Small-business health plans face a 14% median rate increase in 2027, more than big employers expect

Health coverage is heading for its steepest cost increase in years, and the employers in the weakest position to absorb it are the smallest ones. CNBC pulled together the consultants' forecasts on Friday: workplace health costs per employee rising 8.2% to 11.1% in 2027, depending on whose survey you read. Those forecasts mostly describe large employers. The filings for small businesses point higher.

The number behind the number

Insurers that sell plans to small businesses, generally those with 50 or fewer full-time-equivalent workers, have filed for a median increase of 14% for 2027, according to a Peterson-KFF analysis of 295 insurers across all 50 states and Washington, D.C. A quarter of insurers asked for 10% or less and a quarter for 18% or more. Most, 59%, are raising rates by 10% to 20%. The median insurer expects the underlying cost of care to rise 10.8%.

Compare that with the large-employer surveys. Marsh, formerly Mercer, projects total health benefit cost per employee will rise 8.2% on average in 2027, the biggest increase since 2003, after the cuts employers plan to make. Aon puts it at 9.5% if employers change nothing. A small business buying a fully insured plan is looking at a median filing well above both.

What it means in dollars

KFF's 2025 employer survey puts the average family premium at firms with 10 to 199 workers at $26,054 a year, and single coverage at $9,211. Apply a 14% increase to those figures:

• Family coverage: $26,054 times 14% is about $3,648 a year more per covered worker, or about $304 a month.
• Single coverage: $9,211 times 14% is about $1,290 a year more, or about $107 a month.
• A firm covering six workers on family plans and four on single plans would face about $27,000 more a year (6 times $3,648 plus 4 times $1,290).

Those are illustrations, not quotes. The base is the 2025 average, and 2026 premiums have already risen since, so the dollar increase on an actual 2027 renewal could be larger. Individual filings vary widely.

Who actually pays it

Small-business workers already carry more of the cost. KFF found that at firms with 10 to 199 workers, the average worker contribution for family coverage is $8,889 a year, against $6,227 at larger firms, and 28% of covered workers at small firms pay $12,000 or more for a family plan. The average single deductible at small firms is $2,631, against $1,670 at larger ones. That leaves less room to pass increases on to employees than a large employer has.

The large employers are already moving: Marsh found 59% of employers plan cost-cutting changes for 2027, including higher deductibles. Marsh also notes that very expensive claims for new cancer and rare-disease therapies are becoming more common, which can disrupt budgets "particularly for smaller employers."

One trend inside the filings matters for any owner shopping a renewal. Insurers say healthier small groups are leaving the fully insured market for level-funded plans, a form of self-insurance with a fixed monthly payment. One Massachusetts insurer said level-funded small-group options grew from 2% in 2021 to over 11% in 2025. Insurers say that leaves a sicker pool behind, and they cite it as one reason for higher rates. So the 14% median partly reflects groups that have already left.

Owners who buy coverage for themselves face a separate market. KFF found ACA marketplace insurers proposed a median 15% increase for 2027, and the enhanced subsidies expired at the end of last year. We covered the self-employed angle of the marketplace refunds separately.

Sources: Peterson-KFF Health System Tracker; KFF 2025 Employer Health Benefits Survey; Marsh; Aon; CNBC. Dollar figures are our arithmetic from KFF averages and are illustrative. This is general information, not insurance or financial advice.