If your health insurance renewal came in higher than expected this year, you’re not alone.

Small businesses across California are facing continued increases in health insurance premiums. KFF says employers’ premium increases are averaging between six and 10 percent this year. A few businesses have experienced hikes of as much as 32%. Looking ahead, PwC said in mid-June that medical costs will increase employer market prices by nine percent next year, with an expected 8.5% increase in the individual market. That leaves employers asking some difficult questions:

• Do we need to reduce benefits?
• Should employees pay a larger share of the cost?
• Can we still offer competitive coverage without blowing up the budget?

The good news is that cutting benefits isn’t your only option. With the right benefits strategy, many businesses can absorb health insurance premium increases while continuing to offer valuable coverage to employees. Programs like CaliforniaChoice are designed to help employers balance cost control, employee choice, and predictable budgeting — even during periods of rising health care costs.

Why Are Health Insurance Costs Rising for Small Businesses?

Health care costs have been increasing for years, driven by factors such as:

• Higher medical provider costs
• Increased utilization of health services
• Rising prescription drug expenses
• New technologies and treatments
• Inflation across the health care industry

For small businesses, these increases can put pressure on operating budgets and make annual renewals feel increasingly unpredictable. But before you consider reducing benefits, it’s worth exploring ways you can maintain coverage while managing costs more effectively.

Work With an Employee Benefits Broker

One of the smartest first steps is working with an employee benefits broker. A knowledgeable broker can help you:

• Compare plans and carriers
• Evaluate contribution strategies
• Identify cost-saving opportunities
• Review alternative funding options
• Ensure your benefits remain competitive

Best of all, working with a broker typically doesn’t increase your costs. In many cases, it helps employers uncover savings opportunities they may have missed on their own.

How a Defined Contribution Strategy Lets You Lock Your Benefits Budget

One of the most effective ways to manage rising health insurance costs is through a Defined Contribution approach. Rather than absorbing whatever premium increases occur each year, you decide how much your business will contribute toward employee benefits.

With CaliforniaChoice, employers can contribute:

• A fixed percentage of premiums
• Toward all plans or a specific plan
• Toward a specific benefit level
• Toward the lowest-cost plan available

Employees then apply that contribution toward the health plan they prefer. If they choose a plan that costs more than your contribution, they simply pay the difference. This approach creates greater budget predictability because you determine your contribution strategy, rather than allowing premium increases to dictate your spending.

The 12-Month Rate Lock: Eliminating Mid-Year Premium Surprises

One of the biggest concerns employers have is uncertainty. Even after budgeting for benefits, unexpected rate increases can disrupt financial planning. That’s why CaliforniaChoice includes a 12-month rate lock. Once your rates are established, they’re locked for the entire plan year.

That means:

• No mid-year premium surprises
• More predictable budgeting
• Better financial planning
• Greater confidence in your benefits strategy

For many small businesses, this stability is just as valuable as the coverage itself.

How Offering More Plan Choices Can Cost Less Than Cutting Benefits

When premiums rise, many employers assume they need to reduce plan options. In reality, offering more choice can often create better outcomes. CaliforniaChoice gives employees access to multiple health plans and more than 100 coverage options. The CaliforniaChoice portfolio includes:

• Anthem Blue Cross
• Health Net
• Kaiser Permanente
• Sharp Health Plan
• Sutter Health Plan
• UnitedHealthcare
• Western Health Advantage

Employees can choose from HMO, PPO, and HSA-qualified plans based on their individual needs and budgets. That flexibility often helps employees find coverage that works for them without requiring employers to increase spending dramatically.

Should Small Businesses Offer HSA-Qualified Plans?

Another strategy for managing health insurance costs is offering High-Deductible Health Plans (HDHPs) paired with Health Savings Accounts (HSAs). These plans often have lower premiums while giving employees a way to save for future health care expenses.

HSAs offer several advantages:

• Tax-deductible contributions
• Tax-free growth
• Tax-free withdrawals for qualified medical expenses
• Funds roll over year after year
• Employees own and keep the account

For employees who want lower premiums and greater financial flexibility, HSA-qualified plans can be an attractive option.

One Bill, One Platform: How CaliforniaChoice Simplifies Benefits Administration

Managing benefits shouldn’t create additional work for you. CaliforniaChoice helps simplify administration by consolidating multiple health plan options into a single program. Instead of managing separate carrier invoices and portals, employers receive:

• One monthly bill
• One enrollment process
• One online administration platform
• One source for benefits management

Whether you have one employee or 100, benefits administration remains streamlined and easy to manage. That’s less time spent on paperwork and more time focused on running your business.

How to Get More Value From Your Benefits Package Without Increasing Costs

CaliforniaChoice also helps employers maximize value through additional benefits and services like:

• Dental insurance
• Vision coverage
• Chiropractic and Acupuncture benefits
• Life and AD&D insurance

Employers and employees can also access value-added programs through the Business Solutions Suite and Member Value Suite, including:

• Flexible Spending Accounts (FSAs)
• Premium Only Plans (POPs)
• Cal-COBRA administration
• Pet insurance discounts
• Prescription savings programs
• Hearing and vision discounts
• Travel and entertainment savings
• Fitness and wellness discounts

These programs help employers enhance their benefits package without adding costs.

Rising Costs Don’t Have to Mean Fewer Benefits

Health insurance premiums may continue to rise, but reducing benefits isn’t the only solution. A combination of Defined Contribution, employee choice, HSA-qualified plans, simplified administration, and a 12-month rate lock from CaliforniaChoice can help businesses manage costs while continuing to offer attractive benefits.

Your employee benefits broker can help you evaluate strategies for managing health insurance premium increases while maintaining a strong benefits package for employees. If you don’t have a broker, we make it easy to search for one at MyCalChoice.com.