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Employers can slow rising health benefits costs by doing five things before renewal instead of reacting to it: read your claims data, expand virtual care, offer alternative plan designs, require active enrollment, and revisit how your plan is funded. None of it guarantees a lower renewal, and every option is subject to underwriting and plan rules, but employers who plan ahead consistently land in a stronger position than those who wait. Subject to underwriting.
Why are health benefits costs climbing again in 2026?
Cost is the pressure small employers feel most, and it is still building. KFF's 2025 Employer Health Benefits Survey put the average annual premium at $26,993 for family coverage and $9,325 for single coverage, up 6 and 5 percent in a single year. Looking ahead, analysts at the Peterson-KFF Health System Tracker project small-group premiums will rise more than 9 percent in 2026, among the largest increases in years, driven by medical inflation, specialty drugs, and higher utilization. For a Gaylord manufacturer or a Petoskey dental practice, that is real money against a fixed budget, and it is why health costs have ranked among the top concerns of small-business owners for decades per the NFIB. The five strategies below are where an employer actually has room to act.
1. Are you reading your health plan data?
You would not run your Traverse City business without watching your financials, and your health plan deserves the same attention. Depending on group size and carrier, employers can review claims utilization, high-cost claim drivers, pharmacy trends, and emergency-room versus primary-care usage. Reading that data shows where the dollars actually go. If emergency-room visits are driving spend, for instance, steering employees toward urgent care, virtual visits, or a primary-care relationship can reduce avoidable costs. A benefits advisor can help interpret the numbers and turn them into a plan.
2. Are you using virtual care fully?
Virtual care has become a core part of modern benefits rather than an add-on. Employers are leaning on telemedicine and virtual primary care, virtual behavioral-health services, digital management of chronic conditions like diabetes and hypertension, and remote monitoring tools. Used well, these can lower emergency-room and urgent-care use, widen access for employees spread across rural Northern Michigan, and improve satisfaction, often at hours that fit a working schedule.
3. Have you looked at alternative plan designs?
The traditional PPO is no longer the automatic default. Cost-conscious employers are weighing high-deductible health plans paired with health savings accounts, health reimbursement arrangements, and flexible spending accounts. These designs can give an employer more cost predictability and encourage employees to engage with what care costs. The key is choice and clear communication rather than forcing a single option on everyone. Whether any of these fits your workforce depends on your group and is subject to underwriting and plan rules, so it is a conversation to have with an advisor, not a decision to make from a blog post.
4. Do you require active enrollment?
Passive enrollment is convenient, but it often leaves employees overpaying for coverage they do not use, missing life-event updates, and misunderstanding their options. Requiring an active election each year prompts people to review their coverage, reconsider dependents and beneficiaries, account for life changes, and choose on purpose. Over time that improves health literacy and reduces unnecessary spend for the employer and the employee both.
5. Have you reconsidered how your plan is funded?
Fully insured is not the only structure. Employers are increasingly exploring level-funded and self-funded plans, reference-based pricing, and captive arrangements. The shift is real: KFF and industry reporting show level-funded enrollment among small firms climbed sharply over the past several years, a trend Leader's Edge describes in its look at employers flocking to level funding. These structures can offer more transparency and, for the right group, potential savings and more control over plan design. They are not right for everyone, and eligibility is subject to underwriting, but they are worth evaluating if you have seen steady premium increases with relatively low claims.
What should you have ready before your renewal?
Most of the leverage in a benefits renewal comes from starting early with the right information in hand. Gather these before you sit down with an advisor, ideally 90 to 120 days out.
- Your current plan documents, rates, and the most recent renewal offer
- An updated employee census with ages, home ZIP codes, and coverage tiers
- Claims and utilization reports, if your group size allows access to them
- A list of the benefits your employees value most, and where the complaints are
- Any anticipated headcount changes, especially anything near the 50-employee line
That last one matters, because crossing 50 full-time-equivalent employees brings Affordable Care Act applicable-large-employer rules into play, which changes both your obligations and your options.
Our employee benefits page covers how we approach group coverage, and for the broader picture, how business owners can tackle their top insurance challenges and ways to save money on business insurance are both worth a read.
Let's build a smarter benefits strategy
Top O' Michigan Insurance Solutions helps Michigan employers design benefits programs that balance cost, coverage, and the employee experience, from Alpena to Traverse City. We cannot promise a lower renewal, and everything here is subject to underwriting, but we can help you plan instead of react. Reach our Traverse City office or call 800-686-8664, or email Service@TheSpireTeam.com, and an agent will help you get started.