The Renewal Mistake Many Employers Make Every Year (And How to Avoid It)

Open enrollment is weeks away. If your benefits strategy is still in flux, you're not alone, but you are running out of time to make good decisions. That's not a scare tactic. It's just math.

Every year, employers across every industry and size segment arrive at renewal season with the same problem: not enough time to do anything other than accept or adjust (or panic). The conversations that should have happened in August get compressed into October. The options that require lead time to evaluate (alternative funding models, pharmacy carve-outs, point solutions, and even network changes) are suddenly off the table, and the window has closed.

Chris Cigarran, Chief Commercial Officer at Imagine360, put it plainly:

"As healthcare costs continue to rise, employers should look beyond traditional renewal discussions and ask a broader question: Which solution will deliver the greatest value for employees and the organization over time? The most common renewal mistake is simply waiting too long to start. Early planning creates more options, reduces avoidable stress, and allows organizations to make strategic decisions rather than rushed ones."

— Chris Cigarran, Chief Commercial Officer, Imagine360

It's hard to argue with that, especially right now.

The cost environment doesn't reward waiting

According to Mercer's 2025 National Survey of Employer-Sponsored Health Plans, the per-employee cost of employer-sponsored health insurance rose 6.0% in 2025, with employers projecting an average increase of 6.7% for 2026, which would be the largest annual increase in 15 years. PwC's Health Research Institute has since placed actual 2026 group medical cost trend at 9.0%, revising its earlier projection upward. And here's the number that should get every CFO's attention: employers who made no changes to their largest medical plan estimated their costs would rise by over 9%.

Healthcare inflation is structural, and waiting for rates to normalize is not a strategy.

What waiting too long can actually cost you

The damage from a late start shows up in a few predictable ways:

• Fewer options on the table. Alternative funding strategies, carrier changes, and vendor transitions all require time to model, implement, and communicate properly. A compressed timeline eliminates them before they're even evaluated.
• Reactive plan design instead of strategic design. When the clock is ticking, the default is to accept the incumbent's renewal number with minor adjustments.
• Employee experience takes a hit. Open enrollment communication, decision support tools, and benefits education all require lead time. A rushed open enrollment leads to confused employees making uninformed elections, and more calls to HR in January.
• Leadership alignment gaps. The CFO and CHRO often have different priorities at renewal time. Getting them aligned on tradeoffs (cost certainty vs. savings potential, plan richness vs. contribution strategy) takes time you don't have if you start in October.

What early planning actually looks like

A renewal that reflects genuine strategy starts 150 to 180 days before the effective date. That means mid-summer for January 1 groups. By the time Q4 arrives, heavy lifting should be done: cost drivers diagnosed, market alternatives evaluated, financial scenarios modeled, and a recommendation ready for leadership review.

Healthcare cost pressure isn't going away. Employers who treat renewal as a year-round strategic process will continue to pull ahead of those who treat it as a once-a-year transaction. The data is clear. The timing is urgent.

Start now. Even if "now" is later than you wanted.

Want to check your renewal readiness? Download our guide: The Renewal Readiness Framework | OneDigital

Ready to pressure-test your benefits strategy before open enrollment closes? Talk to a OneDigital consultant today.

Sources: Mercer 2025 National Survey of Employer-Sponsored Health Plans | PwC Health Research Institute, Medical Cost Trend: Behind the Numbers 2027