Health Benefits Renewal Planning: How to Navigate the Current Disruption and Volatility

By Jonathan Sadlier

As business owners and executives approach their health benefits renewal period, there is no escape from the uncertainty in the health insurance market. Several of the largest insurers in the U.S. have withdrawn or reduced their earnings guidance for 2025 after underestimating trends in medical care.  

Given the unpredictability in today’s healthcare environment, it is understandable that employers have questions.  

So, what is contributing to this uncertainty, and how can employers prepare for the upcoming renewal period?  

As you can imagine, rising healthcare costs are playing a role in the market’s unpredictability. Medical plan costs were expected to increase by a median of eight percent in 2025, according to the latest Segal Health Plan Cost Trend Survey.  

That trend is expected to continue in the coming year. Large employers anticipate median healthcare cost increases of nine percent in 2026, according to a recent survey conducted by the Business Group on Health.  

Inflation, high-cost drugs like GLP-1s and a backlog of deferred medical claims are driving steep increases in healthcare expenses. At the same time, many insurers are seeing higher-than-expected healthcare utilization rates among their Medicare Advantage plan members, adding to their overall expenses.  

Couple escalating costs with increased scrutiny on pharmacy benefit managers and changes in government funding and payment models for Medicare Advantage and Affordable Care Act (ACA) plans, and it makes for a complicated market.  

Plus, there is more uncertainty on the horizon. The enhanced premium ACA Marketplace tax credits put in place during the pandemic are set to expire at the end of 2025.  

These subsidies, which were introduced as part of the American Rescue Plan Act of 2020, significantly decreased premium payments for ACA Marketplace enrollees. In 2024, 24.2 million people selected coverage through the Marketplace, more than double the number who purchased coverage during the 2021 Open Enrollment Period, according to the Centers for Medicare & Medicaid Services.  

With the tax credits expiring, ACA enrollees are likely to see their premiums go up substantially. ACA plans across the country are seeking a median rate increase of 15% in 2026, according to KFF. As a result, many insurers are expecting to see healthier people drop their coverage, which could lead to a sicker risk pool.   

The combination of these factors has resulted in a complex health insurance landscape. For employers, navigating these disruptions can be overwhelming. However, there are strategies organizations can use to help reduce risk.  

How Employers Can Be Ready  

Employers should prepare for potentially higher health insurance premiums, especially for fully insured plans.  

Expect a bigger focus on cost management strategies from insurers. Challenges could result in some insurers exiting certain markets or reducing their offerings. Employers should keep an eye on these developments and be ready to explore other options if necessary.  

Businesses may need to redesign their benefits or consider alternative funding models, such as self-funded plans. Value-based care arrangements could also be leveraged to reward quality and efficiency over volume in medical care.  

Amid these challenges, along with the confusion and complexities of employee benefits, employers should communicate frequently with employees about their options, costs and value.  

Simplify the experience by providing employees with clear and concise communication materials, as well as resources to help them make informed benefit decisions.  

By understanding the factors driving market volatility and taking a proactive stance, employers can navigate the upcoming open enrollment season with confidence and continue to provide attractive and effective benefits for their workforce.

In an uncertain market, proactively engage with a broker who specializes in employee benefits. 

The Oswald team can review your benefits strategy to assess whether your existing offerings meet your employees’ needs. We can also help you identify opportunities to strengthen the competitiveness of your benefits package.  

This article also appeared on Columbus Business First.

For more information, visit our Employee Benefits page or contact us below: