When should we start working on our health plan renewal?

Most renewals fail because they start 60 days out. By then there is no time to gather data, build a strategy, or create real competition, so the employer signs whatever the incumbent sends.

A good renewal is really a 12-month calendar:

12 to 9 months out: post-renewal review. What worked, what didn't, what employees said.
9 to 6 months out: strategy session on funding, plan design, PBM, and contribution goals.
6 to 4 months out: data gathering. Census, claims, large claim detail, current contracts.
5 to 4 months out: requests for quotes go out for self-funded and captive groups, if marketing is needed.
4 to 3 months out: requests for quotes go out for fully insured groups, if marketing is needed.
3 to 2 months out: quotes come back. Negotiation, finalist rounds, decision.
2 to 1 months out: contribution modeling, employee communication, open enrollment.
Last month: implementation, ID cards, file feeds, compliance notices.

If the strategy is to stay put, you skip the marketing step and spend that time negotiating the renewal instead. Either way, the work that actually saves money happens in the months when nothing is due.

Questions to ask

When did our last renewal process actually start, and when did we see quotes?
How many carriers and vendors were approached, and what did each one say?
What is our strategy for next year, in writing?

How do underwriters actually price our renewal?

Your renewal is a number the carrier decides, not one it simply calculates. The underwriter projects your claims, adds trend, blends in a manual rate based on credibility, applies pooling charges for large claims, then adds retention for admin, taxes, commissions, risk, and profit. Every one of those inputs has a range, which is why two carriers can look at the same data and come back 15 percent apart.

Why did our renewal go up when our claims were good?

If you are fully insured, very little of your renewal is based on your own claims. It is driven by a large, generally unhealthy risk pool, and when your claims come in under what the carrier priced, the carrier keeps the difference. Changing how the plan is funded, even with the same carrier and plan, is often what fixes it.

Fully insured, level funded, self-funded, or captive. Which is right for us?

It depends on who you want holding the risk. Fully insured is the simplest and least transparent. Level funding is the usual first step for a healthy group and is most common under 200 employees. Self-funding gives you all the data and keeps the surplus, in exchange for volatility. A group captive gives self-funded employers the same economics with less volatility by sharing a middle layer of risk with peers.