How do I lower my health insurance renewal without changing plans?

One move, cleaning up the list of who’s on the plan, lowers the renewal bill itself. Three moves lower what the company pays: taking premiums out of pay before tax, changing how much of the bill your people pay, and payroll tax savings worth up to $640 per enrolled employee per year. Your plan, carrier and broker stay put.

What sets a small-group premium?

By law, only five things set the price of a small-group plan. Four of the five things are facts about your group. The fifth thing is the plan you pick. Small-group coverage means health coverage for companies with 50 or fewer employees in most states, and up to 100 employees in a few states. HealthCare.gov (checked September 11, 2026) says:

“Under the health care law, insurance companies can account for only 5 things when setting premiums.”

Age, location, tobacco use, one person or a family, and the plan category set the price. HealthCare.gov’s premium page also says: “Your health, medical history, or sex can’t affect your premium.” Federal law (checked September 11, 2026) caps the age and tobacco factors: an older worker can cost up to three times a younger one, and a tobacco user up to 50% more.

So the renewal on your desk was priced off a census, the list of who’s on the plan, and the census is the first thing to check. Look for an employee who left in March, a dependent who aged out, and, in states that allow tobacco rating, a tobacco flag that stopped being true. Each stale entry is a line on the bill that shouldn’t be there. The location part of the price comes from where the company is based, so one employee moving doesn’t change the price. Checking the census takes an hour, and the census check is the one move that lowers the renewal number itself.

Does taking premiums out of pay before tax lower what the company pays?

Yes. Taking premiums out of pay before tax lowers what the company pays by the company’s share of Social Security and Medicare tax on the dollars employees contribute, up to 7.65%. The paperwork that lets employees pay their share of the premium before tax instead of after is called a premium-only plan, under Section 125 of the tax code. The IRS calls a premium-only plan a cafeteria plan (checked September 11, 2026) and says:

“Generally, qualified benefits under a cafeteria plan are not subject to FICA, FUTA, Medicare tax, or income tax withholding.”

Employees and the company both save. Employees stop paying income tax and their half of Social Security and Medicare on the premium they contribute. The company stops paying the company’s half of Social Security and Medicare on the premium dollars employees contribute, at the rates the IRS (Topic 751, reviewed January 20, 2026) sets: 6.2% for Social Security on wages up to $184,500 in 2026 and 1.45% for Medicare on all wages. The plan, the carrier and the premium don’t change. Look at a pay stub. If the health deduction comes out before tax, you already have a premium-only plan. If the health deduction comes out after tax, setting up a premium-only plan takes a written plan and a payroll setting.

Does changing the premium split lower the renewal?

Moving the split lowers what the company pays. Moving the split doesn’t lower the renewal. The plan costs the same, a bigger share of the plan moves onto paychecks, and your people see the change on the next check. KFF’s survey (October 22, 2025) put the worker’s share of family coverage at $6,850 a year across the employers KFF surveyed. Every percent of the premium you shift onto your people makes the worker’s share bigger. Moving the split is the easiest change on a spreadsheet and the change your people feel first. If you’re weighing a bigger change, we compare an ICHRA (you reimburse people for their own policies), a level-funded plan (a group plan priced off your claims) and a PEO (a company that shares employer duties with you). Read: Should I switch to an ICHRA, go level-funded, or join a PEO when my renewal goes up?

How much of a renewal increase can payroll tax savings offset?

Payroll tax savings offset up to $640 per enrolled employee per year, and the group plan stays as it is. SIMERP, a self-insured medical expense reimbursement plan your company sponsors, redirects payroll tax you already spend into real medical care for your team, and your employees and their families get that care with no copay, no deductible and no fee for service. SIMERP isn’t insurance and doesn’t replace your plan.

For a 40-person company where everyone enrolls, the payroll tax savings come to up to $25,600 a year set against the renewal increase. Insurers asked for a median 14% increase on 2027 small-group plans (KFF, via Healthcare Dive, August 7, 2026). On a $20,000-a-month plan, 14% is $33,600 a year, and $25,600 offsets about three quarters of the $33,600. If the plan costs $15,000 a month, the same 14% increase is $25,200 a year, and $25,600 offsets the whole increase. Whether your increase is offset in part or in full depends on two numbers, the plan’s monthly cost and the percentage on the renewal notice, and simerp.com/renewal puts the two numbers side by side.

Which renewal move comes first?

In this order, from the cheapest to do to the move that costs your people the most:

• Check the census this week. A census check takes an hour.
• Set up a premium-only plan next, if your pay stubs show the health deduction coming out after tax.
• Add SIMERP next, for the payroll tax savings. SIMERP is the only move that offsets part or all of the renewal increase without your people paying more, and the only move that gives your people medical care.
• Move the split last, and only for whatever part of the renewal increase the first three moves don’t offset, because moving the split is the move your people pay for.

If you want the numbers behind the 14% median increase insurers asked for, read: How much are small-group health insurance premiums going up for 2027?

References

• 42 U.S.C. §300gg, “Fair health insurance premiums,” Legal Information Institute, Cornell Law School, checked September 11, 2026. https://www.law.cornell.edu/uscode/text/42/300gg
• 45 CFR §147.102, “Fair health insurance premiums,” Legal Information Institute, Cornell Law School, checked September 11, 2026. https://www.law.cornell.edu/cfr/text/45/147.102
• HealthCare.gov (CMS), “How insurance companies set health premiums,” checked September 11, 2026. https://www.healthcare.gov/how-plans-set-your-premiums/
• Internal Revenue Service, “FAQs for government entities regarding cafeteria plans,” checked September 11, 2026. https://www.irs.gov/government-entities/federal-state-local-governments/faqs-for-government-entities-regarding-cafeteria-plans
• Internal Revenue Service, Topic no. 751, “Social Security and Medicare withholding rates,” page last reviewed January 20, 2026. https://www.irs.gov/taxtopics/tc751
• KFF, “Annual Family Premiums for Employer Coverage Rise 6% in 2025, Nearing $27,000, With Workers Paying $6,850 Toward Premiums Out of Their Paychecks,” October 22, 2025. https://www.kff.org/health-costs/annual-family-premiums-for-employer-coverage-rise-6-in-2025-nearing-27000-with-workers-paying-6850-toward-premiums-out-of-their-paychecks/
• Healthcare Dive, “Insurers want to hike small businesses’ premiums by 14% next year: KFF,” August 7, 2026. https://www.healthcaredive.com/news/small-business-health-insurance-premiums-2027-kff-rate-filings/827247/