Your Renewal is a Negotiation

Every health insurance renewal season, I watch the same thing happen. The anniversary date hits, a rate lands in someone's inbox, and it gets signed because fighting it feels like more trouble than it's worth. That's not a renewal decision. That's an autopilot decision, and it's exactly what your PEO is counting on.

Here's the reality: your PEO isn't renewing anything. They're requoting you. They're rerunning your claims history, accounting for new hires and terminated employees, and adjusting their margin based on where their book of business sits today. If you're not doing the same work in reverse, you're negotiating with one hand tied behind your back.

Start the clock at 90 days, not 30

This is the single biggest lever in you have, and it costs nothing to pull. Even if you have no intention on leaving your PEO it's best practice to benchmark your setup once a year. A RFP process, collecting quotes, normalizing them, and negotiating on your terms, takes 4-6 six week . Wait until 30 days out and your PEO already knows you don't have time to leave. The number they hand you reflects that.

At the 90 day mark, collect the below items to have your broker or point person at the The broker would realistically be on top of this already.

• The most up to date dependent level census
• The most recent invoice
• Health insurance plan designs

From here, ask your broker to go to market to 2-3 PEO's that they would recommend. Alternatively, you can also reach out directly to PEO's but this would be extremely time consuming so we always recommend using the services of a no-cost broker. If you don't already have one than feel free to reach out to us and we can assist.

The cost of never shopping your account

Companies that renew without ever benchmarking against the market typically pay somewhere in the range of 6- 9 percent more in total PEO spend than companies that run a parallel process every year. I've seen this play out directly: a 40 employee group saved close to half a million dollars the first time they actually put their renewal out to bid after 3 years of just accepting the increase.

The logic is simple. Your PEO prices you based on how likely they think you are to leave. If you've never shopped around, that number is low, and your renewal reflects it. Running a real RFP, even if you end up staying put, changes that math. The PEO  now knows there are real numbers on the table from someone else, and that opens the door to negotiate admin fees, free months of admin fees or workers comp premiums.

Three conversations to have before you sign anything

1. Your current PEO. Keep it short: you're evaluating options for the upcoming renewal, you want preliminary numbers by a specific date, and you'll be running a parallel process. No apology needed.
2. At least two alternatives. Three if you can manage it. Make sure every proposal uses the same census, same effective date, and same plan design assumptions, otherwise you're comparing numbers that don't actually mean anything next to each other.
3. Yourself. Decide ahead of time what actually moves you. If your incumbent PEO Ematches the lowest bid, does that settle it, or are there service problems and tech gaps that price alone won't fix? Figure this out before the deadline pressure hits, not during it.

What winning looks like

It's not always the lowest number. Sometimes the win is switching to a provider running 12 percent cheaper. Sometimes it's staying with your current PEO at a 4 percent bump instead of the 9 percent they opened with. Either way, the difference is that they had to earn it instead of assuming they already had it.