This year they are on track for a $750,000 surplus.

The contract says: renew, and the carrier keeps half of it. Leave, and the carrier keeps all of it. 

Say they end the plan year with only $500,000 left in the claims bucket. The carrier still keeps $250,000 of the employer’s unspent money.

If they leave, the carrier keeps $500,000 of the employers unspent money.

Half of their own unspent money is the price of staying. All of it is the price of leaving.

(In our defense, we did not build this plan.  We were brought in to get them out of it)

“Too small” is a sales line

Many employers this size are told “your company is too small to run its plan differently. Too small to self-fund. Claims too ugly.”

That line describes the advisor’s shelf, not your company. Employers with 100 people self-fund with stop-loss insurance (the policy that catches catastrophic claims so one bad year does not blow up the budget), join captives, contract directly with clinics, and fix pharmacy pricing. All the time.

Sometimes fully insured is the right answer, for a smaller group or one with multiple chronic conditions… and that is many fewer employers than are being told they are too small. That should be a conclusion you reach by looking at the math, not a default someone handed you because looking was inconvenient for them.

Three questions about structure

The company above asked, “Do we keep the surplus if we do not renew?” The answer changed how they negotiated.

Three more in the same family. None requires a consultant.

1. Who holds our claims data, and can we have it this month?

2. What does our stop-loss contract say happens if we change carriers or funding?

3. What does this plan cost if we could see every piece of it?

The answers tell you whether you are running a plan or renting one.

Before December 31

✔️ Ask for your claims data in writing. You own it.

✔️ Read the surplus and termination language in your current contract.

✔️ Ask your advisor what self-funding would mean for a company your size.

You built a company big enough to have this problem. You are big enough to fix it.

Want to see what your plan looks like with the lid off? Let’s talk.

They did not. They purchased the business about five years ago, and the broker came with the building. Nobody re-asked a single question in those five years.

Then he told me what the relationship looked like day to day. “We don’t really get a lot of discussion points throughout the year. It’s just this time of year, when it’s renewal time, that we crunch the numbers.” And the line that made me put the pen down: “You shouldn’t have to carbon copy the CEO to get an answer from your broker.”

The service you are paying for

Think about any other vendor this size. Your bank. Your CPA. Your biggest supplier. If the only way your office manager could get a callback was to copy you on the email, that vendor would be gone by spring.

With the benefits broker, that is the standard. One meeting a year. A renewal letter. Questions that sit for a week until someone with a title asks them. It should not be, and it should not be tolerated. He paid for that service either way. The bill never showed it, which brings up the second problem.

And you have never seen the invoice

You know your law firm’s rate, your CPA’s hourly, and your 401(k) advisor’s fee, because a law made them show you. Your benefits broker is the exception. Their pay rides inside your premium and the plan’s vendor contracts: base commission, bonuses, overrides, a cut on stop-loss, sometimes a per-fill fee on every prescription. Some of it is disclosed. A lot of it is not.

Nobody cares much about broker comp (they should). Everybody cares about calling a vendor and hearing nothing back. Those two things come from the same place: nobody ever set the terms. The Consolidated Appropriations Act, passed in 2021, lets you set at least one of them. Your broker owes you a written accounting of what they get paid, from every source, before you sign.

Before December 31

✔️ Count the emails this year where someone had to copy you to get a benefits answer. That number is your service review.

✔️ Send one email: “Please send the written compensation disclosure required under the Consolidated Appropriations Act, covering every source of compensation tied to our plan, plus the fully executed vendor contracts.”

✔️ Put both in a folder dated this year. What you get back, and how long it takes, tells you what you are paying for.

Our client never got that number from the prior broker. The first time anyone in the company saw one was the day we handed them ours.

How many times did you have to be copied this year to get an answer? Let’s talk.

The owner said something I wrote down word for word: “We look at every other expense that we have and scrutinize it. Materials have been pretty flat. We have never looked at what our medical expenses have been.”

He was not embarrassed. He was surprised. This is a company that prices its product off every cost input it has: materials, labor, freight, energy. Health insurance is the second-largest line on the P&L after payroll, and it had never made it into that math. Not because anyone decided to leave it out. It had never occurred to anyone to put it in.

If that sounds familiar, you are in good company. Most owners I meet are in the same spot, and the ones who get out of it are the ones who notice.

How a good operator ends up here

This company tracks scrap. They renegotiate freight. They know the price of steel to the week, and that number flows straight into what they charge.

The health plan skipped all of that because it arrives once a year as a single number with a presentation attached. Every other vendor sends an invoice you can read. This one sends a letter they expect you to accept.

A number with no math behind it does not get scrutinized. It gets paid.

The one question that changes the meeting

The 2027 forecast sits around 9 to 10% (Aon’s number is 9.5%, with average cost per employee now past $19,000). Midsize employers without leverage see worse. A few in my book saw 20% and 40% this year.

The average does not matter. Whether you can see what drove your number does.

Ask: “What changed, in dollars?” Which claims. Which drug line. Who gets paid inside the premium. A clear answer means you have a business decision in front of you. A shrug means you have a bill someone handed you.

The manufacturer asked. The answer took a week to arrive and did not add up. That week told him more than the renewal letter did.

Before December 31

Most of you have a December 1 or January 1 renewal. Signed or not:

✔️ Ask what changed, in dollars, by claim category.

✔️ Ask who gets paid inside the premium, and how much.

✔️ Ask what the plan would cost if you could see inside it.

A blank stare at any of these is a visibility problem, and those are fixable.

Want to know what your renewal is actually telling you? Let’s talk.

Healthcare does not work that way. They do.

This is the last piece of the renewal story, and it is the one that is actually personal. Everything in these letters, the increases you cannot explain, the vendor pay you have never seen, the “you’re too small,” the pharmacy games, the duty you did not know you carried, all of it comes down to one thing. Someone convinced you this cost center was different. That your leverage stopped at the door. That you should hand over a fortune every year and accept whatever comes back.

You built something worth protecting. Every dollar a misaligned vendor pulls out of your plan is a dollar off what you created, for your employees, your successors, the culture you spent years building. This is not an HR conversation. It is a stewardship conversation. The plan is part of the legacy, whether anyone framed it that way for you or not.

Here is the good news the whole season points to. The employers who take this room back are not doing anything heroic. They ask for the math. They ask what their advisor gets paid. They control the pieces they were told they could not touch. They run the plan like they run everything else. The same instincts that built the company, finally pointed at the one cost center that dodged them.

What to do this fall: walk into the renewal like it is any other negotiation, because it is. Bring the same expectations you bring to every vendor. Refuse the shrug. You have earned the right to run this, and you have always had the leverage. Someone just told you that you did not.

You built this business. You should run this plan.

Ready to take that room back? Let’s talk.

Once in the premium. Again in the productivity you lose while people stress about it and still choose wrong.

Here is the connection owners miss. Benefits are not just a cost line, they are how your people reach care, or fail to. A confusing plan with bad access means employees delay care, guess at coverage, land in the wrong setting, and carry the worry into work. That shows up as your claims next year and as output this year. Healthcare access, or the lack of it, walks into your building every morning whether it shows up on a report or not.

Now the renewal tie-in. A plan you cannot explain to yourself is a plan your HR team cannot explain to 300 people. Or 50. The same opacity that hides your costs guarantees a miserable enrollment. Fix one and you fix the other, because a plan built in daylight is a plan people can understand.

I have watched this pay off in hard numbers. One employer recovered $267,000 in lost productivity by making care easy to reach through an onsite clinic. Not a wellness poster. Real access, and it showed up on the P&L. Their health plan is running at 82% of budget for the second year in a row. An onsite clinic is not the answer for every employer, some are too small or too spread out for it. The principle holds everywhere though: make care easy to reach and the productivity comes back.

What to do this fall: sit through your own open enrollment as if you were a confused employee. Can you understand it? Can your people reach care without a treasure hunt? A no there is not an HR failing. It is a design you can change.

Your people carry your business. What they carry to the doctor, or cannot, comes back to you either way.

Want an enrollment that does not make everyone sick? Let’s talk.

Renewal season is when that blind spot sends you a bill.

Run the math the way you run everything else. Industry forecasts put 2027 health costs up around 9 to 10% (Aon says 9.5%). At $15,000 or more per employee, all in, that is real money on your second largest expense. Compound a double-digit increase for three or four years and it does serious damage to EBITDA. You would never let another major cost grow like that unmanaged. This one you were told to accept.

Now run it the other way. A $100,000 cut in your health spend, at a 10% margin, is worth the same as a million dollars in new revenue. You would chase that million. You would build a sales plan around it, hire for it, lose sleep over it. This one you can capture by reading a contract.

And the market number is only the average. The midsize employers I see without leverage land higher, some well past 20% in a single year. A cost line moving 20% with no model behind it is not a benefits issue. It is a capital allocation problem wearing an HR costume.

Here is what changes when you treat it like capital. In the plans where we control the pieces and see the claims, the number is not just lower, it is knowable. I can show a CFO what drove it and what next year likely looks like. That is what a finance leader actually wants. Not a smaller surprise. A smaller surprise you can forecast. Predictability is worth as much as the savings.

What to do this fall: put your health plan in the model. Ask for a real projection, claim drivers and trend, the way you would demand from any other line this size. A plan nobody can forecast is a plan nobody is managing.

You optimize every dollar of capital in this business. This is $15,000 and up per employee, every year, running on autopilot. Take the wheel.

Want your benefits spend modeled like the capital line it is? Let’s talk.

Most owners have no idea. Renewal season is a good time to fix that, because this is the cost center now drawing the lawsuits.

Here is what fiduciary means in plain English. You have a legal duty to run the plan in your employees’ best interest and to make sure what it pays is reasonable. Not the carrier’s duty. Not the broker’s. Yours. The same way you are on the hook for the 401(k), you are on the hook for the health plan. Employees have started suing employers over health plan fees, the same wave that already hit retirement plans years ago. The class-action bar is circling, looking for the next plan that never checked its own costs.

Sit with that at renewal. Accept a number you cannot explain, from vendors whose pay you have never seen, and you are not just overpaying. You are signing off, as the fiduciary, on costs you never checked. That is the exposure. Not a letter from a regulator. A duty you did not know you were carrying.

The good part is that the fix and the savings are the same move. A fiduciary-run plan is a transparent plan. You see the fees, you see the vendor pay, you see the claims, you document that you asked. That is exactly the plan that also costs less, because sunlight drives out the waste. Doing right by your duty and doing right by your budget point the same direction here.

What to do this fall: ask for every fee in the plan, in writing, and ask your advisor to show you how they know your costs are reasonable. Keep the paper. That paper is both your savings trail and your defense.

You would never sign a contract this large without reading it. You already did. Renewal season is your chance to actually read it.

Want to see what you are on the hook for? Let’s talk.

You were right to do the double take. It is exactly as backwards as it sounds.

Here is the machine behind it. Between you and the pharmacy sits a pharmacy benefit manager, the PBM, the company that runs your drug plan. They negotiate prices, decide how much of the manufacturer rebates flow back to you, and set what your plan pays. Sometimes the cash price a stranger off the street gets is lower than the “discounted” price your plan pays. The spread does not come back to you. It stays in the middle, with the PBM.

Now put that next to your renewal. Prescription drugs are one of the biggest forces pushing your 2027 number up. GLP-1 medications alone, the weight and diabetes drugs everyone is talking about, are exploding. Filled prescriptions nearly doubled in a year, and nearly eight in ten employers now name them as a top cost driver. Specialty drugs pile on top. A big share of your increase is pharmacy, and a big share of your pharmacy spend is structure you cannot see.

This is where control changes everything. In the plans where we pick the pharmacy manager separately and read the actual contract, we see the spread, we shut down the games, and drug costs come down without touching a single employee’s copay or medication. Same drugs. Same people. Lower cost. In the bundled plans, that math stays hidden on purpose.

Your employee noticing the cash price is not a fluke. It is a crack of daylight into a system built to be confusing.

What to do this fall: ask who your pharmacy manager is, how they get paid, and whether your contract is transparent. A shrug or a word salad is the finding. The people making money on the confusion are counting on you not asking. Want to read the contract yourself? We built an AI prompt that shows you exactly what to flag. Download The Benefits Contract Review Prompt Pack

The pharmacy counter is where your whole plan shows its hand. Read it.

Want to know what your drug plan is really costing you? Let’s talk.

They were wrong. And this renewal season is proving it in my own book.

I have two kinds of midsize clients right now. One kind is fully insured, the standard setup most brokers sell, and they are getting hammered, some north of 20% this year. The other kind is self-funded and unbundled, meaning we chose each piece of the plan separately and can see inside all of it. Same size. Same headcount. Same lousy market. Their renewals are calm.

Size was never the problem. Structure is.

Now the honest caveat. Sometimes fully insured is the right answer. For a smaller group, or one with very high claims, it can be the smart, safe call. That should be a conclusion you reached by looking at the math, not a default someone handed you because looking was inconvenient for them.

Most owners never hear this part. A company your size can self-fund and cap its risk with stop loss insurance, a policy that catches the catastrophic claims so one bad year does not blow up your budget. You keep the savings in the good years. You see every dollar of claims and every vendor’s cut, the whole engine. The big carriers rarely mention this, because their model runs on you not knowing. Telling you “you’re too small” is easier than proving what your options actually are.

The reaction I watch land on people is not relief about the money, though the savings are real. It is closer to anger. “Why did nobody show me this existed?” They are right to be angry.

What to do this fall: before you sign another renewal, ask one question. “What would this plan look like if I could see inside it?” Ask what self-funding and stop loss would mean for a company your size. An advisor who says you’re too small just handed you your answer, and it is not about your size.

You built a company big enough to have this problem. You are big enough to fix it.

Want to see what your plan looks like with the lid off? Let’s talk.

That gap costs you at renewal, because part of the increase you are about to absorb may be their paycheck.

This is what surprises owners. Broker pay often rides inside your premium and the plan’s vendor contracts. Base commission, of course, but also bonuses, overrides, an extra cut on your stop loss coverage, sometimes a per-fill fee on every prescription your people run through the plan. Some of it is disclosed. A lot of it is not. And the incentives do not always point at your lowest cost. Sometimes they point the other way.

You already know how this feels, because you fixed it everywhere else. You made your retirement advisor disclose in real numbers. Your benefits broker probably handed you a line that reads “we may earn other income that does not affect your cost.” That is not a disclosure. That is a shrug in legal font. And it is not even true, because that income can absolutely affect your cost.

The Consolidated Appropriations Act, a 2021 law, gives you the right to the real number. Your broker owes you a written accounting of what they get paid, from every source. Most owners have never asked. Most have never seen it.

Sit with what that means at renewal. The person advising you on a 15% increase might get paid more when your premium goes up. That is not a conspiracy. That is how a percentage commission works. And how is that working?

What to do this fall: ask for the disclosure in writing. Every dollar, every source. Not “roughly.” In writing. Then go read the contracts, the fully executed ones, and when you don’t have them (it happens more than you’d think), get them and read them. We built a set of AI prompts that walk you through exactly what to look for. Download The Benefits Contract Review Prompt Pack

I disclose my compensation and certify the document. Every client, every year. That is how we run. Not because I am a saint, but because you would demand it from anyone else touching this much of your money, and you should demand it here.

You hold every other vendor accountable. Renewal season is the moment to hold this one too.

Curious what your broker actually makes off your plan? Ask them, then let’s talk about the answer.