Where Does a 20% Health Insurance Renewal Increase Go?

I worked on another small-business health insurance renewal this week.

This employer’s health insurance renewal increase was 20.6%.

Unfortunately, there is nothing particularly remarkable about writing that sentence anymore. We have been seeing difficult renewals repeatedly, and I suspect many Ohio employers heading into the January renewal season are going to have some uncomfortable decisions to make.

What interested me about this particular renewal wasn’t just the size of the increase.

It was what we had to do to the benefits to bring the increase down.

The employer’s current monthly health plan cost is about $2,583.

Keeping the existing benefit structure increases that to about $3,116 per month.

There are less expensive alternatives with the same carrier and general plan structure.

Moving from a $1,500 individual deductible to $2,000 reduces the renewal increase from 20.6% to 17.1%.

To get the increase below 10%, however, the individual deductible has to double to $3,000.

And even then, the employer is still paying 9.7% more than last year.

That is the part I think is worth examining.

What happens to a health insurance renewal increase as the deductible rises?

The numbers look like this:

The middle option is interesting.

Increasing the deductible from $1,500 to $2,000 saves the employer only about $91 per month compared with renewing the current plan.

That’s roughly $1,096 for the entire year.

The employer has taken on a meaningful benefit change, but the renewal is still 17.1%.

To make a larger dent in the premium, we have to make a larger change to the plan.

What does it take to get below 10%?

The $3,000 deductible alternative reduces the monthly cost by about $283 compared with renewing the existing benefits.

That’s approximately $3,392 in annual savings.

But look at the other side of the equation.

The individual deductible doubles from $1,500 to $3,000.

The family deductible doubles from $3,000 to $6,000.

The individual out-of-pocket maximum increases from $7,000 to $8,000, and the family maximum increases from $14,000 to $16,000.

Not every benefit deteriorates.

The coinsurance remains 80%. The office visit copays remain the same. The urgent care copay remains the same. The prescription copays remain the same.

So an employee who primarily uses office visits and prescriptions might experience relatively little difference.

An employee who has significant medical claims could experience considerably more cost before reaching the plan’s out-of-pocket maximum.

That’s why I don’t think it is quite accurate to describe this as simply “finding a cheaper plan.”

The cost pressure didn’t disappear

This is what keeps getting my attention as I work through these renewals.

We can move things around.

We can change carriers.

We can change networks.

We can change deductibles.

We can change out-of-pocket maximums.

We can change the employer contribution.

Sometimes we can change the funding arrangement entirely.

But none of those things necessarily makes the underlying cost of healthcare disappear.

Sometimes we are simply deciding where the pressure is going to land.

In this case, keeping the existing benefits puts more of the pressure into the employer’s monthly plan cost.

Moving to the $3,000 deductible reduces some of that premium pressure, but transfers more potential cost to the people who actually use medical services.

The employer isn’t choosing between a 20.6% increase and no increase.

The choices illustrated here are a 20.6% increase with the existing benefits, a 17.1% increase with a somewhat higher deductible, or a 9.7% increase with a deductible that has doubled.

That is a very different way to look at the renewal.

Are employees going to absorb more of the next round of increases?

I don’t know yet.

One renewal certainly doesn’t establish a trend.

But there is enough evidence nationally that I think this is something worth watching.

KFF’s 2025 Employer Health Benefits Survey found that average family premiums increased 26% between 2020 and 2025. Over that same five-year period, the average single deductible among workers who had a deductible increased 17%.

Claims data analyzed by the Peterson-KFF Health System Tracker show a similar recent divergence from a different direction. Between 2019 and 2023, spending by health plans for people with employer coverage increased 27%, while actual out-of-pocket spending increased 10%.

That does not mean employees have had an easy time with healthcare costs. They haven’t.

KFF found that in 2025, 53% of covered workers at employers with 10 to 199 workers were already enrolled in plans with single deductibles of at least $2,000, and 36% had deductibles of $3,000 or more.

But it does suggest that, recently, some measures of employee cost sharing have been increasing more slowly than the underlying plan cost.

That makes me wonder where the next round of pressure goes.

And there are signs that employers nationally are asking the same question. Mercer reported that employers have increasingly been making plan design changes that shift more cost to employees as health benefit costs accelerate. Its June 2026 research found that 48% of large employers expect to make medical plan changes for 2027, such as increasing deductibles or copays, that will result in higher employee out-of-pocket costs.

Large national employers are obviously not the same thing as an Ohio business with a handful of employees.

But the economic problem is recognizable.

Something has to give.

I think we’ll know more after the January renewals

I’ve written before about the different knobs available when a small employer receives a difficult health insurance renewal.

This case makes me think about the subject a little differently.

Maybe the important question over the next year isn’t simply:

How much are health insurance premiums increasing?

Maybe another question is:

Where are those increases ultimately landing?

Are employers absorbing them?

Are employees paying larger payroll contributions?

Are deductibles going higher?

Are out-of-pocket maximums increasing?

Are employers moving toward narrower networks or different funding arrangements?

Or are we going to see some combination of all of them?

I don’t think we have enough information yet to know exactly how this period will play out for Ohio small employers.

We probably won’t recognize the trend clearly until after it has already happened.

But I know what happened with this renewal.

The employer started with a 20.6% increase.

We could get that increase below 10%.

To do it, the individual deductible had to double.

The cost pressure didn’t disappear.

It moved.

About the Author

For more than three decades, Ted Stevenot has helped Ohio small businesses and their owners evaluate health insurance and employee benefits as a partner at McCarthy Stevenot Agency, Inc.

He writes the Broker’s Desk series to document the real-world decisions, conversations and observations that come from helping small businesses navigate health insurance.

Talk With McCarthy Stevenot Agency

If your Ohio small business is facing a health insurance renewal increase, we can help you review the available options and understand the tradeoffs.

Sometimes the best answer is to keep the existing plan. Other times it may make sense to change the benefit design, network, carrier, funding arrangement or overall approach. The objective is to understand what each alternative saves, what it changes and whether the disruption is worth it.

Contact McCarthy Stevenot Agency to discuss your renewal, or call 513-891-9888.

Related Resources

• Health Insurance Renewal Tradeoffs: What Does It Take to Make a 12% Increase Disappear?
• Why Small Businesses Should Build a Health Insurance Renewal System
• Health Insurance for 5 or Fewer Employees in Ohio
• Ohio MEWA Health Plans for Small Businesses: A Practical Guide
• ICHRA for Ohio Employers
• Health Insurance Prescreen for Ohio Small Businesses

Disclaimer

Broker’s Desk is a series of observations from more than three decades of helping Ohio small businesses and their owners navigate health insurance. Some articles explain a process. Others tell the stories behind the work. Client-identifying details may be omitted or generalized to protect privacy. Plan availability, eligibility, underwriting, benefits and rates vary by employer and program. These articles are intended to help readers understand how experienced brokers think through real-world situations, not to suggest there is one right answer for every business or individual.