Break the Quote-and-Renew Cycle With a Fresh Approach

AUGUST 4, 2026

Many employers and insurance brokers address rising health plan costs by simply taking the plan out to bid. But without insight into what’s driving the increase, many groups end up with higher premiums at the end of the plan year anyway.

Instead of simply comparing quotes again this year, break the cycle with fresh plan design and funding strategies for more sustainable savings.

Choose a Funding Strategy Better Aligned With Your Claims Risk

Most small businesses prefer fully insured health plans for the ease of administration and lower risk. However, healthier groups might be paying more than they should.

For small businesses in the U.S., the Affordable Care Act (ACA) mandates how fully insured plan premiums are determined. Under the ACA, small group health plans of 50 or fewer employees (100 or fewer in California, Colorado, New York, and Vermont) must include essential health benefits and offer a minimum level of coverage. Insurance companies can only use factors like geographic rating area, age, coverage category (individual or family), and tobacco use to calculate and set premium rates for the fully insured plans or coverages they provide to small businesses.

Employers enrolled in one of these plans, often referred to as “community-rated health plans,” would be subject to the plan rates — regardless of their individual claims experience. Healthier groups may find savings by moving to a funding arrangement that better reflects their actual risk.

For these employers, switching to a level-funded health plan can lower premium 10% to 15% and provide greater control over health plan spending. Insurance companies set a level monthly premium based on the individual employer’s expected losses, while stop-loss coverage sets the maximum liability for the plan. If claims are lower than expected, employers may receive a partial refund of premiums, providing additional dividends of 5% to 10%. Our article “Why Are Fully Insured Health Plans Getting More Expensive for Small Businesses?” explains this in further detail.

Find Additional Savings From Plan Design Changes 

Moving from a richer copay plan to a high-deductible health plan (HDHP) can lower the fixed cost of insurance as much as 30%. This results in immediate savings for employers regardless of funding approach. But for companies that want to maintain competitive benefits, adding a health reimbursement arrangement (HRA) can help keep or improve the plan richness employees expect.

Employers typically use the upfront savings from the HDHP to fund the HRA. Enrolled employees can use those funds to cover deductibles or medical expenses, and any unused portion is returned to the employer at the end of the plan year. While there is a risk of higher-than-expected claims, most plan members (76%) incur $4,000 or less in claims expense every year.

Level-funded health plans can help maximize their surplus using an HRA to limit the impact of medical expenses on total claims costs. Even fully insured plans with average health plan usage may see overall savings of 5% to 10%. Read more about this approach in our article “Rising Health Plan Costs Are Reshaping Small Business Benefits.”

Adjusting your health plan contribution strategy can also help lower costs while allowing employees to pick the coverage that best fits their needs. See our article, “Unlock Health Plan Savings With a Balanced Contribution Strategy,” to learn how small changes to employer contributions can help achieve more balanced enrollment and reduce unnecessary spending.