A cost center. (The department running your largest spends. A cost center. Sit with that.)

The org chart disagrees with the budget

Sales gets a strategy. Operations gets a budget. Finance gets a seat at the table. HR gets a compliance checklist and a renewal deadline – and then takes the blame when benefits costs jump 12 percent. The department with the least authority to restructure the spend is the one held accountable for it.

That is not an HR problem. That is org design – and nobody chose it on purpose. It calcified while everyone was busy running the business.

Your broker already knows this

Notice who the renewal meeting gets scheduled with. HR – not you. A renewal presented to someone without the authority to restructure it gets accepted. The same presentation in front of a CFO gets questioned. The current system works because of that gap, not despite it.

What changes when the label changes

Treat benefits strategy as what it is: capital allocation. Give HR the mandate, the data, and direct access to an advisor who answers hard questions – then back them at the table. When HR can challenge structure, contracts, and funding with your authority behind them, this spend starts behaving like every other managed spend in the company.

You built a department around every major dollar in this business. This one already exists. It is just waiting for the mandate.

When did you last send HR into a renewal meeting with real negotiating authority? If the answer is “never,” let’s change what happens this October.

Now ask who plays that role for your health plan. (Go ahead. I’ll wait.)

That silence is the subject of this post.

The duty exists whether anyone mentioned it or not

Under ERISA and the Consolidated Appropriations Act, health plan sponsors carry real obligations: select and monitor vendors prudently, make sure fees are reasonable, act in your employees’ interest. That duty sits with the sponsor – a person, a committee, your company. Not your broker. Not the carrier. You cannot outsource it, and signing the renewal every year does not discharge it.

Here is the asymmetry: your health plan spends multiples of what your 401(k) match costs, with a fraction of the oversight.

Why this one got skipped

The retirement plan learned discipline the hard way – years of scrutiny made committees and benchmarking standard practice. The health plan never had that reckoning. It grew up as an HR purchase – renewed annually, advised by people whose pay rises with the spend, presented as a done deal every October. Nobody convened a committee because nobody said the word “fiduciary” out loud in that room. Ever.

What meeting the duty looks like

Nothing exotic. The same discipline you already run on the retirement side: know what your advisor is paid, and get it in writing. Benchmark your vendors. Read the contracts before signing, or have someone read them for you. Document the process.

A calendar and a folder, used consistently. That is most of it. This is stewardship of the plan your employees depend on, and of money that is ultimately theirs and yours.

You already know how to do this. You do it every quarter for a plan a fraction of this size.

So: who is the fiduciary for your health plan? If you had to stop and think, that is worth a conversation.

Pharmacy pricing is opaque by design, and you will not fix the industry from your office. That part is out of your hands. Your contract is not. A clean(er) contract in a dirty business is a real, achievable thing – and most employers have never seen one.

What dirty looks like

It hides in definitions. What counts as a “rebate” decides how much money finds its way back to you. Spread pricing – the gap between what the pharmacy gets paid and what you get billed – decides how much never does. Add audit rights you don’t have and a termination clause that locks you in for three years, and the contract stops being paperwork. It becomes the business model. (You signed it. They wrote it.)

You do not need the PBM to be a villain for this to cost you. Blind trust does the job all by itself.

The only test that matters

Forget the rebate math for a minute. Here is how you know whether your contract is clean: when a solution that cuts your drug spend shows up – direct sourcing, a cash-pay option for a high-cost generic, a lower-cost channel for a specialty drug – can you plug it in without a fight?

A clean contract says yes. A dirty one tells you to wait three plan years, or pay your way out.

What to demand

Definitions in plain English. The right to audit and verify where the money flows. Termination without hostage-taking. And written freedom to add cost-cutting solutions as they emerge, because they emerge constantly.

Your PBM contract should be a tool. For a lot of employers, it is a trap with a signature on it.

When did someone last walk you through yours, line by line? If the answer is “never,” let’s fix that in 30 minutes. I read these for a living.

Nobody mentioned that the line works a lot better for them than it does for you.

The lie has a business model

An advisor who can only sell four carriers’ products will discover, reliably, that every problem has a four-carrier solution. “You’re too small” is inventory talking, not analysis. (They are describing their shelf. Not your company.)

What companies your size actually do

Employers with as few as 100 employees restructure their funding, join captives (groups of employers pooling risk together), contract directly with providers, and fix their pharmacy pricing. Every day, all over the country. None of this is exotic. The big-box counter just doesn’t stock it.

And the claims objection – “your claims are too bad” – gets the same answer from me every time: that is our specialty. Ugly claims are exactly what these structures were built for.

The tell

When an advisor says “you have no options,” they have just told you something useful – about themselves. The options were there the whole time. Nobody showed them to you because the person across the table couldn’t sell them.

Most executives who finally dig in don’t get angry about the money first. They get angry that nobody ever told them.

What has your advisor never shown you? Ask me what employers your size are actually doing.

Why does that feel normal?

The one room without leverage

You built this company by never accepting a first offer. Freight, software, banking, raw materials – every major contract gets scrutiny, benchmarks, and a real alternative on the table. Then the health plan shows up as a number, not a conversation, and nobody blinks. That is not how it has to be done. It is just how it has always been done.

Meanwhile, the people advising you on that number often earn more when you spend more. Not villains. Misaligned incentives that nobody in the room has ever questioned. Advice follows incentives – you know this about every other vendor relationship in your business. This one somehow gets a pass.

What accountability looks like here

The same discipline you apply everywhere else. Full compensation disclosure from your advisor – what they make, from whom, certified in writing. Contract terms you can read without a law degree. Real benchmarks, not reassurance that “everyone is seeing these increases.” And options beyond the same four carriers wearing different logos.

None of that is radical. It is routine, everywhere else in your budget.

This is stewardship, not procurement

You negotiated everything else that built this business. For most companies your size, this spend sits behind only payroll. Every dollar a misaligned vendor extracts from your health plan is a tax on what you created. The renewal room is the one room you have been walking out of without leverage, and someone told you that was fine.

Nobody meant you harm. But it was not fine. And how is that working for you?

Try one question at your next benefits meeting: “How exactly do you get paid on our plan?” Then book 30 minutes with me and compare answers.

Except one line. Every year, your health plan reprices the cost of employing every single person on your payroll. No proposal. No sign-off. A renewal letter shows up and the number is just… different. (Higher. The number is higher.)

Drift is not a decision. It costs like one.

A raise is a decision. Trend is drift, and drift compounds: a plan trending 8 percent a year doubles in nine years. Nobody in your building approved that. Everyone in your building pays for it – you in margin, your employees in deductions that quietly eat their raises. Sorry – that openly eat their raises. There is nothing subtle about it.

The strange part: we treat it like weather. A 12 percent increase gets a groan, a budget line adjustment, and a “see you next year.” Imagine your freight vendor or your software supplier repricing 12 percent annually, on autopilot, while everyone shrugged.

The repricing happens upstream

That number gets built from things you never see: network contracts, pharmacy pricing, intermediary incentives that reward higher spend. The people assembling it do not work for you. Opacity is the business model, and your annual increase is its invoice.

Make it a decision again

Employers who control this spend treat the health plan like a managed cost, not a fixed one. They see what drives the number: what the contracts actually say, what the pharmacy actually costs, who gets paid what along the way. Then they decide – structure, funding, vendors – the way they decide everything else in the building.

Your workforce got repriced this year. The only question is whether you were part of the decision or just on the distribution list.

Want to see what actually drives your number? Book a 30-minute review.

It sounds responsible. It is a decision to pay more, dressed up as patience.

The options have already collapsed

Your renewal lands in October. It gets built over the summer – claims data, carrier positioning, and your advisor’s incentives, all locked in months before you see a number. By the time the meeting happens, you are not negotiating. You are attending a presentation. (A polished one. There will be slides.)

Then you get three choices: accept the increase, shop the same product with a different logo, or stall. None of them touch what drives the number. You will also be told there is no time to try anything else this year. Conveniently, that will be true.

Waiting is the expensive part

A Chief Commercial Officer told me his sales quota went up by $8 million this year. Not because the business grew. Because the health insurance renewal did, and his team now has to sell enough to cover it. That is what “we’ll fix it at renewal” looks like when the bill lands on someone’s number.

Think about how you run every other major contract. You start early, set the terms, benchmark alternatives, and walk in with leverage. Now look at the health plan: one of the largest spends in the company, repriced every year, on a timeline where you hold zero cards.

The increase gets your attention. The year most companies spend not acting costs more than the increase itself. Structural changes – how the plan is funded, what the contracts allow, how pharmacy gets priced – need months of runway. Ask for them in October and the answer is “next year.” Every year.

The calendar is the strategy

The employers who control this spend work on it in June and July, while there is still time to change the structure instead of arguing about the price. They renegotiate contracts, restructure funding, and test alternatives before anything gets locked. They walk into October with a renewal they shaped, not one they received.

It is July. Your renewal is under construction right now. Are you in the room, or are you waiting for the reveal?

Book a 30-minute mid-year review. October will feel very different.

Dig anyway. A big and growing share of that increase isn’t medical spend. It’s pharmacy. And pharmacy is built to keep you from seeing what you actually pay.

This isn’t only a self-funded issue. Fully insured and level-funded plans carry the same drug costs, just buried deeper.

Where the money hides

Your Pharmacy Benefits Manager (PBM) sits between your plan, the pharmacy, and the drug maker, and gets paid by all three. Spread pricing means they charge your plan more than they pay the pharmacy and pocket the difference. Rebates from manufacturers are supposed to lower your costs, but often steer your plan toward pricier drugs because the rebate is bigger (great for everyone except you).

You’d never accept that from another vendor. Imagine a supplier who profited every time your costs rose, then refused to show you the invoice. You’d fire them by Friday.

What actually fixes it

Ask for pass-through pricing. You see exactly what the pharmacy was paid, you pay that, and the PBM charges one flat, disclosed fee. No spread. Rebates flow back to your plan.

That single change turns your biggest mystery cost into a number you can read.

So when this year’s increase lands, ask: how much of this is pharmacy, and who’s profiting on the part you can’t see?

You can account for every line in your budget. Payroll, rent, software, the office coffee. Each one breaks down to the dollar, because you made it.

Then there’s the benefits rate.

One number. No itemization. No accounting of what’s built into it, who gets paid out of it, or which plan designs never made it to your desk.

You would not approve a six-figure invoice from a contractor that just said “building.” You’d ask what’s in it. This is the same invoice. Somewhere along the way, you stopped asking.

Claim transparency before you sign, not after

Most employers go looking for answers after the renewal lands – once the increase already hit and the decision’s already made. That’s backward. The time to ask is before you sign, while you still have leverage.

And clarity is not a favor your broker grants you. It’s the baseline you’d demand from any other vendor in the building. (You’d be insulted if your accountant called his fees “proprietary.”)

So demand it. In writing. Before renewal:

✔️ Full fee and compensation disclosure – every dollar the broker and the carrier earn from your plan ✔️ What’s built into the rate – the actual line items inside that single number ✔️ Which plan designs weren’t presented, and why – the options that never reached you

And don’t stop at the disclosure statement. Pull the contracts.

I once read a disclosure that said the broker earned $30 PEPM (per employee per month) plus a bonus of $6 to $12. Reasonable enough, on paper. Then we pulled every contract. The bonus wasn’t $6 to $12. It was $20.

The disclosure wasn’t a lie. It just wasn’t the whole number. (That gap is exactly why you read the contracts and not the summary.)

If they shrug, caveat, or tell you “that’s just how it works,” you’ve still learned something. The shrug is the disclosure.

The part that outlasts the savings

Under ERISA, you are responsible for what you approve – and that includes what you were never shown. “I didn’t know” is not much of a defense when knowing was the job.

The opacity isn’t a bug in the model. The model runs on it.

So before the next renewal crosses your desk, send your broker those three questions in writing. If the answers don’t come back clean, that’s worth a conversation

Q: What should I ask my benefits broker before renewal? Three things, in writing: full fee and compensation disclosure, what’s actually built into the rate, and which plan designs weren’t presented and why.

Q: Why does the benefits rate come as one number? Because nobody made it break down. Every other vendor in your budget itemizes. This one got a pass it never earned.

Q: Under ERISA, am I responsible for fees I was never shown? As the responsible plan fiduciary, you have a duty to make sure your plan’s fees are reasonable. Since the end of 2021, brokers and consultants for group health plans have had to disclose their direct and indirect compensation to you in writing before you renew. A fee you were never shown may be a disclosure that never happened – and that’s your cue to ask for it.

Most renewals aren’t a negotiation. They’re a deadline someone else set for you.

By the time that letter shows up, the outcome is baked. The work that actually moves the number happens six to eight months earlier. Start now and you walk in as a negotiator. Wait for the letter and you’re a passenger.

So while it’s still quiet, ask for two things.

Your claims data

This is the blueprint of your plan, not a stack of numbers. It shows what’s actually driving your cost and whether last year was a real trend or a one-time spike…or maybe a really low-cost year. Buried in it is the part that matters most: your high-cost claimants. It used to be that 20% of your claimants drove 80% of your cost. Now it’s closer to 10% driving 90%. If you’re self-funded, that’s the stop-loss laser report; if you’re fully insured, a large claimant report will do. Knowing who and what ahead of time lets you plan for those outliers instead of getting ambushed after you’ve signed. Without this, you’re accepting a number built on a generic industry model instead of your own people.

How your broker actually gets paid

Ask it plainly. How are you compensated on this plan, and does that change if my premium goes up? The big firms love a disclosure that says extra compensation “doesn’t affect your costs.” It does. Your premium is everyone else’s revenue, and nobody in that chain has a reason to shrink it. You deserve to know whether the person advising you wins when you spend more.

(None of this means firing anyone or blowing up your plan. It means asking earlier, while there’s still time to do something with the answers.)

The leaders who control their renewals aren’t running a secret play. They just start while everyone else is waiting for a letter. The data is yours. The timeline is yours. The only variable is when you decide to pick them up.

Renewal season is closer than it looks. Want to see what your current plan isn’t telling you? Let’s pull the thread now, while it still matters.