Emerging EB Business Insights
Help Your Business Brace for Surging Health Plan Enrollment
OCTOBER 7, 2025
For years, small businesses in the U.S. have relied on the individual health plan ACA Marketplace to help their employees find health insurance coverage. Under expanded tax credits, coverage through the Marketplace was made more affordable for more Americans, resulting in record enrollment for 2025.
However, with significant premium increases expected for 2026 and the potential expiration of premium tax credits, Marketplace health plans could become unaffordable for millions of members. Employees who cannot access affordable coverage elsewhere may turn to employer-sponsored health plans. Smaller businesses should brace for higher enrollments and spending ahead.
More Pressure on Employer-Sponsored Health Plans
Enhanced premium tax credits — first made available through the American Rescue Plan Act in 2021 and later extended under the 2025 Inflation Reduction Act — are set to expire at the end of 2025. These health insurance tax credits increased the amount available to cover health insurance premiums for those who already qualified for financial help, and expanded the subsidies to middle-income enrollees, many of whom were previously priced out of the Marketplace.
If these tax credits are not renewed, middle-income enrollees will no longer qualify for any subsidies and will need to pay full price. Based on insurance carrier rate filings for the 2026 plan year, premiums are expected to increase 20% for Marketplace health plans — the largest increase since 2018.
These premium increases, combined with the expiring tax credits, have led health policy experts at KFF to estimate that the average out-of-pocket (OOP) premium for most people buying Marketplace coverage will more than double.1 The resulting sticker shock will drive many to seek employer coverage instead.
Without a cost management strategy in place, small businesses will be hit hard. Employers that offer health benefits will be overwhelmed by higher enrollments and expenses, while employers that don’t offer benefits will lose workers to companies that do.
How USI Can Help
USI Insurance Services helps employers evaluate different plan design and funding strategies to lower the cost of health benefits. We use sophisticated health plan analysis and underwriting expertise to evaluate employer risk and recommend best-fit solutions.
Level funded: Companies with lower-than-average medical claims can save between 5% to 10% on premium by switching to a level-funded health plan, and plans that run better than expected may receive a refund on premium up to an additional 5%.
High deductible: Employers may also find savings by switching to a high-deductible health plan and may choose to help employees cover OOP expenses by offering health savings accounts (HSAs). HSAs may be entirely employee-funded (voluntary), or employers may choose to make contributions. Employers may instead fund a health reimbursement arrangement (HRA) or offer a gap plan to cover certain expenses.
Group-limited medical policies: Offering a minimum-value limited medical policy can be an inexpensive entry point for employers that have not previously offered health benefits. These plans are not subject to employer contribution or minimum participation rate requirements, and can be implemented with as few as five enrollees, depending on the vendor and the state.
Contribution strategies: Employer contributions toward base and buy-up plans could inadvertently drive employees to enroll in the more expensive plan. Employers may find savings in an adjusted contribution strategy that balances enrollment between plan options.
Explore cost-saving options ahead of the new plan year. Contact your local USI representative or email ebsolutions@usi.com to learn more.
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