Time to Review Employee Benefit Plans for 2027

As a seasoned health insurance executive, I am often asked to assist organizations in reviewing their benefit programs as costs climb, with the goal of ensuring financial sustainability while maintaining strong coverage.

What surprises most leadership teams is how early the process really needs to start. The decisions that will shape your 2027 benefit costs are already being influenced right now by contracts, renewals, vendor structures, and claims trends that lock in long before the next renewal cycle.

Waiting until summer of 2026 is often too late. By then, most of the levers that control cost and risk are already set.

Here are five areas where organizations consistently find the most opportunity when they start early and review their plans strategically.

1. Pharmacy Expenses

Prescription drug costs are now the fastest-growing line item in most employer health plans, and they are often the least understood.

Many plans are tied to pharmacy benefit managers (PBMs) whose revenue is built on spread pricing, rebates, and opaque contracts. Employers may see discounts on paper, but those numbers often hide inflated baseline prices and fees buried inside the system.

A proper pharmacy review looks at:

• Actual net drug costs, not just rebate totals

• Formulary design and clinical appropriateness

• Specialty drug management and site-of-care programs

• Contract language that determines who keeps the savings

For many organizations, pharmacy alone can represent 20–30% of total health plan spends. Even modest improvements here can have a significant financial impact.

2. Administration Expenses

Most employers focus on claims costs but overlook the layers of administrative fees quietly accumulating in their plans.

These include:

• Third-party administrator (TPA) fees

• Network access fees

• Care management and disease management programs

• Data, reporting, and compliance charges

Over time, plans often accumulate services that were added for a specific reason but never reevaluated. Some remain valuable. Others no longer deliver meaningful return.

A detailed audit frequently reveals overlapping services, outdated contracts, or pricing structures that no longer reflect current market rates. Eliminating waste here does not reduce benefits or employee experience, it simply removes unnecessary cost.

3. Shifting of Risk

How risk is carried in your plan is one of the biggest drivers of long-term cost stability.

Fully insured plans transfer risk to the carrier but often come with higher premiums and limited transparency. Self-funded and level-funded models allow employers to retain more control, gain visibility into claims, and participate in savings when claims run well.

The right structure depends on:

• Workforce size and demographics

• Claims volatility

• Cash flow tolerance

• Long-term financial strategy

Many organizations remain in legacy funding models simply because “that’s how it’s always been.” A thoughtful risk analysis can reveal whether there is an opportunity to reduce premiums while still protecting the organization from catastrophic exposure.

4. Stop-Loss and Large-Claim Protection

For employers that carry risk, stop-loss coverage is the safety net. But not all stop-loss policies are created equal.

Poorly structured stop-loss can:

• Exclude critical diagnoses

• Limit coverage for ongoing high-cost claimants

• Create renewal spikes after large claims

A proactive review ensures the coverage matches the organization’s true risk profile and that contract terms prevent future surprises. This is one of the most overlooked areas and one of the most financially impactful.

5. Claims Data and Utilization Trends

You cannot manage what you cannot see.

Access to clear, usable claims data allows leadership teams to understand:

• Where healthcare dollars are actually going

• Which conditions are driving cost

• Whether care is being delivered in the most cost-effective settings

This data becomes the foundation for smarter plan design, targeted wellness programs, and negotiations with vendors. Without it, decisions are based on assumptions rather than facts.

Why Starting Now Matters

The organizations that control benefit costs over time are the ones that start early, ask hard questions, and structure their plans intentionally.

Reviewing your employee benefits for 2027 is not just about next year’s renewal—it is about building a system that protects your workforce while keeping your business financially healthy for years to come.

The earlier this work begins, the more options you have.

If benefit costs are rising faster than your business can comfortably absorb, now is exactly the right time to take a closer look.