Three out of five groups with 75–500 eligible employees that came to Take Command for a 2027 ICHRA evaluation were facing proposed group health plan renewal increases of 30% or more.
For benefits consultants, that is a signal to look across your book now and identify which clients need another option on the table.
You already know the familiar levers: negotiate with the carrier, shop the market, change the plan design, or shift more of the cost to employees. Those moves may reduce the immediate increase. But if the client is experiencing renewal volatility tied to claims experience, struggling with participation, or facing limited carrier competition, a less painful renewal may still leave the underlying problem intact.
That is the conversation to have before the renewal becomes a crisis: Are we solving this year’s increase, or does the way this client funds health benefits need to change?
Why midsize groups deserve a closer look
Take Command analyzed 93 groups with 75–500 eligible employees that it evaluated for the 2027 plan year. Of those groups, 56 were facing proposed increases of at least 30%. The median increase was 36%, and the average was 37.8%.
These figures reflect groups that came to Take Command for evaluation, not the entire midsize employer market. But they show the level of renewal pressure already bringing clients and consultants to the table.
Midsize employers can occupy a difficult position in the group market. Their workforces may be distributed across multiple locations and include employees with different coverage needs. At the same time, they may lack the purchasing leverage of much larger employers. A high-cost claim, low participation, or limited carrier competition can leave them with few attractive ways to reduce costs without shifting more of the burden to employees.
A high renewal increase does not automatically make a client right for ICHRA. It does make the client worth evaluating.
Start by showing the client what the renewal actually means
The percentage creates urgency, but the client needs to understand the decision behind it. Translate the renewal into its effect on the business and employees.
Clarify:
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The additional annual employer cost if the plan renews as quoted
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How much of the increase the employer can absorb
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How employee payroll contributions would change under the current strategy
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Whether the renewed plan also changes deductibles, networks, copays, or other benefits
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What the employer or employees would have to give up to keep coverage affordable
This creates the baseline for comparing alternatives. A carrier concession or lower-priced plan is not necessarily a better outcome if the savings come from a significantly higher deductible, a narrower network, or a larger employee contribution.
Determine whether negotiation addresses the real problem
As you review the renewal, look at what is driving it and whether the same pressure is likely to return.
Ask:
- Is the increase tied to one or more high-cost claims?
- Are specialty pharmacy costs or increased utilization contributing?
- Has participation changed or weakened the group’s risk pool?
- Is the carrier applying a broader medical trend increase?
- Has the client received repeated double-digit renewals?
- Are there enough carrier options to create meaningful competition?
Negotiation and carrier shopping remain important. But reducing a 40% proposal to 25% does not necessarily solve the client’s problem. If the employer remains exposed to the same claims and participation dynamics, the negotiation may only defer the next difficult renewal conversation.
Gallagher Home Health Services saw that pressure build over time. The 200-employee organization faced renewals that rose from 10–15% to 15–20% and eventually exceeded 20%. The pattern showed that the employer was not dealing with one unusually difficult year. It was facing a recurring cost problem.
RACOM reached this point after receiving a proposed 40% increase for its 124 full-time employees. The company needed an alternative that could maintain the benefit without absorbing an unsustainable increase. After moving to ICHRA, RACOM kept its annual benefits costs at approximately $1 million while increasing participation.
The lesson is not that every 40% renewal should lead to ICHRA. It is that a significant renewal should prompt consultants to compare the group options with a different funding model before recommending that the client absorb, reduce, or redistribute the increase.
Which clients should evaluate ICHRA?
Renewal size is one signal. The case for evaluation becomes stronger when it appears alongside other signs that the group plan no longer fits the client.
Look more closely when a midsize client:
- Has received repeated double-digit renewals
- Is absorbing significant claims volatility
- Has employees across multiple states or rating areas
- Struggles with group participation requirements
- Has limited carrier or network options
- Is considering shifting substantially more cost to employees
- Needs a more predictable benefits budget
- Has employee populations with substantially different coverage needs
The consultant does not have to decide that ICHRA is the answer at this stage. The job is to recognize when the client’s situation warrants modeling it alongside the group renewal.
Put an actual ICHRA design next to the renewal
Clients cannot make a sound decision by comparing a detailed group renewal with a general explanation of ICHRA. They need to see how a specific design could affect their budget and employees.
A useful comparison should account for:
- Current employer and employee contributions
- The client’s target benefits budget
- The employer’s broader goals, including retention, hiring plans, risk tolerance, and administrative capacity
- Employee ages and locations
- Individual-market premiums in each relevant county
- Available carriers, plan options, and provider networks
- Employees' unique needs
- ACA affordability requirements
- Potential employee classes and contribution structures
- The enrollment and support experience employees will receive
Location-specific analysis matters. Individual-market pricing, carrier participation, networks, and plan choice can vary by county. A recommendation should be based on the markets employees would actually use, not a national average or a hypothetical allowance.
Palisades Hospitality used this type of employee-level modeling when one of its group plans received a 63% renewal. The company reviewed available plans and modeled costs for employees with different roles, locations, and family situations. That gave leadership evidence that the alternative could work for employees as well as the company before it approved the change.
Have the conversation before the client runs out of options
Do not wait until carrier negotiations stall to introduce ICHRA. A credible comparison may require workforce data, market analysis, contribution design, affordability testing, leadership review, employee communication, and enrollment planning.
Starting earlier gives you room to determine whether ICHRA is a strong fit and address employee-impact concerns before the final recommendation. If it is not the right answer, you can return to the group renewal knowing you evaluated the alternatives. If it is, the client has enough time to make the transition well.
Three out of five midsize groups in Take Command’s analysis were already facing proposed increases of at least 30%. That makes now the time to identify which clients need an ICHRA comparison while there is still time to evaluate it properly.
Have a client with 75–500 eligible employees facing a 30%+ renewal?
Compare an ICHRA strategy with your client's group renewal.
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