If you offer a group health plan, the number that will define your 2027 budget has already been filed with your state regulator. Across 295 small group insurers in all 50 states and D.C., the median proposed premium increase for 2027 is 14%, according to a Peterson-KFF Health System Tracker analysis published August 6. Entering 2026, insurers asked for 11%.
This is a proposal, not a bill. But rate filings are the earliest honest signal an employer gets, and they arrive months before the renewal packet.
What happened
KFF reviewed 2027 rate filings from 295 small group insurers nationally, plus a closer read of 82 insurers across 14 states and D.C.
- Median requested increase: 14% (up from 11% for 2026)
- 25th percentile: 10%. 75th percentile: 18%
- 59% of insurers are requesting increases between 10% and 20%
Insurers attribute the request mostly to the underlying cost of care, not administration. The median insurer estimate of the underlying medical cost trend for 2027 is 10.8% — hospital prices, physician services and prescription drugs.
Three drivers show up repeatedly in the filings. Specialty drugs: filings cite “the high cost per specialty prescription, and the lack of low cost substitutes.” GLP-1 medications, where utilization keeps climbing among diabetes patients even as some plans drop weight-loss coverage. And behavioral health, which KFF reports has grown at more than 20% annually over the past two years on both higher utilization and higher provider rates.
There is a structural story underneath. The fully-insured small group market shrank from about 17 million covered lives in 2013 to roughly 10 million in 2024 — a 41% decline — while overall small-employer coverage fell only about 8%. The gap is level-funding, which grew from 2% of the market in 2021 to 11% in 2025. Healthier, younger groups have been leaving for self-funded arrangements, and what is left behind in the fully-insured pool is sicker and more expensive to cover.
Why it matters
A 14% median is not the same story as the 15% median filed in the individual ACA market for 2027 — different pool, different decision. For an individual buyer, a rate increase is a shopping problem. For an employer, it is a whether problem: whether to keep offering coverage at all.
That question is already being answered in the data. Only 51% of firms with fewer than 25 workers offered health insurance last year, against 97% of companies with 200 or more employees. Double-digit renewals are how that 51% gets smaller.
State-level context matters too, and it is not reassuring. In Washington, thirteen insurers requested an average 22.4% increase in the 2027 individual market — a filing the Insurance Commissioner’s office said it would review through September, before November open enrollment.
“We’re going to spend the next several months reviewing every assumption made by the insurers to make sure their requests are justified.” — Washington Insurance Commissioner’s office, May 26, 2026
Regulators do trim these requests. They rarely erase them.
What this means for small business owners
1. Budget the renewal at the filing, not at last year’s increase. If your 2027 model carries a 6% or 8% health line because that is what you have absorbed historically, replace it. Use your own carrier’s filed request if you can find it in your state’s rate filing portal; use 14% if you cannot. It is easier to release budget you did not need than to find it in March.
2. Get your renewal quote earlier than usual. Ask your broker now for a preliminary 2027 number and for two alternative plan designs alongside it. A 14% median with a 10-to-18 spread means carrier choice is worth real money this year — more than in a 6% year.
3. Price the total compensation number, not the premium in isolation. For Washington employers this lands on top of a payroll stack that is already moving: the UI taxable wage base rises to $82,000 on January 1, 2027, and the state’s own trust fund forecast anticipates a solvency surcharge. Health premium plus payroll tax base plus wage growth is one budget conversation, not three.
4. If you are considering level-funding, model the bad year. Level-funded arrangements are why the fully-insured pool is deteriorating, and they can genuinely cost less for a young, healthy group. They also transfer claims risk to you. Run the maximum-liability scenario, not just the expected cost, and make sure your cash position survives it.
5. Decide what you will tell employees, and when. If part of the increase is passing through to employee contributions, that conversation goes better in September with a plan than in December with a number.
The bottom line
The 2027 health line is knowable today, and it is worse than the last few years — a 14% median ask driven by a 10.8% medical cost trend, with most carriers clustered between 10% and 20%. Regulators will shave some of it off. Build the budget off the filing anyway, get the renewal quote early, and put the health increase in the same model as the payroll changes already scheduled for January 1.
