Why your health insurance renewal costs more this year

Your health insurance renewal has arrived, and it looks like your premiums have decided they deserve a raise. A pretty generous one, at that. 

You didn’t add any fancy benefits, and your employees are still on the same plan. So why are you suddenly paying more for the exact same coverage?

What’s driving the increase?

Unfortunately, health insurance premiums don’t stay the same just because your coverage does. Several factors can drive up renewal rates, including: 

• Rising medical costs: Hospital care, prescription drugs, and other healthcare expenses keep getting more expensive. 
• Your group’s makeup: Employees’ ages, tobacco use and family coverage, plus your business’s location, can affect premiums for ACA-compliant small-group plans. Rules vary by state.
• Plan type: Fully insured and level-funded arrangements play by different pricing rules, which can affect renewal costs. 

Under Affordable Care Act rules, insurers usually can’t increase premiums for non-grandfathered, fully insured small-group plans based on your employees’ medical conditions or your group’s claim history. 

But just because the insurer has reasons for raising your rates doesn’t mean you just have to accept it. 

Don’t just renew. Review.

Before you reluctantly hand over what feels like the equivalent of your life savings, take a closer look at what you’re getting. Your renewal notice isn’t a marriage license. You don’t have to commit to another year without seeing what else is out there. Here’s where to start: 

• Compare the fine print. Look beyond monthly premiums. Compare deductibles, copays, provider networks, and prescription coverage against last year’s plan. A lower premium looks great on paper. But your employees may feel differently when their next doctor’s visit comes with a bigger bill. 
• Make your insurer explain itself. Ask your carrier or broker what’s behind the increase, then request quotes from competitors. Save the loyalty for your local grocery store rewards program – not your insurer.
• Consider changing your plan. Higher deductibles or different provider networks may lower premiums, but those savings could come at your employees’ expense. Make sure the trade-off is worth it. 
• Explore other options. Depending on your business, it may be worth looking into level-funded plans or health reimbursement arrangements. Just keep in mind that different arrangements come with different rules, costs, and risks. 
• Review your contributions. Adjusting how much your business pays toward premiums could help your budget, but check participation requirements and consider what employees can realistically afford. 

A renewal notice isn’t your only option. Compare plans, question the increase, and make sure you’re getting your money’s worth before signing up for another year of sticker shock.