What’s Really Driving Your Health Plan Renewal?

SEPTEMBER 1, 2026

Negotiations are a key part of the renewal process: the insurance company proposes a rate, then the employer or broker works to bring it down. Yet many renewal proposals include assumptions and charges that are not easy to see or evaluate. Understanding what goes into renewal calculations can help employers see what a fair renewal should look like and provide better leverage at the negotiating table.

What’s Behind the Numbers?

Insurance companies and third-party administrators (TPAs) use premiums to cover claims, administrative expenses, and other plan-related costs. Administrative fees are often the most visible source of revenue, but renewals may also include claims-based charges and pricing assumptions that are harder to detect. The impact on renewal depends on how the plan is funded:

Fully Insured — Insurers often calculate renewal pricing using inflated medical claims trend, inconsistent credibility weighting, and padded claims reserves, all of which can generate additional revenue. Although medical trend is expected to range from 8% to 12% this year, carriers may increase that assumption to 11% to 18% in their renewal calculations.

Self-Funded — Administration fees for self-funded plans typically account for less than half of the carrier’s or TPA’s total profit. The remaining revenue usually comes from claims-based fees embedded in the renewal, such as network access, shared savings, and capitation fees.

Pharmacy contracts can also generate significant revenue, especially for insurance carriers that have their own pharmacy benefits manager (PBM) administering the plan. These contracts also typically include embedded claims-based revenue from sources such as spread pricing and rebates.

When these revenue sources are buried in the claims expense line, employers are unable to negotiate from a fair starting point. With a clearer view of the numbers, employers and brokers can negotiate lower and more equitable pricing with insurers.

A Comprehensive Approach to Renewals

Many brokers negotiate from the carrier’s proposed rate, even when that proposal includes inflated assumptions. USI Insurance Services uses claims data, underwriting principles, and AI-assisted analytics to model what a fair starting point should look like for our clients. We compare our assessment with the insurance carrier’s proposal to uncover what is driving the renewal — and where there may be room to negotiate.

Presenting our assessment to the insurance carrier often leads to an additional 3% to 6% reduction in renewal premium for fully insured health plans. When combined with additional negotiated rate decreases of 5% to 7%, our analysis can help reduce final renewals by 8% to 13% from the initial proposed amount.

For self-funded employers, our process identifies undisclosed sources of insurer revenue and can help reduce expected costs by 3% to 4%. Ensuring maximum credits for PBM rebates can lower administration fees by more than 50%.