Preparing for 2027: Actions to Manage Rising Health Insurance Costs

Employers are entering another difficult benefits cycle. Risk management and HR consulting firm Aon projects U.S. employer healthcare costs will rise 9.5% in 2027 before mitigation efforts, pushing average plan costs above $19,000 per employee. The forecast reflects higher utilization, more chronic conditions and high-cost claims, and continued growth in specialty-drug and glucagon-like peptide-1 (GLP-1) spending.

For employers, the answer can’t simply be passing every increase to employees. Health benefits influence recruiting, retention, financial well-being and the organization’s reputation as an employer. A better approach may be to use the health insurance renewal process to strategically review the market, the workforce and the full range of available plan options.

Start with the Market, Not the Renewal Quote

A health insurance renewal proposal should be the beginning of the conversation, not the final answer. Employers should ask their current broker to explain the major cost drivers and should consider testing the market with other qualified brokers or advisers. A disciplined review can compare carriers, provider networks, pharmacy arrangements, administrative fees, funding structures and service capabilities.

Shopping the market doesn’t always mean changing carriers. It can validate pricing, reveal negotiation opportunities and help leadership understand the tradeoffs behind each option. The goal isn’t to chase the lowest premium at any cost, but to find the best combination of affordability, access, quality and predictability.

Use Plan Design to Create Meaningful Choice

Employers should examine whether their current plan lineup still serves both the organization and its employees. Offering a traditional preferred provider organization (PPO) plan alongside a high-deductible health plan (HDHP) can give employees more control. Some workers may value predictable copayments and broader first-dollar coverage, while others may prefer lower payroll deductions and access to a health savings account.

Creative design choices may include different deductibles, employer health savings account (HSA) contributions, tiered networks, centers of excellence, stronger prescription-management programs, telehealth and care-navigation support. Each option should be modeled carefully so a lower employer cost doesn’t create an unusable benefit for employees.

Design Around the Workforce You Actually Have

Benefit decisions should be grounded in employee demographics and utilization patterns rather than assumptions. Employers can review age bands, family status, geographic distribution, compensation levels, enrollment behavior and claims trends in aggregate while protecting employee privacy. Employee surveys and listening sessions can add context that the numbers alone cannot provide.

This analysis may show employees need more plan choice, better mental-health access, stronger chronic-condition support or lower-cost coverage for dependents. It also may reveal communication problems: a valuable benefit has limited impact if employees don’t understand how to use it.

Make Benefits Part of the Employer Brand

A benefits program communicates what an organization values. A company that emphasizes flexibility, family support or employee well-being should make those commitments visible in its plan strategy and communications. Leaders should explain not only what the plans cost, but also why particular options were selected and how employees can obtain help.

Clear communication is especially important when changing deductibles, contributions, networks or eligibility rules. Employees are more likely to trust the process when the organization explains the business realities, describes the choices considered and provides practical decision support during open enrollment.

Evaluate Alternatives Beyond the Traditional Group Plan

For some employers, an individual coverage health reimbursement arrangement (ICHRA) may be worth evaluating. Under this model, the employer provides a defined contribution that eligible employees use toward individual health coverage rather than offering the same traditional group plan to everyone. Federal guidance permits these arrangements when applicable conditions are satisfied.

An ICHRA also can offer budget predictability and employee choice, but it’s not a universal solution. Employers should analyze local individual-market options, affordability, employee classes, administrative requirements, tax-credit implications and the employee enrollment experience with qualified benefits and legal advisers before proceeding.

Review Eligibility and Dependent Coverage Rules Carefully

Eligibility rules can materially affect plan costs. Employers may review waiting periods, hours requirements, dependent definitions and spouse coverage provisions. When a spouse has access to coverage through another employer, some organizations use a working-spouse surcharge or restrict spouse enrollment, subject to applicable law and plan terms.

Any change should be supported by a documented cost analysis and communicated with care. Employers should consider affordability, administrative complexity, family impact and nondiscrimination requirements rather than treating dependent coverage as a simple cost-transfer exercise.

Employers that begin early and remain open to creative options may be better positioned to manage the next increase without sacrificing the value of their benefits.

Consider Navigation and Virtual Care Support

Navigation and virtual care services can help employees identify appropriate care, understand bills and insurance questions, manage chronic conditions, and obtain support without automatically defaulting to higher-cost settings.

Before selecting any vendor, employers should evaluate clinical quality, utilization, integration with the existing plan, privacy and security, employee experience, fees, reporting, and measurable outcomes. A new program should solve a clearly defined workforce problem rather than becoming another underused point solution.

A Practical Road Map for Employers

Employers preparing for 2027 can begin with the following steps:

Diagnose the increase. Separate medical, pharmacy, utilization, large-claim, administrative and trend factors.
Test the market. Compare carriers, brokers, funding approaches, networks and vendor arrangements.
Model multiple designs. Measure the effect on both employer spending and employee payroll and out-of-pocket costs.
Validate workforce fit. Use aggregate data and employee feedback to identify the benefits employees value and the barriers they face.
Communicate early. Give employees clear comparisons, examples and decision support before enrollment.

Flexibility Is the Best Cost-Control Strategy

With 2027 healthcare costs projected to approach another double-digit increase, employers can’t rely on a single tactic. The strongest strategy combines competitive marketing, thoughtful plan design, workforce analysis, appropriate eligibility rules, and carefully selected alternatives such as ICHRAs or navigation services.

The objective isn’t merely to reduce this year’s renewal. It’s to build a sustainable benefits program that protects access to quality care, limits financial pressure on the organization and its employees, and strengthens the employer’s ability to attract and retain talent. Employers that begin early and remain open to creative options may be better positioned to manage the next increase without sacrificing the value of their benefits.

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