Small Business Health Insurance Trends for 2025–26: What Every Employer Needs to Know

Running a small business is tougher than ever—and offering health insurance hasn’t exactly gotten easier, either. Between rising premiums, new coverage trends, and shifting employee expectations, many business owners feel stuck between doing right by their team and managing the bottom line.

The good news? You’re not alone. Thousands of small employers across PA, NY, MD, MI, and FL are navigating these same challenges. And the companies who stay informed, plan ahead, and make strategic decisions are the ones who end up saving money and retaining talent.

Here’s what’s trending right now and what it means for you.

1. Premiums Are Rising Again—But in New Ways

Premiums for employer coverage climbed again this year, and small businesses are feeling it the most.Family coverage through employers rose to nearly $27,000 on average, and many insurers are filing 8–12% increases for 2026 in the small group market.

Why is this happening?

• Higher costs for specialty medications, especially GLP-1 weight-loss drugs

• Increasing rates of chronic conditions

• Higher hospital and care delivery pricing

• Small employers having less negotiating power than large corporations

For very small groups (2–5 employees), the squeeze is even tighter. Premiums have risen faster here than in any other segment. That’s why plan design matters more than ever.

2. HDHPs & HSAs Are Back in the Spotlight

With premiums climbing, many small businesses are leaning into High Deductible Health Plans (HDHPs) paired with Health Savings Accounts (HSAs).

These plans come with:

Pros:✔ Lower monthly premiums✔ Employee ownership of HSA dollars✔ Tax advantages for both employer and employee✔ More control over spending

Cons:• Higher out-of-pocket costs at the point of care• Requires employee education• Can feel overwhelming for new users

For some groups, HDHPs are smart. For others, they can hurt retention. The key is helping employees understand how to use the plan so they’re not scared away by the deductible.

3. Alternative Funding Models Are Trendier Than Ever

One of the biggest shifts in the small-group world is the rise of non-traditional plan options, especially for groups struggling with cost.

ICHRA (Individual Coverage HRA)

Employers give employees a set allowance, and employees pick their own insurance plans. This can cut costs dramatically and adds flexibility.

QSEHRA (Qualified Small Employer HRA)

Great for very small groups that can’t afford traditional group plans.

Association Health Plans

Small businesses band together to gain large-group purchasing power.

These options used to feel “outside the box.” Now they’re becoming mainstream—especially for 2–10 employee companies who want out of the heavy renewal cycles.

4. The Prescription Drug Wildfire: GLP-1s & Specialty Meds

If there’s one thing shaking the entire insurance industry, it’s the surge in prescription drug spending.

The biggest drivers?

• GLP-1 drugs like Ozempic, Wegovy, and Zepbound

• Gene and cell therapies

• Biologic specialty meds

These drugs are excellent for health outcomes—but extremely expensive. That cost trickles directly into employer premiums.

Because of this, we’re seeing:

✔ Stricter utilization management✔ Higher copays/coinsurance✔ Employers wanting plans with stronger care coordination✔ Increased interest in weight-management programs as alternatives

Small groups should absolutely be looking at drug cost strategies during renewals.

5. Benefits Matter More Than Ever for Retention

Even with rising costs, one truth stands firm:

Employees value health insurance more than any other benefit.

In fact, small employers who offer coverage often see:

• Lower turnover

• Higher productivity

• Better morale

• Stronger recruiting visibility

For businesses competing with larger companies or remote employers, offering health coverage isn’t just generous—it’s strategic.

The market is tight. Good people stay where they feel supported.

6. State-by-State Differences Still Matter

Since you operate across multiple states, it’s worth noting that each one has its own landscape:

Pennsylvania

Stable carrier options, competitive networks, biggest increases in small rural counties.

New York

More heavily regulated, higher base premiums, strict community rating.

Maryland

Strong carrier competition, generally stable rate trends.

Michigan

Mid-range premiums with broad network options, especially for 5–50 groups.

Florida

Rapid growth but more variation in premiums, networks, and underwriting.

This is why a “one-size-fits-all” solution never works. What’s cost-effective in PA may be overpriced in NY or underperforming in FL.

7. 2025–26 Is the Year to Re-Evaluate Your Strategy

Small businesses shouldn’t just renew their plan and hope for the best—not anymore.This year, smart employers are:

• Auditing their current plan design

• Comparing new funding models

• Reviewing Rx utilization

• Revisiting dental/vision/life/disability bundles

• Educating employees on how to use their plan

• Asking brokers for multi-year cost strategies (yes, those exist)

A benefits package is no longer just a renewal—it’s a retention tool, a financial strategy, and a recruiting advantage.

How Houtz Insurance Helps Small Businesses Stay Ahead

You deserve more than a cookie-cutter quote.

You deserve:

• Clear explanations

• Honest recommendations

• Creative strategies for small groups

• Support across PA, NY, MD, MI, and FL

• Annual (and mid-year) plan reviews

• Employee education sessions

• A broker who digs deep to find the right fit for your budget and your people

(And if you’re reading this as a business owner—you deserve a stress-free renewal season, too.)

Final Thoughts

The small-group health insurance world is shifting fast. Costs are up, options are changing, and employees expect more than ever. But with the right approach, small businesses can still provide competitive, meaningful coverage without breaking the bank.

If you want help reviewing your current plan or exploring new options, I’m here to make the process simple—and make sure you’re getting the most out of every benefit dollar.

Ready to look at your 2025–26 strategy?Let’s chat.