Before You Accept Your Employee Benefits Renewal: What the Numbers Should Tell You
An employee benefits renewal can arrive as a deceptively simple document: current rates, proposed rates and a percentage change that quickly becomes the centre of attention.
That percentage matters. But it is only the beginning of the conversation.
A well-prepared renewal can tell an organization where costs are emerging, which parts of the plan employees rely on, where coverage may be falling short and whether the current arrangement is still delivering good value. It can also reveal what the organization needs to investigate before making changes.
This is especially important as Canadian employers balance financial pressure with growing demand for meaningful health support. In WTW’s 2025 Canadian Benefits Trends Survey, 73% of employers identified rising benefit costs as a leading influence on their benefits strategy. More than half planned to reallocate or rebalance spending over the following three years.
The goal, then, is not simply to reduce the renewal increase. It is to understand it well enough to make a deliberate decision.
Start with the story behind the increase
A renewal should explain more than the amount the insurer proposes to charge. Employers should be able to see what contributed to the result.
Depending on the size and financial arrangement of the plan, the calculation may reflect the organization’s own claims experience, broader insurer trends, changes in the age or composition of the workforce, inflation, utilization, pooling charges and insurer expenses. Dental fees, paramedical use, prescription drugs and disability experience can move in different directions.
Ask your advisor to separate those factors. A 12% increase driven mainly by a temporary spike in dental claims calls for a different response than the same increase driven by a sustained rise in specialty-drug spending or long-term disability risk.
Useful questions include:
Which benefits contributed most to the increase?
How much reflects our claims, and how much reflects general pricing assumptions?
Were there one-time claims or changes likely to continue?
How do the insurer’s trend assumptions compare with current market experience?
Have the plan’s demographics or participation levels changed?
If the answers are unclear, the organization does not yet have enough information to approve the renewal confidently.
Look beyond total claims
Aggregate claims can hide important patterns. Review the categories underneath the total and compare them over several years where credible data is available.
For health benefits, consider the types of prescription drugs being used, the role of high-cost medications and whether drug-management provisions are working as intended. For paramedical services, look at both utilization and maximums. Heavy use can indicate that employees value the benefit; it can also show that current limits are being reached before treatment is complete.
Disability deserves its own discussion. Examine incidence, duration and recurring causes where the group is large enough to protect employee privacy. A rising disability cost may point toward opportunities in early intervention, manager training, workplace accommodation or mental-health support. Treating it solely as an insurance-pricing issue can miss the underlying organizational risk.
The 2025 Benefits Canada Healthcare Survey found growing concern about plan sustainability while also confirming how highly members and sponsors value health benefits. That tension is exactly why broad reductions can be counterproductive. An organization needs to know what it is changing and whose needs will be affected.
Consider what low utilization may be telling you
Low use does not automatically mean a benefit lacks value.
Employees may be unaware of the coverage, uncertain about eligibility or unable to navigate the claims process. A virtual-care service may overlap with another program. An employee assistance program may be difficult to find when someone needs it. A benefit may have been added years ago but rarely communicated since.
Before eliminating an underused service, ask:
Do employees know it exists?
Is it easy to access?
Does it duplicate another benefit?
Have employees said they value it?
Would better communication improve its use?
This review can uncover savings without weakening the plan. It may also identify benefits that deserve stronger promotion rather than removal.
Review the insurer and vendors, too
Plan design is only one part of value. Renewal season is also a good time to review service.
Consider the accuracy and speed of administration, employee support, reporting quality, digital tools, disability-management practices and the insurer’s ability to explain emerging risks. If the plan includes virtual care, an EAP, navigation support or wellness platforms, look at vendor performance and employee experience rather than simply confirming that the services remain available.
WTW found that 64% of surveyed Canadian employers planned to address high costs by enhancing value or moving to better-value vendors across health, retirement and risk benefits. A competitive market review can be useful, but switching insurers solely to secure an attractive first-year rate may create disruption without solving the underlying cost drivers. Compare like with like, including contracts, pooling arrangements, service commitments and renewal methodology.
Bring HR and Finance into the same conversation
HR often sees how benefits affect employees. Finance sees cost, volatility and budget risk. A stronger renewal decision uses both perspectives.
Together, the two functions can agree on a small set of objectives before evaluating options. The organization may want to keep year-over-year costs within a sustainable range, protect coverage for serious health events, address a known workforce need or simplify an overly complicated plan. Clear priorities make trade-offs easier to assess.
This also changes the quality of the conversation with the advisor. Instead of asking only, “Can you negotiate a better rate?” the organization can ask, “Which option best supports our priorities, and what are the financial and employee consequences?”
Make changes with purpose
There are many possible responses to a difficult renewal: negotiate pricing, adjust cost sharing, change deductibles or maximums, introduce plan-management controls, revise funding or move spending from a lower-value area to a higher-priority need.
Every option affects employees differently. Before making a change, model the savings, identify who will feel the impact and decide how the change will be communicated. A modest adjustment that employees understand can be better received than an unexplained reduction that appears arbitrary.
The renewal is one of the best opportunities employers have to examine whether their benefits plan remains financially sustainable and useful to the people it serves. The headline rate deserves attention. The information behind it deserves even more.
If your organization is preparing for a benefits renewal, Aria Benefits can help you interpret the numbers, evaluate the options and make a decision that reflects both your business priorities and your employees’ needs.
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