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Small Business Health Insurance Renewals in 2027: What a 14% Increase Means for Your Team
Insurers are asking for a median 14% increase on small-group plans for 2027. Here is how to read your renewal, which options to price, and how to tell employees without losing them.
- (Author)
- Esther Mwangi
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- 7 min
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- Hiring
In this guide 9 sections
Insurers have asked for a median 14% increase on small-group health plans for 2027. Your renewal may differ, because rates are still under state review. Start talking to your broker about 90 days before renewal, ask what is driving your rate, and price at least three alternatives.
This guide is for owners and managers who offer health insurance to a small team and want to keep it without a budget shock. It covers what the numbers say, how to read your renewal letter, the main options and how to tell employees. Emazoo covers how businesses run day to day, and benefits cost is one of the biggest line items a small employer faces.
What the 2027 Numbers Say
The Kaiser Family Foundation (KFF) analyzed preliminary rate filings from nearly 300 insurers in all 50 states and Washington, D.C. Healthcare Dive's report on the KFF analysis puts the median request at 14%, up from 11% for 2026. Most insurers asked for 10% to 20%, and six asked for more than 30%.
Insurers point to higher hospital and physician prices, more use of care and expensive specialty drugs. GLP-1 weight-loss and diabetes drugs are a major factor. Some insurers are dropping anti-obesity coverage, but KFF found spending still rose as more people with diabetes used the drugs.
These are requests, not final rates. State regulators review the filings, and some trim them. KFF also notes the 14% figure is a median across insurers that is not weighted by how many people each one covers. Treat it as a planning number, not a quote.
Why Your Renewal May Not Match the Headline
Your rate depends on two things: the market pool your carrier prices from, and your own group's claims. A company with a few heavy users can see a bigger jump than the median. A company with a young, healthy team may see less.
Ask your broker which one is driving your increase. That answer decides whether switching carriers helps. If the rise reflects the whole market, a new carrier will likely quote something similar. If it reflects your group, a different structure may do better.
Group size also matters, and so does the state. Only 51% of firms with fewer than 25 workers offered insurance last year, compared with 97% of firms with 200 or more workers, according to Healthcare Dive. Small firms have fewer choices and less leverage, which is why preparation matters.
When Should You Start Working on Your Renewal?
Start about 90 days before your renewal date. That timing comes from the benefits firm OneDigital, which recommends talking to your broker 90 days out, not 30. Renewal letters often arrive in the fall for plans that start in January.
On the first call, ask for three things. Ask for your claims and utilization data, ask why the rate is rising, and ask for alternatives to model. Write the answers down, because you will compare them later.
If your renewal letter has already arrived, you can still act. Ask whether the carrier will hold the rate for a different plan design, and ask for a second quote on the same plan from another carrier. A broker who cannot produce both is not doing the job.
Questions to put to your broker
Bring this list to the first call and write down each answer.
- What share of my increase comes from my group's claims, and what share from the market?
- Which three plan designs would you price, and what would each save?
- Would you quote a level-funded plan, and what does a bad claims year cost?
- Does my group qualify for the federal small business tax credit?
- When must I decide so coverage does not lapse on January 1?
Good brokers answer these with numbers. Vague answers are a sign to ask a second broker for a competing view.
Your Options at a Glance
Most small employers choose among six paths. This table compares them in plain terms.
| Option | How it saves money | Main risk |
|---|---|---|
| Change plan design | Higher deductible, narrower network or an HSA-compatible plan | Employees pay more out of pocket |
| Shift contribution | Employer pays a smaller share of dependent coverage | Takes pay out of some workers' pockets |
| Level-funded plan | Lower cost and a possible rebate for healthy groups | No guaranteed renewal, exposure to big claims |
| ICHRA | Fixed monthly reimbursement, employees pick plans | More work for staff, less control over the plan |
| PEO | Pooled large-group rates and plans | Fees and less control over HR |
| Drop coverage | Removes the premium | Hurts hiring and retention, hard to reverse |
OneDigital says plan design changes could save 5% to 8% without eliminating benefits. That is a useful rule of thumb, not a promise. Ask your broker to run the numbers on your group.
What Should You Know About Level-Funded Plans and ICHRAs?
Level-funded plans are growing fast. OneDigital says their share of small-group arrangements has grown from 2% to over 11% in some markets since 2021. They can offer savings and a rebate when claims are low, but they carry no guaranteed renewal, reduced ACA consumer protections and exposure to claim spikes.
KFF raised a wider concern. Level-funded plans are generally not subject to ACA benefit requirements, so insurers can underwrite based on health status. As healthy groups leave the fully insured pool, premiums can rise for the groups that stay.
An individual coverage health reimbursement arrangement, or ICHRA, works differently. You give each employee a fixed monthly amount, and they choose their own plan. That gives you a predictable budget, but it shifts shopping work to your team.
Before you pick either, ask what happens in a bad year. A level-funded plan with one large claim can look very different from the sales pitch. Ask your broker to model a claims spike, not only the average case.
Check the Federal Small Business Health Care Tax Credit
A tax credit may offset part of the cost. The IRS page on the small business health care tax credit says eligible employers have fewer than 25 full-time equivalent employees, average wages below an inflation-adjusted limit, and pay at least 50% of employee-only coverage. They generally must offer coverage through the SHOP Marketplace.
The credit can be up to 50% of premiums for small business employers and is available for two consecutive taxable years. The smaller the employer, the bigger the credit. You claim it on Form 8941, and premiums above the credit may still be deductible.
Payroll costs shift in other ways too, such as the 2027 Social Security wage base, so keep one benefits budget sheet. Check the current-year wage limit on the IRS page, because the table there lags. Ask your tax preparer whether your business qualifies before you assume it does. Many owners find the average-wage test is what rules them out.
A Worked Example for a Ten-Person Team
Say your company covers 10 employees at $600 a month each for employee-only coverage, and you pay 100%. That is $72,000 a year. A 14% increase adds $84 a month per person, or $10,080 a year.
Now look at three responses. Raising the deductible might trim 5% to 8% of the new premium, based on the OneDigital range. Asking employees to cover 20% of the premium would shift roughly $16,000 of the new total to them. Neither choice is free, because each one costs your team something.
The right answer is the one your team can live with. Running the numbers before you announce anything prevents most of the panic. If you have staff in Maryland, remember that FAMLI payroll contributions start January 1, 2027, so budget for both changes together.
How to Tell Your Employees
Tell them early and plainly. Employees take bad news better when they hear it from you before a letter arrives, and when you show your work.
- Share the carrier's proposed increase and the dollar cost to the company.
- Explain the choices you compared and why you picked one.
- Show exactly what changes for each person: premium, deductible, network.
- Offer a short Q&A session and a named contact for questions.
- Put the final summary in writing before open enrollment starts.
At Emazoo, our editors see the same mistake often: owners announce a change and skip the reasoning. A short, honest explanation protects trust better than a polished memo.
Benefits sit next to other January changes, so review them together. Our guide to 2027 minimum wage increases for small employers covers one cost that lands on payroll in the same month.
Conclusion
A 14% median request is a warning, not a verdict on your renewal. Start early, get your data, compare plan design, level-funded and ICHRA options, check the tax credit and explain the result to your team.
Your next step is small. Email your broker today and ask for your claims data, the reason for the increase and at least two alternatives. This article reflects public sources current as of October 28, 2026, and is general information, not insurance or tax advice. Your broker and tax preparer can confirm figures for your business.
