Nearly three in four small and mid-size employers that currently offer traditional group health insurance are considering dropping those benefits for 2027, driven overwhelmingly by rising premium costs, according to a September survey from eHealth.
eHealth surveyed more than 500 small- to mid-size business owners and managers at companies with up to 500 employees from Aug. 24-28. The margin of error was plus or minus 4 percentage points.
Seven notes:
- Among employers that currently offer group health insurance, 73% said they are actively considering dropping those benefits for 2027. Cost was the dominant factor, with 85% of that group pointing to price as the reason. Another 11% cited the difficulty of managing health benefits for employees, and 5% cited other reasons.
- More than half of the employers surveyed (54%), said they are facing double-digit premium increases heading into 2027. The breakdown of rate hikes reported by respondents was as follows: 5% saw no increase, 7% saw increases under 5%, 27% saw increases of 5% to 10%, 31% saw increases of 10% to 15%, 17% saw increases of 15% to 20%, and 6% saw increases above 20%. Another 7% said they did not yet know their 2027 rates.
- Eighty percent of those facing premium increases said they were surprised by the size of the jump, with 44% saying they were “very surprised” and an additional 36% saying they were “surprised.”
- Looking further out, 85% of employers offering group coverage said they are worried they will not be able to afford it within three years. That included 53% who said they are “very worried” and 32% who said they are “worried.”
- Among those offering benefits, 29% said the cost of premiums is their single biggest frustration, and 19% said the unpredictability of costs from year to year was their top concern. Another 13% said their biggest frustration was finding a plan that suits everyone on staff. Only 28% said they had no significant frustrations with their current setup.
- Forty-one percent of employers said managing their group coverage is a “huge burden,” and 38% described it as a “burden.” Among employers that do not currently offer group health insurance, 65% said they would like to but cannot afford to.
- Fifty-eight percent of respondents they are considering a move to alternative coverage arrangements such as level-funded or self-insured plans. Separately, 57% of all respondents said they are familiar with CHOICE arrangements (formerly ICHRA), up from 46% in the prior year’s survey.
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