Small Business Health Plans Could See 11% Premium Increase in 2026

Every year, health insurance companies inform state officials of their expected cost changes and propose new prices for plans that comply with the Affordable Care Act regulations.

A report from KFF, an independent source for health policy research, focuses specifically on plans for small businesses—typically those with 50 or fewer employees. These plans can be purchased through the Small Business Health Options Program (or SHOP), through special programs or directly from insurance providers. According to the report, insurance providers in all 50 states and the District of Columbia are proposing to raise their prices by a median of 11% for 2026.

Researchers gathered proposed premium rates from government websites for 318 insurance companies across the country. They also examined detailed documents from 96 insurers in 16 states and the District of Columbia to better understand why premiums are changing.

The following factors were cited as driving premium increases in 2026:

• Rising health care costs—Health care services and provider treatments are getting more expensive. Insurance providers expect these costs to go up by about 9% in 2026.
• Inflation and labor shortages—General inflation and a shortage of health care workers are making it more expensive for insurers to pay doctors and hospitals. Some insurers say that the merging of big health care companies is reducing competition and driving up prices.
• Tariffs—Some insurers are concerned that tariffs could increase the cost of medications and medical supplies.
• Expensive medications—Many insurers noted concerns about the increased use and cost of glucagon-like peptide-1 (or GLP-1) drugs and other specialty medications. These drugs are expensive and widely used, which is likely to push premiums higher.
• Market volatility—The small group market is becoming less stable. Fewer small businesses are buying these plans, and those that do often have employees with higher health care needs, which increases costs. Instead, businesses are turning to individual or self-insured plans.

Employer Takeaway

Small business employers who offer health care should prepare for notable increases in health insurance premiums in 2026, with many insurers proposing double-digit rate hikes. Rising costs can be unavoidable, but employers can continue to monitor market trends to best inform employee benefits decisions.

Contact us for more resources.