It’s October 1st, and we’ve officially entered the fourth quarter. For many employers, that means health insurance renewals, open enrollment, and decisions that will shape next year’s healthcare budget.
These decisions affect both the business and the people who depend on its benefits. How do you manage rising costs while providing coverage employees can afford to use when they need care?
Last month, I outlined five questions employers should ask before accepting their renewal. This month, I want to build on that conversation: once you start understanding where your healthcare dollars go, what can you do with that information?
When a renewal arrives with an increase, the conversation often turns to what the company can absorb and how much employees will have to pay. Before raising deductibles or payroll contributions, it helps to examine what is driving the expense.
Moving an expense onto employees changes who pays the bill. It does not resolve what made the care expensive.
Understanding the financial picture
Your insurance carrier may be meeting its financial requirements. Your plan may offer a familiar network. Those details matter, but they do not necessarily explain whether your business and employees are receiving good value.
Consider the Medical Loss Ratio, or MLR. Under federal rules, fully insured carriers generally must spend at least 80% of adjusted premium revenue in the individual and small-group markets, and 85% in the large-group market, on medical claims and qualifying quality improvements. That requirement establishes a financial standard. It does not establish that every service was purchased at a competitive price.
When an insurer belongs to a larger organization with affiliated healthcare businesses, meeting the MLR requirement does not answer every question about how money moves through that organization or what those businesses earn.
Employers still have reason to ask what they are paying for, how those payments are determined, and what information is available to evaluate the value they receive.
The contracts deserve attention
For employers exploring partially self-funded arrangements, the conversation shifts toward the contracts supporting their own plan. Depending on the structure, employers may have greater flexibility to select their pharmacy benefit manager, or PBM, review compensation, and negotiate how rebates and other manufacturer payments are handled.
The federal insurer MLR requirement does not apply to the employer’s partially self-funded plan. Understanding claims expenses, administrative fees, pharmacy arrangements, and financial protections remains essential.
A promise of “100% rebate pass-through” deserves a closer look. What does the contract define as a rebate? Does that definition include manufacturer payments received by affiliated companies, including a group purchasing organization? What fees or other compensation can be retained?
Employers should also understand whether their audit rights allow them to verify those payments and arrangements beyond the PBM that signed the agreement.
The wording matters. It determines what the employer receives and what can actually be checked.
That attention should extend to medical spending. Where appropriate data is available, reviewing major claims, procedure codes, sites of care, and amounts paid can help identify opportunities to purchase care more efficiently.
A different funding arrangement can provide greater visibility and control, but the contracts and ongoing management need to support those goals.
Employees need help using their coverage
There is also a human side to managing healthcare spending.
An employee who needs a specialist, an imaging test, or an expensive prescription may have little idea where to begin. Having an insurance card does not necessarily mean knowing which provider to call, what the service will cost, or how to resolve a coverage problem.
HR can help explain benefits, but a difficult healthcare situation may require more time and expertise than an HR team has available.
Care navigation gives employees someone to turn to. Depending on the service, that assistance may include finding appropriate providers, understanding coverage, comparing care options, coordinating appointments, or helping resolve prescription and billing problems.
Employers should ask how that support works in practice. Who answers when an employee needs help? Can assistance begin before a procedure is scheduled? Will someone help when a medication requires prior authorization or a claim is disputed?
A benefit has greater value when employees know it exists and can use it when it matters.
A strategy that works throughout the year
I call this opportunity a healthcare renaissance for employers: using better information, clearer contracts, and practical employee support to manage healthcare throughout the year.
The right approach will depend on the company’s size, workforce, location, and financial circumstances. The starting point is understanding the spending before deciding how to respond to it.
Employee affordability belongs in that discussion from the beginning. Payroll contributions, deductibles, copays, prescription costs, and access to care all affect whether a plan works for the people it covers.
The right employee benefits advisor should welcome questions about who gets paid, how compensation works, what each part of the plan costs, and whether employees are benefiting from it. My team and I see employee advocacy as part of that responsibility, alongside helping employers understand and manage their budget.
Before accepting the next increase, look behind the premium, examine the contracts, and consider what happens when an employee actually needs care.
The goal is a sustainable healthcare budget and coverage employees can afford to use without unnecessary financial strain.
About Ken Wosczyna
Ken Wosczyna of EBA-1 is a healthcare strategist specializing in employer-sponsored health plans, utilization analytics, and sustainable cost control. Based in Stamford, Connecticut, he helps employers develop long-term healthcare strategies that improve affordability for employees while creating more predictable healthcare spending for businesses. Through data-driven analysis and multi-year planning, Ken works with organizations to reduce overspending and build sustainable health plans that better serve both employers and their workforce.
For additional perspectives on employer healthcare strategy, cost management, and industry trends, visit https://eba-1.com/ or subscribe to Ken’s LinkedIn newsletter, K.I.S.S. Healthcare 101 — Keep It Simple & Smart, Monthly Health Insurance at https://www.linkedin.com/build-relation/newsletter-follow?entityUrn=7249889392675155968
