

We built our approach so renewal season feels like a planned check-in, not a yearly surprise, and it starts with how rates are set. With Meridio, rates aren't driven by one business’s individual group's claims. A major medical event on your team won't, by itself, be the reason your renewal jumps. Costs can still change from year to year as the broader market moves, but you're not left exposed to the kind of volatility that one large claim can create.

Businesses that work with Meridio don’t have to wait on a renewal notice to start the conversation. Meridio Customer Success Managers review plans with you ahead of renewal, walk through what's changing, and help you weigh your options against your budget and your team's needs. Because our plan options range from preventive coverage to more comprehensive plans, there's room to adjust without starting your search from scratch.

And the support doesn't stop once decisions are made. Our licensed Benefit Guides help employees understand their options and answer questions throughout the year, so you're not stuck as the go-between when any issues arise. On average, businesses that work with Meridio see savings of 20% or more, though results depend on your current plans, workforce, and goals.

If your renewal is coming up, talk with our team about what your options could look like this year. Already a Meridio customer? Reach out to your Customer Success Manager to start your renewal review.