Employee Benefits Renewal: Cut Costs with Claims Data

Claims data can turn an employee benefits plan renewal from a cost increase into a cost-saving opportunity. By analyzing prescription, disability, and absence reports, employers can see where money is being spent and where changes can control premiums.

Instead of accepting new rates at face value, we help Alberta municipalities and small businesses use claims data to negotiate better premiums, adjust coverage to reflect needs, and invest in programs that reduce future costs. We’ll show you exactly how we do this!

Key Takeaways

Here’s what every Alberta employer should know before their next renewal:

Claims data = leverage for lower costs and smarter renewals
Prescription drugs are the biggest driver; track high-cost meds and patent expiries
Disability and absence data reveal hidden costs, especially for mental health
Demographics matter; multi-gen workplaces need balanced coverage
Flexibility wins; HSAs and WSAs can boost satisfaction without raising costs

Employee Benefits Renewal: What Drives Up Your Costs

Overall, health benefits costs in Canada are expected to rise by 7.4% in 2025. By digging into claims data and identifying cost drivers, you can leverage claims experience to negotiate better rates and make data-backed changes that reduce long-term costs.

These are the main cost drivers shaping renewal rates:

Claims Experience

Insurers set renewal rates based on how much employees used the plan in the past year. For example, if prescription drug claims or disability payouts were higher than expected, premiums go up.

Prescription Drug Inflation

Prescription drugs are the most significant cost driver in benefits plans for small businesses and Alberta municipalities. Employer drug plan expenditures have grown at a compound annual rate of ~7.1% since 2018, with drug costs alone jumping 14.1% in recent years.

And yes, we know you have questions about meds like Ozempic and Wegovy. Keep reading for some info that will help you manage those costs.

Demographics

Older employees with dependents increase prescription and disability costs, while younger staff push for mental health and wellness coverage. In Alberta municipalities, it is common to find competing demands across multiple generations in the workplace.

Utilization Patterns

Sometimes premiums rise because employees aren’t using benefits effectively. Claims data reveals whether certain benefits are underutilized, so employers can redesign plans to match actual needs.

Prescription Drug Claims: The #1 Cost Driver in Renewals

According to Aon, drug plans make up 59% of the cost of extended health plans, and these costs are likely to increase between 6% and 9% this year.

Newer medications like Ozempic and Wegovy for diabetes and weight management, or fertility treatments, are becoming increasingly common in benefit plans. While these drugs can make a real difference for employees, their popularity comes with a steep price tag.

This is where claims data and timing matter. Detailed reports can reveal:

High-cost claimants – A small number of employees using expensive drugs may drive a disproportionate share of prescription costs. Tracking these claims helps employers and insurers explore options like pooling protection to stabilize rates.
Chronic condition trends – Claims often identify rising cases of conditions such as diabetes or heart disease, pointing to opportunities for preventive health and wellness programs.
Emerging drug pressures – New treatments (e.g., semaglutides, fertility meds) can dramatically shift costs as usage grows. Understanding their benefits is key to balancing employee support with sustainable budgets.
Patent expiry opportunities – Brand-name drugs are most expensive while under patent. Once generics or biosimilars hit the market, costs can drop by 25%. Employers who monitor their claims data can plan for these shifts and negotiate smarter renewal terms.

Disability and Absence Data: The Hidden Cost Driver

While drug claims usually get the most attention during renewal, disability and absence data can quietly drain budgets if they’re not reviewed. In fact, disability claims are now one of the fastest-growing areas of group benefits costs in Canada, with mental health–related leaves leading the increase. According to Sun Life, almost 40% of disability claims are tied to mental health conditions.

Analyzing disability and absence data gives employers a window into the real health of their workforce:

Mental health trends – Rising short-term disability claims for anxiety, depression, and stress-related conditions signal a need for better mental health coverage, EAPs, or additional HR support for proven employee-focused programs.
Musculoskeletal injuries – Common in physical or frontline roles, back and joint issues can cause recurring absences. Data helps employers target preventive programs such as ergonomics or physiotherapy.
Chronic or recurrent claims – Employees with repeat absences or long-term claims may need earlier interventions, accommodation, or support programs.
Union and non-union differences – In Alberta municipalities, unionized and non-unionized employees may have different claims and absence patterns because of their work and negotiated benefits. If these aren’t identified, employers risk plan designs that don’t match real usage, leading to higher renewal costs and potential inequities between groups.

When this data is ignored, employers pay higher premiums year after year without addressing the root causes. But when used strategically, it can justify wellness investments with real ROI, like improved employee mental health support, absence management programs, or preventive care that keeps employees working longer and healthier.

Our Step-by-Step Approach to a Better Renewal

We dig deep into your claims data, challenge assumptions, and design a plan that controls costs and supports your employees. Here’s how we do it:

1. Collect the Right Data

Most renewal packages only show top-line costs. We go further by requesting detailed reports on drug claims, disability and absence trends, demographics, and utilization. Because we know what to ask for, we give you the full picture, not just what the insurer wants you to see.

2. Find the Real Cost Drivers

Instead of accepting “your premiums are going up 15%,” we break down the data to uncover why. We benchmark your results against similar organizations so you know if the insurer’s math is fair and that they are pricing comparable benefits.

3. Listen to Your Employees

Claims show where the money is going, but only your team can tell us if the coverage matches their needs. We run short surveys or focus groups to connect the numbers with what employees value. That way, changes are based on evidence, not guesswork.

4. Pressure-Test the Renewal Quote

Renewal quotes are built on assumptions, but we don’t take them at face value. We scrutinize drug trend projections, pooling charges, and admin fees, pushing back when the math doesn’t add up. This process often saves our clients thousands of dollars.

For organizations with 75 to 100+ employees, reviewing health and dental claims experience can uncover even more savings. If claims have been stable, we often renegotiate insurance contracts with carriers to cut unnecessary administration fees.

5. Redesign for Value

Instead of accepting a more expensive version of the same plan, we rebalance coverage based on the insights. We may also recommend more flexibility and savings through a Health Spending Account (HSA) or Wellness Spending Account (WSA).

For example, when we helped a client switch carriers from fully insured to a self-insured model with drug pooling, they received more than $75,000 back in claims reserves and cut administration fees.

6. Roll Out and Communicate

We don’t stop at plan design. We provide communication toolkits, manager talking points, and employee-friendly guides to help your team understand and use their benefits effectively.

Your Benefits Renewal Done Right

On your own, benefits renewal feels like an annual cost increase you can’t control.

With us, you get detailed insights and an effective renewal strategy. And the best part is that our renewal reviews are completely free. You don’t pay us until you have a plan you truly love.

Here’s what we bring to the table: