Your number is worse than the number in the news
If your renewal keeps landing harder than the figures you read about, you are not imagining it. The headline number is usually not your number.
Two pieces of research landed this month. One looked at what small businesses will pay for health insurance in 2027. The other looked at what employers of every size will pay. They do not agree. The gap between them is the whole story.
Read together with a third report on what benefits now cost a small company, they say something a 20 to 99 employee business would recognise straight away. Your costs rise faster than a big company's. You already carry most of the bill. And it is the second largest thing on your books.
Small business rates are going up 14% in 2027
Peterson-KFF read the rate filings that insurers submitted to regulators in all 50 states and the District of Columbia. Those filings are not marketing. They are the document where an insurer has to tell a state why it wants more money.
The median small group rate increase for 2027 is 14%. Most small group insurers are asking for somewhere between 10% and 20%.
Here is what the insurers themselves said was driving it:
Medical prices went up. Hospitals and doctors charge more than they did.
People are using more care. More visits, more procedures, more claims.
New specialty drugs cost more than the ones they replace.
More people are taking GLP-1 medicines. Those are not cheap.
More people are getting mental health care. That is good news. It is also costly news.
Fewer healthy people are staying in the pool, which raises the price for everyone left in it.
Only the last one is about the market rather than about medicine. When healthier groups leave the small group market, the groups who stay carry more of the risk. You did nothing wrong and your price still moves.
Source: BenefitsPRO, "SMBs' health insurance rates to jump 14% in 2027", Peterson-KFF Health System Tracker
What a year of coverage now costs per employee
The second report comes from Aon and covers employers of every size. Its number for 2027 is 9.5%, which pushes the average cost above $19,000 per employee.
That is the fourth year in a row of increases close to double digits. Aon built it from more than 1,100 employers, 7.9 million employees and $135 billion of health care spending, after plan changes and workforce differences were accounted for. So it is not a forecast of what could happen. It is what is already priced in.
Two things sit underneath that average and both are worth knowing.
The first is that you carry most of it. Employers now absorb more than 80% of the cost of the plan.
The second is that your employee still feels it. The average employee is expected to spend nearly $5,300 of their own money on health care in 2026. Their share out of each paycheck went from $2,943 to $3,130 in a single year, a rise of 6.4%. So the raise you gave them and the increase they absorbed are competing for the same money.
The drivers Aon names are familiar. More care being used. More people managing an ongoing condition. More high cost claims. Specialty drug spending. GLP-1 medicines spreading beyond weight into heart disease, sleep apnea and kidney disease, with pill versions widening access again.
There is one newer driver that has not reached most renewal conversations yet. Providers have started using artificial intelligence to write up and code visits. In some cases that is bringing back higher billed charges for the same care. Nobody has to behave badly for your bill to go up.
Source: BenefitsPRO, "U.S. employer health care costs projected to climb 9.5% in 2027", Aon, Health Value Initiative
It is already your second biggest expense
For most small businesses, benefits sit right behind payroll. Second on the list. Costs for small and mid sized employers have risen nearly 20% in recent years.
A Harris Poll of small business decision makers puts some numbers on what that feels like. Nearly half, 49%, worry that what they currently offer makes it harder to hire and keep people. Of those, 80% say they cannot find something that works across different health needs, different family situations and different locations.
The wish on both sides of the table is the same. Owners and employees agree. The plan usually does not.
When the cost lands there are four moves available. Absorb it yourself. Change the coverage. Move more of the cost to your people. Or look at a different model altogether.
Which one is right depends on your numbers, your people and how much room you have. There is no answer here that fits every 40 person company, and anyone who tells you there is has something to sell.
Source: BenefitsPRO, "How alternative models help SMBs tackle health costs", Justworks / The Harris Poll
Where to start
You cannot argue with a rate filing. You can be ready before the renewal meeting instead of during it.
Work out your own number first. Take your headcount, multiply it by what a year of coverage costs you today, then add 14% rather than the 9.5% in the news. That figure is your starting position, and it is better to see it in September than in November.
Then ask three questions of whoever handles your benefits. What are the top three things driving my cost. What would the other option have cost me last year. Who answers my employees when they cannot work out how to use the plan.
If those questions are hard to get answered, that is the problem worth fixing. The price is downstream of it.
