Nearly three in four small to mid-sized employers offering traditional group health coverage are considering dropping it for 2027, according to a new survey by eHealth, Inc., a publicly traded online insurance marketplace. The finding lands as benefits advisers head into a renewal season where their small-employer clients are more financially strained than at any recent point.
The survey, conducted by SurveyMonkey between August 24 and 28, drew responses from more than 500 owners and managers of businesses with up to 500 employees. Its margin of error is plus or minus 4%. Because eHealth sells health insurance products to small employers, the findings should be read in that context.
The numbers are stark. Among employers currently offering group coverage, 54% are facing premium increases of 10% or more for 2027, with more than one in five reporting increases above 15%. Of those facing rate hikes, 80% say they were surprised by the size of the increase. That sticker shock has driven 73% of those employers to actively consider dropping traditional coverage for 2027, with 85% citing cost as the primary reason.
Small and mid-sized employers have historically been the most vulnerable to premium volatility. They carry less financial cushion than large employers when renewals come in hard. The eHealth data points to that vulnerability reaching a critical level, with 85% of respondents worried they will no longer be able to afford group health benefits within three years.
The alternative gaining the most traction in this segment is the Custom Health Option and Individual Care Expense (CHOICE) Arrangement, formerly known as an individual coverage health reimbursement arrangement (ICHRA). Under a CHOICE Arrangement, employers set a fixed monthly contribution, and employees buy their own coverage on the individual market. Familiarity with the model among small to mid-sized employers reached 57% in the eHealth survey, up from 46% in 2025.
That 11-percentage-point jump coincides with the federal government's September rebrand and marketing push. The SBA and CMS unveiled the CHOICE Arrangements name at a joint event in Indiana, with resources aimed specifically at small employers.
That familiarity shift creates a direct challenge for advisers. A July study by the Employee Benefit Research Institute (EBRI) and Morgan Health, a JPMorganChase division, found that about three-quarters of employers said they would be more likely to adopt a CHOICE Arrangement if their broker, benefits consultant, or a peer recommended it. The EBRI-Morgan Health survey covered nearly 1,000 benefits decision-makers. Employer appetite for the model is substantially shaped by what advisers bring to the table.
The adviser community has been slow to respond. More than half of benefits brokers have still never sold an ICHRA, and broker expectations for continued adoption growth fell 15 percentage points in 2026 alone. The eHealth survey makes clear that small employers are now asking the coverage question themselves, regardless of whether an adviser has raised it first.
That has direct consequences for client retention. Advisers who cannot speak to CHOICE Arrangements as a credible alternative risk ceding the initiative in exactly the renewal conversations the eHealth data describes. The 58% of small employers already pursuing or considering alternatives to traditional group coverage confirms that the conversation is underway, whether or not an adviser is leading it.
