Navigating Rising Healthcare Costs: Projected Increases For Small Business Health Plans In 2026
- SiekmannCo
- Nov 3
- 3 min read
Small employers offering health coverage through Small Business Health Plans compliant with Affordable Care Act regulations are bracing for significant premium adjustments in 2026. According to a comprehensive analysis by the Kaiser Family Foundation (KFF), insurers across all 50 states and the District of Columbia have proposed a median premium increase of 11% for these plans. This projection underscores the ongoing challenge of rising healthcare costs and highlights the need for strategic planning in employee benefits.
These Small Business Health Plans, often available through the Small Business Health Options Program (SHOP) marketplaces, state exchanges, or directly from carriers, serve businesses with typically 50 or fewer employees. The proposed rates, based on preliminary filings from 318 insurers, reflect broader trends in medical inflation and utilization that are putting upward pressure on premiums.
Key Findings On Proposed Premium Increases
KFF's review of preliminary 2026 rate filings reveals substantial variation but a clear upward trend:
Median Proposed Increase: 11% across 318 insurers nationwide.
Range of Changes: From decreases as low as -5% to increases up to 32%.
Distribution: Approximately 68% of insurers propose increases between 5% and 15%, while 10% seek hikes of 20% or more.
Detailed Subset Analysis: In a deeper examination of 96 insurers across 16 states and D.C., the median proposed increase is slightly higher at 12%.
These figures are preliminary and subject to state regulatory review, with final rates typically finalized in the fall. Nonetheless, they signal that many small businesses could face double-digit premium growth, exacerbating the financial strain amid persistent rising healthcare costs.
Primary Drivers Behind Rising Healthcare Costs
Insurers cite multiple interconnected factors contributing to these proposed increases, with escalating medical and pharmacy expenses at the forefront.
Escalating Utilization & Unit Costs
Insurers commonly project an overall increase in healthcare costs of about 9%, driven by higher prices for hospital services, physician care, and outpatient treatments.
Ongoing inflation in provider contracts and labor shortages in the healthcare workforce continue to elevate operational expenses for hospitals and clinics.
Impact Of High-Cost Prescription Drugs
A significant contributor is the surging utilization and expense of glucagon-like peptide-1 (GLP-1) agonists, such as those used for diabetes management and weight loss.
Of the detailed filings reviewed, 27 insurers specifically highlighted GLP-1 drugs as a key driver of premium pressure.
In response, some carriers plan to exclude coverage for GLP-1 medications when prescribed solely for weight loss in 2026 to mitigate costs.
Market Dynamics & Volatility
Declining enrollment in the small group market, with fewer businesses opting for these plans.
Shifting toward alternatives like individual coverage or self-insured arrangements often leaves a higher-risk pool that increases costs for remaining participants.
Reduced competition due to provider consolidation and, in some cases, concerns over potential tariffs impacting drug and supply prices.
These elements compound to create a challenging environment under Affordable Care Act regulations, which mandate essential health benefits and rating rules but do not shield plans from underlying cost trends.
Strategies For Small Businesses Amid Rising Costs
While rising healthcare costs present unavoidable pressures, small employers can take proactive steps:
Review alternative plan designs, such as high-deductible health plans paired with HSAs, to balance premiums and out-of-pocket expenses.
Explore level-funded or self-insured options where feasible, potentially offering more predictable costs.
Enhance wellness programs to promote employee health and potentially qualify for better rates.
Shop competitively during renewal periods and consider association health plans or other grouping mechanisms compliant with ACA rules.
Monitoring final approved rates and consulting with benefits experts will be crucial for optimizing coverage while managing budgets.
In an era of persistently rising healthcare costs, small businesses must navigate these changes thoughtfully to maintain competitive employee benefits packages compliant with Affordable Care Act regulations.
For tailored guidance on Small Business Health Plans, cost containment strategies, retirement planning, or comprehensive employee benefits solutions, contact The Siekmann Company. Our experienced team helps organizations like yours achieve sustainable, compliant benefits programs that support both business goals and employee well-being.