Healthcare costs are some of the most difficult parts of planning an employee benefits strategy. For small and mid-sized businesses, even a moderate increase in premiums can meaningfully impact their budgets. At the same time, employees still expect competitive health coverage, especially as benefits continue to play an important role in attracting and retaining talent.
With open enrollment approaching, now is the time to look beyond the renewal rate and think strategically about what your benefits will cost next year, what your employees actually use, and where you may have opportunities to improve the plan.
Why Healthcare Costs Continue to Rise
The pressure being put on employer-sponsored health plans is not going away.
AON projects a 9.5% median increase in employer healthcare costs for 2027, before plan design changes.
Here are some of the factors that contribute to that pressure:
- Specialty Pharmaceuticals and GLP-1s: Prescription drug trends are surging up to 11.5%, mainly driven by the expansion of high-cost specialty drugs and demand for GLP-1 anti-obesity medications. (Source)
- Behavioral Health Demand: Mental health and substance use utilization have surged 62% since 2018, continuing to outpace general medical inflation. (Source)
- Catastrophic & High-Acuity Claims: Approximately 32% of employers identify catastrophic claims as the primary source of medical plan inflation. (Source)
These trends don’t mean employers have to accept higher premiums or shift more costs to their employees. Going forward, employers should spend more time digging into the details of their benefits strategy before signing that renewal paperwork.
Look Beyond the Premium Increase
In our recent post, What Small Businesses Need to Know About Benefit Costs in 2027, we unpacked how we approach conversations about rising healthcare costs with our clients.
One of the first conversations we have is about the entire benefits strategy, not just the renewal rate.
For example: a plan with a different deductible structure or an HDHP may create opportunities to manage premiums. Employers can also consider how HSAs, wellness programs, and other resources can help employees manage their out-of-pocket costs.
Education matters, too. Employees don’t always understand how their benefits work or which options offer the best value. A plan may have a higher deductible, for example, while many employees’ actual healthcare expenses are primarily subject to copays. Understanding how employees use their benefits can help employers make more informed decisions.
The goal isn’t simply to find the cheapest plan—it’s to find the right balance between cost, coverage, and employee experience.
How LBMC EP Helps Employers Manage Healthcare Costs
This is where having an experienced benefits partner can make a difference.
At LBMC Employment Partners, we help clients evaluate their benefits strategy before making decisions for the next plan year. That can include reviewing plan designs, comparing available options, evaluating employee needs, and looking for opportunities to manage costs without unnecessarily reducing the value of the benefits employees receive.
For some small and mid-sized businesses, a PEO partnership can create additional opportunities. Through a PEO, employers may gain access to benefits and plan options that can be difficult to secure independently. LBMC EP’s PEO model provides the purchasing power and infrastructure of a larger employee population while giving smaller organizations access to an experienced team that can help manage the broader HR and benefits strategy.
For organizations that aren’t ready for a PEO, our benefits brokerage services provide another path forward. We can help evaluate the open market and negotiate options while keeping benefits strategy connected to the rest of your HR needs.
Don’t Wait for the Renewal Packet
Rising healthcare costs aren’t going to disappear at the next open enrollment. The employers that are best positioned to manage them are the ones willing to start the conversation early.
Whether you are considering a new plan, reviewing your current broker or wondering if a PEO could make your benefits more competitive, LBMC Employment Partners can help you evaluate your options and plan with greater confidence.
Ready to take a closer look at your 2027 benefits strategy? Contact LBMC EP to start the conversation.
