For Small Businesses, the Time is NOW for a Cost Saving Benefit Strategy
Open enrollment is fast approaching, and small businesses are already feeling the pinch of the rising costs in their supply chain, labor, and operational expenses.
Most authoritative sources estimate a 9% median increase in health-related benefit costs in 2026, and potentially ranging from 13% to 20% in small business group plans––and the variance is based on methodologies, employer size, and projections for broader shifts in benefit design.
This estimated increase in employee benefits costs will only add to the pain, and now is the time to be working with an independent broker to know your options and avoid the trappings of bundled PEO solutions and other factors pushing rising premiums.
Understanding the Cause
Specifically for small businesses, 2026 group health insurance premiums are being driven up by a convergence of these cost pressures:
- Ongoing Inflation & Healthcare Utilization
- Expensive New Medications & Pharmaceuticals
- Limited Market Flexibility
- Shifting Demographics & Risk Profiles
Inflation & Utilization
General inflation affects everything from supplies to staffing, which raises operating costs for healthcare providers and insurers. These higher administrative charges are often passed on to small-employer groups.
As more Americans are seeking elective procedures and treatments at outpatient care centers (post COVID), it increases the amount of claims. The increase in utilization, along with higher healthcare prices, is contributing to higher overall medical costs and health insurance premiums.
Medications & Pharmaceuticals
Small businesses are also experiencing increased utilization of costly medication such as GLP-1 drugs for obesity and diabetes, as well as high-cost gene and cancer therapies. Over 70% of businesses are concerned about the increasing cost of pharmaceutical drugs, and 51% plan to increase cost-sharing in 2026.
Market Flexibility
Provider consolidation and market concentration––with limited insurers––reduces competition and contributes to premium increases. Small businesses also have less negotiating leverage with insurers and providers, resulting in comparatively higher premiums and smaller plan networks.
Shifting Demographics & Risk
Small businesses often experience younger and healthier individuals not enrolling and/or seeking individual coverage vs the premiums associated with small group plans. The result is the remaining risk pool will have a greater demand and higher utilization rate, driving an increase in premiums for small group plans.
Bottom Line
This open enrollment season, Esprit Benefits encourages small businesses to strategically explore the opportunities and options available with benefit plan design … and to look at innovative, supplemental options to help contain costs, reduce claims, and save money on benefits in 2026.
