As we enter 2025, employers are seeing some of the steepest health insurance renewal increases in recent years. At J. Krug, we are helping businesses across Chicagoland evaluate options, contain costs, and make strategic decisions to protect both their budgets and their employees.

 Renewal Increases by Carrier

Across our book of business since January 1, 2025, renewal increases have averaged 15.25% in the under 50 small group marketplace. Notably:

• Aetna – 19.54%: Employers with Aetna are facing some of the largest hikes, largely due to claims volatility and pharmacy expenses.
• BlueCross Blue Shield – 15.90%: While slightly below Aetna, BCBS renewals are still running well above trend, especially in mid-market groups.
• UnitedHealthcare – 12.76%: UHC has been somewhat more stable, but double-digit increases remain challenging for most employers.

These increases are well above the national market trend of 6-8%, highlighting how localized cost pressures are hitting Chicagoland groups harder then average. It’s also important to note that large, self-funded employers – who have more control over plan design and risk – help bring down the national average, masking the sharper rate hikes experienced in the fully-insured small group plans.

What’s Driving the Increases?

Several factors are fueling this environment:

• High claims utilization: As the cost and frequency of medical claims rise, insurers are raising premiums to stay ahead of future projections.
  Demographic shifts: An aging workforce often brings increased health needs, while changes in group size (whether growing or shrinking) can alter the risk pool.
• Escalating pharmacy costs: Specialty drugs, including GLP-1 medications used for weight management and diabetes, are significantly increasing overall spend.
• Market dynamics: As healthier groups opt for self-funded or level-funded arrangements, the remaining fully-insured pool skews higher risk, further driving up rates. 

Shifting Toward Level Funding

More employers are looking beyond traditional fully insured models and moving toward Level-Funded and Captive arrangements, which offer:

• Medically underwritten rates: By basing premiums on actual health data, groups with favorable demographics may secure lower costs than fully-insured carriers would allow.
• Potential refunds or credits: If claims run below projections, employers may receive money back at the end of the year instead of paying into a pooled system.
• Access to claims data: Employers gain insights into spending patterns, such as which services or medications are driving the most costs, and can respond proactively.
•  Opportunities for cost steering: With claims visibility, employers can guide employees toward lower-cost providers and services, such as urgent care instead of ER visits, or generic drug alternatives.
   

Employer Strategies

In response to rising costs, many businesses are adjusting their benefit structures:

• Adjusting plan design: Increasing deductibles and out-of-pocket maximums is a common way to offset premium increases, though it does shift more cost-sharing to employees.
• Adding supplemental benefits: Policies such as accident, hospital indemnity, and critical illness plans provide an extra financial safety net, helping employees handle unexpected medical events.
• Exploring HRAs and Med Gap plans: Health Reimbursement Arrangements (HRAs) and gap insurance plans can help offset the higher cost burden from increased deductibles, making coverage feel more affordable.
• Considering Captives or Self-Insured structures: These approaches provide greater flexibility and allow employers to pool risk differently, offering long-term control over their benefits programs.
   

Renewal & Open Enrollment Timeline

Employers should stay mindful of the key deadlines in the renewal process:

• Renewals released 60–90 days prior: This provides time to review options, evaluate alternative funding strategies, and prepare communication to employees.
• Underwriting takes 1–3 weeks: Depending on the time of year and complexity of the group, the underwriting process can extend, so starting early is crucial.
• Employee education is essential: Open enrollment meetings are the best opportunity to explain changes, highlight cost-containment strategies, and ensure employees understand the value of their benefits.

The Bottom Line: In today’s environment, employers can’t afford a “set it and forget it” approach to benefits. By evaluating level-funded options, leveraging claims data, and adjusting plan designs, businesses can navigate renewal challenges while still offering competitive benefits.

 At J. Krug, our team specializes in helping companies across Chicagoland find creative solutions to balance cost and care. Contact us today to explore customized renewal strategies for your team.