Small group health insurance premiums are on track for one of the largest increases in recent years. Insurers are pointing to rising medical costs, heavier utilization, and high-cost specialty drugs including GLP-1 weight-loss treatments. Benefits advisors will need to prepare clients for an aggressive renewal season and a harder conversation about plan design.
Insurers are requesting a median 14% premium increase for the small group market in 2027. That figure is the median across rate filings from nearly 300 insurers in all 50 states and D.C., analyzed by the Peterson-KFF Health System Tracker.
The 14% median is higher than the 11% insurers requested entering 2026. The proposed increases are preliminary and subject to regulatory review, but they are drawn from actual insurer cost projections filed with state regulators.
The underlying medical trend (a measure combining price and utilization effects) came in at a median of 10.8% across the 82 insurer filings KFF reviewed in detail. Insurers cited higher prices for hospitalizations and physician care, increased use of services, and accelerating prescription drug costs as primary contributors.
GLP-1 medications are a specific pressure point. Some plans have stopped covering GLP-1 drugs for weight loss, but costs are still climbing as diabetes patients use them at higher rates. Mass General Brigham Health Plan noted in its Massachusetts filing that it sees "rising utilization for diabetic GLP-1s as these treatments increasingly are being used to treat diabetes and expanded for other conditions" even after dropping weight loss coverage.
The scale of that drug spend matters for brokers placing small group accounts. GLP-1 medications now account for 20.3% of total prescription spend among employer plans, up from 17.5% a year earlier. The figure comes from the State of Employee Benefits Report 2026 by Benefitfocus. Members taking GLP-1s cost their plans close to $7,400 a year.
Behavioral health is also adding to the pressure. Boston Medical Center Health Plan said in its Massachusetts filing that behavioral health spending has grown at more than 20% annually over the past two years, "driven by higher utilization and increased provider rates."
Blue Cross and Blue Shield of Massachusetts HMO Blue gave the broader picture in its rate filing: "Costs for medical care and medications for our members have escalated rapidly and spending is now growing at the fastest rate in more than a decade."
The renewal problem runs deeper than the rate itself. KFF analysis shows fully-insured small group enrollment fell 41%, from 17 million in 2013 to 10 million in 2024.
Healthier groups are exiting for level-funded arrangements. That shift leaves a sicker and more costly population in fully insured plans.
Level-funded adoption grew from 2% in 2021 to over 11% in 2025 in Massachusetts, according to one insurer's filing citing state enrollment data. KFF researchers warned that continued growth in level-funded options "has the potential to further erode the fully-insured small group risk pool and could contribute to future premium increases for small businesses, particularly those with sicker employees."
For benefits advisors, the 2027 renewal cycle calls for a two-front conversation with employer clients. The first is the rate: clients need to understand what underlying cost trends are producing a double-digit number. The second is plan design.
Level-funded and self-funded arrangements offer lower upfront premiums for healthier groups but carry material tradeoffs. Those include no guaranteed renewal, reduced ACA consumer protections, and exposure to high-claims years without the risk pooling that fully insured plans provide.
Advisors who can match plan structure to workforce risk and explain the tradeoffs clearly are better positioned to retain accounts when renewal conversations turn difficult.
