The 2027 Renewal Is Going to Sting. Here Is What I Am Telling Our Clients.

I have been doing this long enough to remember renewal seasons that felt bad. 2027 is different. It is not one carrier or one bad claims year. It is the whole market moving at once, and I would rather you hear it from me now than from a renewal letter in a few weeks.

The numbers, without the spin

Mercer's latest survey puts the average employer cost increase for 2027 at 8.2% after employers make plan changes. That is the highest figure since 2003. If you do nothing, the same survey says you should expect closer to 11%. Segal is seeing median medical trend near 9.9% on PPO plans, and pharmacy trend is running between 11.5% and 14% depending on whose report you read.

I am sharing the ranges on purpose. Nobody has a precise number for your group. But if a carrier hands you a single-digit renewal for 2027 without any plan changes, read the fine print, because that is not where the market is.

What is actually driving it

Three things, and only one of them is new.

Pharmacy is first. Specialty drugs and GLP-1s are now roughly a quarter of what employers spend on health care, and the GLP-1 line alone is adding about a full point to overall trend. Second is hospital pricing. Labor costs and consolidation have pushed facility rates up and they are not coming back down. Third, and this is the new one, is AI-assisted billing on the provider side. Coding software is capturing higher-level claims for the same visits. The carriers are seeing it in their data, and it is showing up in your renewal.

What I am not telling clients to do

I am not telling anyone to simply raise the deductible and move on. Fifty-nine percent of employers say they plan to shift cost in 2027. Some of that is unavoidable. But a deductible increase that pushes people away from care usually comes back as a bigger claim eighteen months later. It is a loan, not a savings.

The three conversations to have before you sign

First, pharmacy. Ask what your plan is paying for GLP-1s today and what the clinical criteria are. If you have never looked, that is where the easiest decision lives.

Second, funding. For groups above roughly 50 employees, a level-funded or partially self-funded arrangement is worth a real look this year, because it lets you keep the savings when your group runs better than the pool. We model this for clients every fall, and 2027 is the year the math has moved for a lot of mid-size Florida employers.

Third, steerage. Site-of-care programs, centers of excellence, and variable copays sound like big-company tools, but the carriers have brought them down-market. If your plan can pay less for the same MRI at an imaging center instead of a hospital, your employees should know that before they book the appointment.

Where I land

This renewal is going to be uncomfortable no matter what. The employers who come through it best will not be the ones who found a magic carrier. They will be the ones who made two or three deliberate decisions instead of accepting a number. Call me, call your advisor, and let us get those decisions made early.