2026 renewals are breaking records: what employers must know (and do) now

2026 is shaping up to be one of the toughest renewal seasons in recent memory. For employers, double-digit healthcare cost increases aren’t just another budget line item. They’re cutting into profits, forcing difficult tradeoffs, and in some cases threatening long-term viability.

For HR leaders, renewal season has become a balancing act between protecting the bottom line and protecting employees from rising out-of-pocket costs. And for employees, higher premiums and narrower networks mean delayed care, financial strain, and worsening health outcomes.

In a recent webinar, Bryan Davis (National Practice Leader at Nava Benefits), Colleen Locke (Benefits Solutions Director at Nava Benefits), and Brandon Young (CMO at Garner Health) unpacked what’s driving the surge, why the old playbook no longer works, and the strategies employers can use to take back control.

Why are 2026 renewals hitting employers so hard?

The short answer: cost trends are breaking records. Medical trend was expected around 9%, but real-world numbers are closer to 10–11%, and more employers than ever are seeing renewals over 15%.

Brandon Young called it an “existential crisis” for many organizations, with health plan costs starting to eclipse profits. For employers, this forces difficult decisions that pit financial realities against the desire to provide high-quality, affordable coverage for employees. Every renewal season becomes a balancing act: protecting the bottom line while also safeguarding employee health, satisfaction, and retention.

What’s driving healthcare costs higher than ever before?

It isn’t one villain. It’s several powerful forces hitting at once. Pharmacy trend (especially GLP-1s and other specialty therapies) is surging, the size and severity of claims are climbing, America is getting older (and sicker), deferred care is converting into catastrophic episodes, and years of consolidation have concentrated pricing power.

The net effect: higher unit prices + higher risk and a renewal season where employers are forced into tradeoffs between budget reality and their commitment to great care.

Pharmacy spend is surging

GLP-1s alone now account for about 21% of employer pharmacy spend, and weight-loss coverage decisions are a major driver of renewal math. More broadly, specialty drugs consume ~50% of total drug spend even though only ~1–2% of patients use them, meaning a small slice of utilization can move the whole budget.

High-cost claimants are multiplying

Million-dollar claims are growing faster than plan budgets. In Sun Life’s latest high-cost claims analysis, $1M+ claims rose 29% year over year, with a record number of $3M+ claims and a single-member high of $12.7M, all of which can swing a mid-market employer’s renewal on their own.

An aging population is shifting demand upward

The U.S. is crossing a demographic threshold: by 2030, roughly 1 in 5 Americans will be 65+. As older adults consume more (and more complex) care, pressure on hospitals and specialists flows through into employer premiums.

Delayed care is turning into severity (and cost)

Cost and access barriers are pushing people to wait, then show up sicker. About one-third (36%) of adults say they skipped or postponed needed care due to cost in the last year, and 18% report their health got worse after delaying care. That’s tomorrow’s high-severity, high-cost claims.

Market consolidation concentrates pricing power

Decades of hospital mergers and vertical integration (hospitals acquiring physician practices) have raised prices without consistent quality gains. Evidence shows hospital consolidation is linked to meaningfully higher prices. In highly concentrated markets, vertical integration can significantly drive up costs, raising marketplace premiums by around 12%, specialist service prices by 9%, and primary care prices by 5%, according to a Health Affairs analysis of California markets.

At the same time, a few insurer-owned pharmacy benefit managers (PBMs) control most of the drug benefit, drawing scrutiny for practices that can push drug costs up.

Why isn’t the old renewal playbook working anymore?

For decades, employers and benefits brokers had a familiar set of moves to manage renewal increases. But in today’s hardening market, each of those tactics is falling flat.

1. Carrier shopping

The old move: Take a steep renewal from one carrier and shop it to another, hoping competition would drive rates down.

Why it doesn’t work now: Carriers are de-risking their books, intentionally pricing out groups they consider high risk. If Aetna gives you a 40% increase, UnitedHealthcare is unlikely to swoop in with relief, because they’re using the same risk strategies. The result: less leverage, fewer options.

2. Aggressive negotiation

The old move: Push hard on the carrier, demand concessions, or “yell louder” in hopes of clawing back a few points.

Why it doesn’t work now: In a hard market, carriers are dug in. They’re strategically raising rates across the board and won’t budge just because an employer or broker pushes harder. Simply put, there’s no room to negotiate when the business model has shifted.

3. Cost-shifting to employees

The old move: Raise deductibles, increase employee contributions, or reduce coverage to offset rising premiums.

Why it doesn’t work now: Employees are already under strain from inflation and stagnant wages. More cost-shifting leads to frustration, reduced engagement, and in many cases, delayed care that comes back as higher-cost claims later. The strategy isn’t sustainable for attraction, retention, or long-term cost control.

How employers can take back control this renewal season

You may not be able to avoid big renewal numbers in 2026, but you’re not powerless. Employers still have levers they can pull to regain a measure of control. The key is to shift focus away from chasing short-term fixes and instead invest in smarter decision-making frameworks that balance financial realities with employee satisfaction.

The panel emphasized three steps: know your numbers, know your priorities, and know your options.

• Know your numbers: Understand workforce demographics, claims drivers, and benchmarking. Data clarity empowers strategic decision-making.
• Know your priorities: Every employer must balance cost, employee satisfaction, disruption tolerance, and organizational bandwidth. Aligning leadership early prevents missteps.
• Know your options: Beyond plan design tweaks, a menu of innovative strategies is available:
  • Self-funding and level funding
  • Care navigation and provider steerage (e.g., Garner Health)
  • Variable copay plans (e.g., UHC’s Surest)
  • Reference-based pricing (RBP)
  • Individual Coverage HRAs (ICHRAs)

What priorities should guide your renewal strategy?

When renewals bring double-digit increases, every employer faces tough tradeoffs. You can’t maximize every lever at once, so clarity on your true priorities is what helps you make decisions with confidence. The panel highlighted five dimensions worth aligning on early with HR, Finance, and leadership:

1. Costs

Do you have a target budget you simply cannot exceed? For some employers, containing spend is the top priority, even if it means introducing change or disruption elsewhere. Setting a clear budget anchor helps frame what’s realistic as you weigh plan options.

2. Benefits quality

How important is it for your program to stand out against peers? Some organizations want their benefits to be a differentiator in recruiting and retention. Others may focus on closing specific gaps, like fertility, behavioral health, or caregiving, where employee needs are most acute.

3. Bandwidth

Even the best strategy fails without the operational capacity to execute. HR and Finance leaders need to be honest about how much change they can realistically take on this year. Adding a new vendor or shifting funding models may be smart financially, but only if the team has the bandwidth to implement smoothly.

4. Employee satisfaction

What are employees actually saying about their benefits? Listening to feedback, whether through surveys, focus groups, or HR conversations, helps clarify what’s working, what’s missing, and what pain points would make employees most receptive to change.

5. Employee Disruption

How attached are employees to their current benefits, and how do they typically respond to change? A workforce that’s been through multiple plan overhauls in recent years may have little tolerance for disruption. On the other hand, a team that’s frustrated with the status quo may be ready to embrace something new.

Bottom line: Every employer is balancing the same five levers: cost, quality, bandwidth, satisfaction, and disruption. The organizations best prepared for 2026 renewals will already know where they can flex and where they need to hold firm.

Why the right broker partnership matters more than ever

In a renewal season this challenging, the difference between just surviving and strategically navigating costs often comes down to your broker. The old playbook is no longer enough, and neither is a broker who simply shops carriers and passes along renewal numbers.

What employers need now is a true consultant:

• Someone who digs into your data and helps you understand what’s really driving your costs.
• Someone who will surface creative, out-of-the-box solutions, from self-funding strategies to navigation tools to alternative plan designs.
• Someone who partners with you year-round, not just during renewal season, to monitor trends, identify risks early, and adjust strategy before surprises hit.
• Someone who can balance financial realities with employee experience, so you’re not forced into short-term fixes that backfire down the road.

Bottom line: Partnering with a broker who acts like a co-strategist and who stays engaged all year long is one of the most important levers employers have to regain control in 2026 and beyond.