Want More Control Over Health Plan Costs? Start With Underwriting.

With a 9% increase in medical cost trend projected for 2026, HR teams are rethinking plan designs, and CFOs are bracing for the renewal conversation.

But underneath both of those reactions is a sometimes-overlooked layer that has an outsized influence on what your organization pays for medical coverage: underwriting.

Underwriting is the process of predicting your future claims based on past experience and turning that prediction into a price. The good news? Whether your plan is fully insured, the more you understand the levers, the more control you have over both cost and predictability.

5 Underwriting Levers and How to Use Them 

1. Align your funding approach and financial strategy.

For fully insured plans, underwriting is typically handled by the carrier, historically without a lot of visibility. Now, with 67% of employees enrolled in self-funded plan options as of 2025, underwriting is in the spotlight and providing greater pricing transparency across funding models.

Every funding approach – fully insured, level-funded, or self-funded – is a different answer to the same question: How much risk do we want to hold, and how much transparency and upside do we want in return? Fully insured often feels simpler and more predictable, but you can give up some visibility into claims and the chance to benefit when your plan performs better than expected. Level funded and self funded arrangements offer more control and the potential to keep unspent dollars, but require more comfort with variability and a clearer risk management strategy. 

2. Stay ahead of cost trends with year-round data. 

If you’re only checking in on plan performance once a year, you’re reacting. Year-round tracking allows you to steer.

In today’s environment, access to regular reports tracking utilization, claims, and pharmacy spend enables leaders to understand what’s driving risk profiles, spot emerging trends, and make strategic adjustments.  

Work with your benefits advisor, carriers, and vendors to create quarterly dashboards and projections that provide real-time visibility.

3. Refine plan designs to reshape risk.  

Underwriters don’t just look at how much your plan paid last year. They look at why. 

Deductibles, copays, contributions, and networks all influence who enrolls, how they use care, and what it costs. Rich plans with lower employee contributions can inadvertently attract dependents with higher health needs. Plans with no steerage to high value providers can end up paying hospital prices for care that could have been delivered in lower cost settings. 

On the flip side, designs that encourage primary care, chronic condition management, and use of high value networks can help bend your trend and improve how underwriters view your risk. 

Treat plan design as a strategic lever that supports both talent and risk. Talk with your benefits advisor about more than just cost implications. Explore how plan design affects who enrolls and how they use care – and the potential underwriting impacts.  

4. Stop treating pharmacy spend as a line item.  

Pharmacy used to be an addon in benefits discussions. Today, it's a leading driver of cost and underwriting outcomes.  

Pharmacy now accounts for roughly 24% of employer health spend, and that share is growing – driven largely by specialty drugs, GLP-1 medications, and oncology therapies. Just a few claims can drive a disproportionate share of your total spend and renewal outcome. 

Having a deliberate, transparent pharmacy strategy that allows you to explore options, such as formularies, GLP-1 coverage criteria, specialty drug pathways, and manufacturer assistance programs, can significantly affect how your risk is priced. 

5. Optimize your stop-loss policy as a strategic risk-management tool.  

If you're in a level-funded or self-funded plan, stop-loss insurance is what prevents a catastrophic claim from becoming a balance-sheet event. But not all stop-loss coverage is equal.  

The details of your coverage – attachment points, contract periods, and whether any high-risk individuals are “lasered” with higher deductibles – are all underwriting levers that shift risk between you and the stoploss carrier.  In addition, contract provisions such as no new lasers at renewal packaged with a rate cap can mitigate future risk.

 
You don’t need to become a stop-loss expert. Ask your benefits advisor to walk you through exactly what scenarios you're protected from and identify any potential gaps. 

The bottom line 

Underwriting isn't just actuarial math. It's one of the most impactful ways to take action on health plan costs. By monitoring your data and working closely with your advisor, you’ll be well-positioned to spot issues early, make adjustments, and reduce renewal surprises. 
 
This article includes input from Rusty Farris, Carla Hartsoe, and Juan Lamb, Managing Consultants at OneDigital. Collectively, Rusty, Carla, and Juan bring deep expertise in helping employers understand underwriting dynamics and leveraging datadriven strategies to manage health plan risk and cost.