Four years of climbing health insurance premiums have not pushed small businesses to drop coverage. The median premium at small businesses reached $8,743 per employee in 2026, up 31% since 2022. The share of small businesses offering health insurance held steady at around 21%.
Those figures come from a new Gusto analysis, which draws on anonymized payroll and benefits data from over 500,000 businesses with between two and 49 employees, reweighted to reflect the broader US small business population by industry, size, and geography. Premium figures are drawn from the subset of those businesses for which Gusto acts as broker. Gusto is a payroll and human resources software company that acts as health insurance broker for a subset of its platform clients.
The finding that most small employers are holding the line on coverage aligns with what benefits advisers in this market already observe. The data also points to where the cost is going instead.
The cost burden is not spread evenly. Businesses with two to five employees paid a median of $9,170 per employee in 2026, roughly 6% more than firms with 25 to 49 employees. That premium gap shows how health insurance is priced - insurers spread medical risk across a pool, and a group of two to five people is far more volatile than a group of 40.
Premiums for the smallest businesses have also climbed fastest. Companies with two to five employees have seen premium growth above 35% since 2022. That outpaces the 31% average across all small businesses in the dataset.
Even after adjusting for inflation, the Gusto data shows real healthcare costs at small businesses rose about 17% since 2022. Health has outpaced most other cost lines these employers manage. That trajectory sits alongside the 11.1% employer healthcare cost increase WTW projected for 2027 absent plan redesign, a number that reflects the same underlying cost pressures playing out at larger scale.
With coverage rates stable, the cost has to surface somewhere. Gusto's August survey found that 52.7% of small business owners said they would absorb a premium increase rather than shift costs to employees or cut the benefit. Only 2.1% said they would drop coverage entirely.
What employers give up in exchange is the open question. Higher premium costs that do not appear as reduced coverage have to emerge somewhere in the business, potentially as slower wage growth, smaller retirement contributions, or constrained hiring. Gusto names this directly but does not resolve it with data.
The most visible behavioral shift is in plan design. The share of small businesses offering at least one health savings account (HSA)-eligible plan climbed from about 9.6% in 2019 to 12.7% by 2026. These high-deductible health plans (HDHPs) carry lower monthly premiums. Employees take on more out-of-pocket exposure in exchange.
HSA adoption grew across every business size between 2022 and 2026. Among businesses with one to 10 employees, the share offering an HSA-eligible plan rose from 7.4% to 9.4%. Among businesses with 26 to 49 employees, it rose from 17.6% to 22.1%.
For the smallest firms, where traditional fully insured coverage is most expensive, level-funded plans and health reimbursement arrangements (HRAs) are also options the report identifies. The HSA trend is the product conversation most immediately relevant at renewal in the small group market. Shifting a client toward an HSA-eligible plan is often the one cost-containment lever that does not require a benefits reduction.
The broader renewal environment heading into 2027 is not softening. KFF's September 2025 analysis of preliminary rate filings from 318 small group market insurers found a median proposed premium increase of 11% for 2026, with hospital, physician, and prescription drug cost inflation as the primary drivers. Coverage in the small business market is holding, but the renewal conversations benefits advisers are having with small business clients are increasingly about what employers are cutting elsewhere to keep it that way.
