INDIANAPOLIS – Private online health insurance marketplace eHealth published new research showing that over half of small to midsize employers offering group health benefits are facing plan premium increases of 10% or more for 2027.

The increases are prompting many to consider canceling coverage for employees or exploring alternative insurance arrangements, according to the report.

The report, which is based on a survey of over 500 owners and managers of businesses with 500 or fewer employees, highlights the challenges small to midsize employers face when it comes to offering traditional group health insurance benefits.

According to the report, cost concerns heading into 2027 include:

  • 54% of businesses that offer group health insurance are facing double-digit group health insurance premium increases for 2027, with more than 1 in 5 employers reporting a premium increase of 15% or more.
  • 80% of those facing rate hikes said they were surprised by the size of the premium increase for next year, including 44% who were “very surprised.”
  • 73% are considering dropping traditional health insurance benefits in 2027, with 85% of these citing the high cost of coverage as the primary motivator.
  • 85% worry they won’t be able to afford to offer group health insurance benefits within three years.
  • Among businesses that don’t offer employees a group health insurance plan, 65% said they would like to do so but can’t afford it.

Also according to the report:

  • 72% expressed at least one point of dissatisfaction with their current coverage, with the most common issues including high premiums (29%), unpredictable costs (19%) and finding a plan that suits everyone (13%).
  • 79% said administering a group health insurance plan is a burden, including 41% that consider the process a “huge burden.”
  • 58% reported already pursuing alternative insurance arrangements other than a fully insured plan, such as level-funded or self-funded plans, or shifting to Custom Health Option and Individual Care Expense Arrangements.

“Employers of all sizes know that offering health benefits helps them hire and retain the best workers, but our new survey shows that rising health insurance costs are making that increasingly difficult,” said Derrick Duke, CEO of eHealth. “With over half of small to midsize employers facing double-digit premium increases for 2027, many are responding by evaluating alternative approaches that can provide greater cost certainty and less administrative burden, while providing improved flexibility and financial assistance to employees seeking health insurance coverage.”

The full report can be viewed on eHealth’s website.