Group health renewals are heading for their steepest jump in years, but our benefits team explains what increase to plan for in 2027 and the practical levers that can soften the hit before your renewal letter arrives.
Group Benefits Renewals: The 2027 Outlook
Group Benefits Renewals:
The 2027 Outlook
Authored by Andrew LaRocco and Kimberly Goode
Renewal Season Is Going to Hurt
If your group health renewal notice made your stomach drop, you are not alone. Most employers are about to see a bigger jump than they have in years, and the increase is coming on top of several years of rising costs. The good news is that a big number on a renewal letter is not the end of the story. Most of the increase is something you can plan for, shape, and push back on. This article walks through what the market looks like heading into 2027, what increase to plan for, and what you can do about it.
The 2027 Landscape
Every major survey points the same direction. Employers are looking at the steepest rise in cost trend in about two decades, and the reasons are not going away. A few things are pushing costs up:
- Medical prices and use. Providers are charging more, and people are using more care.
- Prescription drugs. Pharmacy is now about a quarter of employer health spending. GLP-1 weight-loss and diabetes drugs and specialty medications are the biggest pressure points.
- A thinner small-group pool. Smaller employers have fewer people to spread risk across, so one bad claim year moves the rate more.
The result is that many employers are shopping for alternatives. Some are looking at level-funded or self-funded plans, and others are rethinking their pharmacy arrangements with their PBM. Those choices are worth understanding before your renewal date, not after.
What Increase Should You Plan For?
Plan for something in the range of 8% to 10% on your total health cost for 2027, and budget higher if you have a small group. Thresholds for small group can vary from under 500 employees to under 2,000 employees depending on the carrier. More than 80% of companies fall into the small group category. Here is what the major sources are saying:
| Source | What It Measures | 2027 Projection |
|---|---|---|
| Business Group on Health | Large-employer cost trend, before and after plan changes | 9.2% before, 8% after |
| Aon | Employer cost growth before changes | 9.5% |
| Marsh (employer survey) | Total cost per employee, with and without changes | 11% without changes, 8.2% with |
| PwC | Group medical cost trend | 9% |
| KFF (rate filings) | Median proposed increase for small-group plans | 14% |
A few things to keep in mind:
- A trend is not your renewal. Industry numbers describe the cost of care in general. Your renewal depends on your own claims, your plan design, your pharmacy spend, and your carrier's pricing.
- Small groups tend to feel it harder. The 14% small-group figure is a median of proposed increases, and many insurers are asking for between 10% and 20%.
- The before and after matters. Many of these numbers assume no changes at all. The gap between the two is where smart planning pays off.
How to Soften the Hit
You cannot control medical inflation, but you can control how much of it lands on your budget. Here are the levers that tend to matter most. No single lever closes the gap. Used together, they can make a real difference.
| Lever | Action |
|---|---|
| Start early | Don't wait for the renewal letter to start thinking about it. Review your claims, census, and plan design now, so that when renewal terms arrive you're ready to evaluate them quickly instead of accepting the first number. |
| Market your plan | Ask carriers and other options to compete for your business. A renewal you never shop is a renewal you may overpay for. |
| Look hard at pharmacy | Pharmacy is now about a quarter of health spending. Ask your PBM for clear reporting on net drug costs, and ask whether rebates are passed back to you. Many employers are now looking at transparent PBM models. |
| Tune plan design | Small changes to deductibles, copays, or network tiers can shift cost between you and your employees. Make those changes on purpose, with the numbers in front of you. |
| Use tax-advantaged accounts | HSAs, FSAs, and HRAs can help employees manage their own costs while keeping the core plan affordable. |
| Build a wellness and care plan | Care navigation, chronic condition programs, and centers of excellence can help employees get better care for less money. |
| Review your plan's performance every quarter | Catch claims trends early, before they show up as a renewal surprise. |
Your Next Steps
| Timing | Action |
|---|---|
| Now | Pull your last three years of claims and renewal numbers. |
| Before your renewal | Review your goals, plan design, and pharmacy spend so you know what you want to change. |
| When renewal terms arrive | Compare every quote on cost and value, and decide whether to market the plan or renew as is. |
| Before enrollment | Review final plan documents and prepare your team with clear, plain-language materials. |
| Every quarter | Review plan performance so surprises stay small. |
If you want a second set of eyes on your renewal, we are happy to walk through it with you.
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Sources
- Business Group on Health, 2027 Employer Healthcare Strategy Survey (9.2% before plan changes, 8% after)
- KFF analysis of 2027 small-group rate filings (median proposed increase of about 14%)
- Marsh employer survey, as reported by Helpside (11% before changes, 8.2% after)
As of October 22, 2026.
