Why Your 2026 Health Plan Is Jumping

Across all 50 states and Washington, D.C., 318 health insurers have proposed a median premium increase of 11% for small group plans in 2026, according to KFF’s Health System Tracker. Large employers are looking at roughly half that. As the chart below shows, about 68% of those insurers are proposing hikes between 5% and 15%, and 31 insurers want increases above 20%. These are proposed rates, not final ones. State regulators still have to review them. But the direction is clear, and the gap between what small businesses pay and what large companies pay is widening.

The Insurance Pool Behind Your Plan Is Losing Its Healthiest Members

Think of the small group insurance market like a neighborhood restaurant that depends on a steady mix of regulars. Some order light, some order expensive. The mix keeps prices reasonable for everyone. Now imagine the light eaters start leaving for a new place down the street. The restaurant is left serving mostly the expensive diners, so it raises prices. That pushes out a few more moderate eaters. Prices go up again. The cycle feeds on itself.

That’s what’s happening in the small group insurance pool. The healthiest small businesses are finding cheaper options elsewhere. Some move their employees to the individual ACA marketplace. Others switch to self-insured plans, where the company pays employee claims directly instead of buying a policy. Some choose level-funded arrangements, where you pay a fixed monthly amount to a carrier but accept the risk that high claims could raise your costs next year. Each time a healthy group leaves, the remaining pool gets more expensive to cover.

Large employers skip this problem entirely. A company with 500 employees typically self-insures, meaning it never enters the small group pool in the first place. It has enough people to spread risk on its own. A 12-person marketing agency or a 6-person plumbing shop doesn’t have that luxury. As the latest Fed survey of small business costs confirms, these pressures compound. You’re in this shrinking pool whether you chose it or not.

What Insurer Filings in Ohio and New York Actually Say

This isn’t theory. Insurers are describing the problem in their own regulatory filings.

In Ohio, Paramount Insurance Company gave up. Low enrollment and an unstable risk pool pushed the insurer to consolidate its small group lines under Medical Mutual. In its filing, Paramount wrote: “Due to low enrollment and lack of stability in these pools, we would like to consolidate lines of business under Medical Mutual and, also, offer similar plan options through NWOBA, the Northwest Ohio Business Alliance.” NWOBA is a MEWA, which stands for multiple employer welfare arrangement. It lets several small businesses band together to buy coverage as a group, spreading risk across more people. Paramount chose to stop offering small group plans on its own. Ohio’s average proposed premium increase for 2026 is 16%.

The story in New York is different. Independent Health Benefits Corporation, known as IHBC, didn’t exit. But its pool got sicker. In its filing, IHBC reported “significant losses in membership beginning in 2025 due to various factors such as competitive rate position and overall reduction in the market segment statewide.” The healthier groups found better deals and left. IHBC estimates that the members who stayed cost 1.65% more per member per month than the 2024 baseline population. That may sound small. But applied across thousands of remaining members, it changes the math on every premium the insurer charges.

These aren’t news reports or analyst guesses. They’re statements insurers made to state regulators to justify price increases. One insurer walked away from the small group market. Another watched its pool get worse and more expensive. Both outcomes mean the same thing for you: if your insurer is in a shrinking pool or exits entirely, your choices narrow and your leverage drops. Being a loyal customer for ten years won’t help if there’s no one left to insure you at a reasonable price. For owners already making difficult cost decisions heading into 2026, this adds another line item that can’t be ignored.

One Employee on Ozempic Can Blow Up a 10-Person Plan

Behind the 11% headline is a 9% increase in underlying medical costs. The biggest surprise inside that number is GLP-1 drugs like Ozempic and Wegovy.

A single employee taking one of these medications can cost a health plan $15,000 to $20,000 per year. In a 500-person company, that cost gets absorbed across a large pool and barely moves the average. In a 10-person company, it can account for a huge share of total claims.

That’s the core unfairness of being small. The same drug, prescribed to the same kind of patient, hits your plan ten or twenty times harder than it hits a large employer’s plan.

Hospital costs and physician fees are also climbing, partly because mergers have reduced competition in many markets. Fewer hospitals in your area means higher prices for every procedure. Healthcare worker shortages are pushing up labor costs at clinics and hospitals, and those costs flow straight into what insurers pay for your employees’ care. As NFIB’s latest survey of owner priorities shows, these cost pressures are now at the top of the list for small businesses nationwide. You can’t control drug prices or hospital mergers. But knowing that these structural forces are driving your premium higher tells you something important: switching carriers alone won’t fix it. The costs follow you.

If You Buy Insurance on the Marketplace, There’s a Separate $1,500 Hit Coming

What 11% Actually Costs a 10-Person Team

A percentage is easy to read past. Dollars are harder to ignore.

If your company pays roughly $7,500 per employee per year for its share of group premiums, an 11% increase adds about $825 per employee. For a 10-person team, that’s approximately $8,250 in new annual cost. That’s roughly equal to one month of a junior employee’s salary. For a 25-person firm, the added cost crosses $20,000.

1 Five Decisions to Make Before Your Renewal Lands

1. Request your renewal quote at least 90 days before it’s due

2. Most owners see their renewal letter and react. By then, you have weeks, not months. Call your broker now and ask for the quote early. If you wait until it lands, you’ll default-renew at whatever the insurer sends because there’s no time to shop.

3. Ask your broker to quote an ICHRA alongside your group plan

4. An ICHRA, or individual coverage health reimbursement arrangement, works like this: your company gives each employee a set monthly amount, and they use it to buy their own plan on the ACA marketplace. You control your budget. Employees pick the plan that fits them. The tradeoff is real, though. Some employees will find it confusing. Others may end up with worse coverage than your current group plan, depending on what’s available in your state. Ask your broker to run the numbers for both options side by side so you can compare.

5. Get a level-funded quote if your team is young and healthy

6. In a level-funded plan, you pay a fixed monthly amount to a carrier, but you’re essentially betting that your employees won’t file big claims. If claims stay low, you might get money back or see flat renewals. If someone has a major health event, your costs could jump sharply the following year. This works best for companies with a younger, healthier workforce that are willing to accept some risk. It does not work well if you have even one or two employees with expensive ongoing conditions. Your broker should be able to show you a level-funded quote next to your traditional group quote so you can weigh the gamble.

7. Adjust your current plan design before you switch carriers

8. Switching insurers isn’t the only lever. Moving to a higher-deductible plan and pairing it with an employer contribution to each employee’s HSA (health savings account, a tax-advantaged account employees use for medical expenses) can offset a premium increase without changing carriers. Employees will notice the higher deductible. Be upfront about why you’re doing it and what the HSA contribution covers. This move keeps your provider network intact, which matters more to employees than most owners realize.

9. Model what it costs to drop group coverage entirely

10. Run the math on giving employees a flat stipend to buy marketplace plans on their own. In some states, marketplace options are competitive and the stipend approach saves money. In others, the options are thin and employees end up worse off. You also lose group health insurance as a recruiting and retention tool. For some five-person firms, this is the right call. For a 30-person company trying to hire, it can backfire. Don’t guess. Have your broker or accountant model it with real local premium data.

Not every owner will see an 11% hit. Three insurers actually proposed rate decreases. The majority of proposals fall in the 5% to 15% range. And these are still proposals. State regulators will review them through the summer, and final approved rates could come in lower. Your actual number depends on your state, your insurer, and the health of the specific pool you’re in. The point isn’t to panic. The point is to have real alternatives quoted and ready before the renewal envelope arrives and forces a decision for you.