3 Important Keys to Negotiating Benefit Renewals | Matthew Strain | Corporate Synergies

3 Critical Keys to Negotiating Benefit Renewals

By | Vice President, Senior Benefits Consultant | 11.6.2018

Negotiating benefit renewals with success: the ticket is planning all year long.

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Employee benefits are typically the second-highest expense for employers—right behind payroll. But unlike payroll, benefits are difficult to budget for each year because the upcoming annual renewal rate can feel like a mystery. Knowing what to do before and during the process of negotiating benefit renewals can increase your success.

Not knowing what the benefits renewal rate will be until the end of the plan year complicates the balance that employers must strike between offering a rich plan that employees appreciate at a cost the finance team can live with. It doesn’t have to be that way.

Knowing how to approach the annual renewal with health insurance carrier, pharmacy benefits manager (PBM) and other players can help the savvy employer save some money while maintaining the same level of benefits as before. The ticket is planning for the annual renewal all year long, which removes the mystery and leads to a predictable rate.

Here are three keys to negotiating the annual renewal with your carrier:

1. Create a good carrier relationship

A great way to gain control of what happens at the end of the benefit plan year is to set the tone from the beginning. This means outlining expectations before signing a contract and communicating wants and needs throughout the plan period.


A good carrier relationship can help you come to an agreement when negotiating benefit renewals.

Building good insurance carrier and PBM relationships extends beyond the insurers you’re currently working with to others in the market. One way to maintain a good relationship is to avoid marketing to all carriers for the best rate before each renewal period. Carriers spend time and money responding to requests for proposal (RFPs). If they respond year after year without winning the business, they may lose interest when you are ready to move your benefits.

2. Get plan renewals early.

Left unchecked, most insurance carriers hold the benefits renewal rate as long as possible (60-75 days before the end of a contract). But receiving your carrier’s initial renewal rate earlier gives you more time to evaluate the renewal and negotiate the rate. (Yes, it’s true—you don’t have to accept the first number the carrier offers.) The best way to ensure your request for an early benefits renewal rate is heard and followed is to discuss it before signing a contract.

By receiving your renewal rate approximately 120 days before the end of your contract, you have enough time to evaluate the rate together with your health and welfare benefits broker and underwriting team and then respond with another offer. And if you feel that another carrier can offer better rates, you can also market your benefits plan and still have time to switch insurance carriers before the contract ends.

3. Offer a fair and reasonable rate.

After you receive your annual benefits renewal rate, work with your internal team and your benefits broker to begin negotiations. Importantly, this doesn’t mean countering with a number so low that the carrier finds it untenable and unreasonable. In that case, the insurer may not meet your demand and you’ll be forced to turn to other carrier options without having planned for that possibility.

Instead, respond with a fair and reasonable rate increase backed by data. The goal is to counter offer with a number that creates stability and predictability for renewals in the future.

Learning your benefits renewal rate for each plan year can be stressful, but it doesn’t have to be. Negotiating benefit renewals by getting information early and maintaining good carrier relationships can help you create a better annual renewal with predictability and improved budgeting year after year.


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© 2018 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.


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    By: Matthew Strain

    Matt Strain is responsible for the design and coordination of the client’s health and welfare benefits program. In this critical role, he identifies the employer’s goals, objectives and service requirements and then unites the appropriate Corporate Synergies resources to execute the program. He works closely with the Director of Account Management to meet all client needs and to ensure that deliverables are attained as promised. He has a continuing presence on the client’s account as a relationship manager.

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