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.

Here is a test. Picture any other vendor in your business raising their price 20% and answering “that’s just the market” when you ask why. You would want the math. You would get the math, or you would get a new vendor.

Health insurance is the one line where owners accept the shrug. The renewal shows up like weather, you brace, you pay, you move on. The big benefits consultants are forecasting somewhere around 9 to 10% for 2027 (Aon says 9.5%, pushing the average cost past $19,000 per employee). That is the market average. Midsize employers without leverage routinely see worse.

The average is not the story. Whether you can see the math is the story.

I have fully insured clients this year staring at increases north of 20%, a few north of 40%. I also have self-funded clients, same size, same headcount, whose renewals are barely moving. Same market. Same year. Wildly different letters. The difference is not luck and it is not size. One group can see exactly what their claims did and why the number moved. The other gets a number and a shrug.

That is the whole game. A renewal you can explain is a business decision. A renewal you cannot explain is a bill someone handed you. Claims run high in a plan we can see into, and the increase makes sense. The client can plan for it. An increase that arrives with no visible math is not a market problem. That is a visibility problem, and it is fixable.

What to do this fall when the letter comes: do not ask “can we get it down.” Ask “show me the math.” Ask what drove the number. Ask what you are paying for and who gets paid inside it. A blank stare at any of those questions is the real problem, and it is not the market.

You negotiate every other number in this building. This one is not weather. It is a decision someone made, and you paid for it.

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

Sit with how strange that is. A buyer begging to spend more – and the market has nothing on the shelf.

You already pay for predictability everywhere

Fixed rates instead of variable. Multi-year vendor contracts. Hedges on fuel, currency, materials. You pay premiums all over your business to make numbers stop moving, because stable numbers let you plan, price, and borrow with confidence. This is basic financial management.

Then the health plan walks in with a one-year term and a fresh repricing every renewal, and everyone shrugs.

Why nobody sells it

Annual repricing is not an accident of the market. Every year of volatility creates another negotiation, another commission cycle, another number you cannot plan around. For the people who assemble your renewal, volatility is the business model. (You have met the business model. It shows up every October.)

Predictability is built, not bought

No carrier hands out a guaranteed three-year number. But you can design toward one: structures that cap your exposure, contracts that span more than a single plan year, transparency that removes the annual surprise before it gets assembled. It takes engineering and runway – which is exactly why this work starts mid-year, not at renewal.

The math the quote already did

That CEO was not being dramatic. He had done the math on what a stable number is worth to planning, pricing, and borrowing. $900K was his price for certainty.

What is yours? Let’s find out what a designed-for-stability plan looks like. [LINK]

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.