The 2027 numbers are the worst in two decades. Mercer projects health benefit cost per employee rising 8.2% after the changes employers plan to make, the largest increase since 2003, and about 11% if they change nothing. Aon projects 9.5%, pushing average cost past $19,000 per employee. Business Group on Health reports a 9.2% median. WTW puts it at 11.1% before plan changes. The International Foundation of Employee Benefit Plans found a 10% median.
Faced with that, most employers reach for the same lever first. They raise the deductible.
We think that is backwards. Plan design lowers premium by making the benefit worse, and the surveys themselves show how little it buys. The levers that move more money are less visible, take longer to pull, and start about 120 days before renewal.
Plan design is the most used lever and the weakest one.
Look at what the big surveys say plan changes are worth. Mercer’s gap between no changes and planned changes is roughly 11% against 8.2%, about 2.8 points. WTW’s, as reported from a preview of its survey, is 11.1% against 9.7%, which is 1.4 points. Business Group on Health reports a 9.2% median offset to 8% with plan design changes. That is 1.2 points.
One to three points of trend, bought once.
The following year, trend compounds on the new base, and the plan is permanently worth less to the people it covers. Smaller employers have already been pulling this lever hard. Per the KFF 2025 Employer Health Benefits Survey, the average single deductible at firms with 10 to 199 workers is $2,631 against $1,670 at larger firms, and workers at small firms pay $8,889 toward family coverage against $6,227 at large ones. Small employers cost shift more and still do not get a better trend. That is the evidence that design alone is not the answer.
Our ranking, from most money moved to least
| Rank | Lever | Honest verdict |
|---|---|---|
| 1 | Funding structure | The largest structural lever for a healthy group. It requires underwriting, and you have to tolerate renewal volatility. |
| 2 | Claims data access | Saves nothing by itself, but every lever below it works better with the data. |
| 3 | Marketing the renewal | Reliable and underused. Needs lead time and a census. |
| 4 | Pharmacy strategy | Real money, mostly reachable once you control funding and data. |
| 5 | Contribution strategy | Moves your cost, not total cost. A transfer to employees. |
| 6 | Plan design | One to three points, once, with a worse benefit. |
| 7 | Wellness programs | No measurable effect on spending in the best controlled trial. |
1. Funding structure
This is the lever small employers most often never touch, because in the ACA small group market (employers with 1 to 50 employees, or up to 100 where a state has extended the definition) it does not exist. Under 45 CFR 147.102 a small group carrier may rate on only four factors, and claims are not one of them. A healthy group and an unhealthy group of the same ages in the same county pay the same. The healthy one is subsidizing the pool.
Level funding and self funding change that. Per KFF 2025, 37% of covered workers at firms with 10 to 199 employees are already in level funded plans and 27% in self funded ones, and KFF notes that level funded plans use health status in rating and underwriting. For a group that underwrites well, being priced on its own results can move more money than every plan design change combined. For a group with a serious ongoing claim, it can be a mistake. The mechanics and the downside are laid out on how a level funded health plan works, and a PEO master plan is the same decision pointed the other way.
2. Claims data access
This one is contrarian, and it is the lever we would pull first in almost every case. Since the Consolidated Appropriations Act, 2021, group health plans may not sign agreements with providers, networks, claims administrators or other service providers offering access to a network that restrict the plan from electronically accessing deidentified claims and encounter information, down to the allowed amount on each claim. Every plan attests to compliance with CMS by December 31 each year.
Many employers attest, or have their carrier or administrator attest for them, and never ask for the data.
Without it you cannot tell whether a renewal is fair or whether one claimant drove it. With it, every other lever gets sharper. Ask your carrier or administrator for it in writing.
3. Marketing the renewal properly
A renewal that only goes back to the incumbent carrier with a counteroffer has not been marketed. Real marketing starts with a current census and the claims data from lever two. Both go to several carriers, across funding types and into the PEO market, well before the renewal date. Large employers treat this as routine. In the Business Group on Health 2027 survey, 71% of employers reported using the request for proposal process to secure lower pricing.
Do not wait on a rebate to rescue a bad renewal. Under the ACA medical loss ratio rules, small group insurers must spend at least 80% of premium on care and quality and large group insurers 85%. KFF estimates 2026 rebates at about $121 million to small group plan sponsors and $113 million to large group sponsors nationally. Measured against Aon’s $19,000 per employee, that is a rounding error. The money is in the quote, not the refund. If the incumbent broker cannot run that process, a broker of record letter changes who can.
4. Pharmacy strategy
Business Group on Health reports pharmacy at 25% of employers’ total healthcare spend, with drug costs estimated to rise 12% in 2026. Mercer attributes up to about one point of the 2027 trend each to GLP-1 drugs for weight management, AI enabled claims submission software, and No Surprises Act dispute resolution. Employers are responding. The same Business Group survey found GLP-1 coverage for obesity falling from 72% of employers in 2025 to 60% in 2026.
The honest caveat for a 60 or 150 person company: real pharmacy changes, such as carving out the PBM, are mostly available to groups that control their own funding. On a small fully insured plan, the carrier’s pharmacy program is usually part of the package.
5 and 6. Contribution strategy and plan design
Raising the employee share lowers the employer’s line and leaves total cost where it was. It is a legitimate budgeting decision. Just name it correctly. For applicable large employers there is a ceiling, too. Self only coverage stays affordable for 2027 plan years only up to 10.22% of household income under Rev. Proc. 2026-26.
Plan design we have covered. Use it last, on purpose, after the structural levers have been priced.
What does not work
Workplace wellness programs are the clearest example. In a randomized trial across 160 BJ’s Wholesale Club worksites, published in JAMA in 2019 by Zirui Song and Katherine Baicker, employees in the program reported more regular exercise and active weight management, but after 18 months there were no significant effects on clinical measures, health care spending or absenteeism. A three year follow up of the same trial found no significant differences in spending either. Offer wellness because employees value it, but never budget it as savings.
A few other habits waste the renewal window. Negotiating inside 30 days. Switching carriers inside the same funding structure and calling it strategy. Waiting for a rebate. Accepting a PEO or carrier renewal with the medical line bundled so it cannot be tested. The timing problem is covered on whether your renewal increase is normal.
Frequently asked questions
How much will employer health insurance cost in 2027?
The major surveys project 8% to 11% increases. Mercer projects 8.2% after planned changes and about 11% with none. Aon projects 9.5%, with average cost passing $19,000 per employee. Business Group on Health reports a 9.2% median and WTW 11.1% before plan changes. The International Foundation of Employee Benefit Plans found a 10% median.
What is the most effective way to lower employer health insurance costs?
For a group with favorable claims, changing the funding structure usually moves the most money, because level funded and self funded plans price on the group’s own results rather than the four ACA small group rating factors, which apply to employers with up to 50 employees (100 in some states). Getting claims data and fully marketing the renewal come next. Plan changes are worth roughly one to three points of trend according to the major 2027 trend surveys.
Does raising the deductible lower health insurance costs?
It lowers premium once, by shifting cost to employees. The 2027 surveys put the value of planned plan changes at about 1.2 to 2.8 points of trend. Per KFF 2025, small firms already carry an average single deductible of $2,631 against $1,670 at large firms.
Can employers get their health plan claims data?
Under the Consolidated Appropriations Act, 2021, group health plans may not agree to contract terms that restrict electronic access to deidentified claims and encounter information, and every plan attests compliance to CMS by December 31 each year. Ask the carrier or administrator in writing.
Do workplace wellness programs reduce health care costs?
The strongest evidence says no. A randomized trial across 160 BJ’s Wholesale Club worksites, published in JAMA in 2019, found no significant effect on health care spending after 18 months, and a three year follow up found no significant differences in spending.
Price the structural levers before you touch the plan
Send one census and your current plan summary. We request your claims data first. Then we take the group to every funding structure and the PEO market at once, and show what each lever is worth in dollars. There is no fee to your business.
More context: what an independent benefits broker does.