The landscape of small business health insurance is undergoing a profound transformation. Following a challenging 2025, the expiration of enhanced Affordable Care Act (ACA) marketplace subsidies, coupled with a shrinking small group market, the industry has created a perfect storm for small business owners. 

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At Meridio we take pride in staying up-to-date with the latest health insurance trends, regulation changes, and the impacts these changes have to small businesses nationwide. One thing is certain, the health insurance landscape will continue to shift, though we won’t waiver in our commitment to helping small businesses navigate the evolving environment. 

Key Market Trends Shaping the Future of Small Business Health Insurance

Two significant trends are converging to reshape the health insurance landscape for small businesses: the expiration of enhanced ACA subsidies and the continued decline of the small group market. Understanding these current market trends is the first step toward making informed decisions for your business and your team.

The End of Enhanced ACA Marketplace Subsidies

The enhanced premium tax credits, which were a lifeline for millions of individuals and small business owners purchasing coverage through the ACA marketplace, expired at the end of 2025. This has led to a dramatic increase in premium costs for those who relied on those  subsidies. According to an analysis by the Kaiser Family Foundation (KFF), premium payments are estimated to more than double on average in 2026, a staggering 114% increase from $888 in 2025 to $1,904 [1].

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This has a disproportionate impact on middle-income earners and those in states that have not expanded Medicaid. For example, a 60-year-old couple earning just over 400% of the federal poverty level could see their annual premium payments increase by over $22,600 [1]. 

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The Urban Institute estimates that 4.8 million people will lose their insurance coverage as a result of the subsidy expiration, with some states seeing a potential 65% increase in their uninsured population.

How Small Business Owners Move Forward

If you’re a US-based business who has team members buying employee health insurance through the Marketplace, they’ll likely be turning to you for advice and health coverage. Being able to offer a health plan that covers basic preventative care and even hospitalizations can be crucial to your company culture and employee retention. Knowing when to offer benefits, if you haven’t before, will be a key factor in your future success. 

The Decline of the Small Group Market

Simultaneously, the small group health insurance market continues to erode. The number of insurance carriers participating in the small group market has plummeted, dropping from an average of 13 carriers in 2015 to fewer than five in 2020, according to the National Federation of Independent Business (NFIB) [3]. This lack of competition drives up prices and limits options for small employers.

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Data from KFF shows a steady decline in the percentage of small businesses offering health benefits. From 1999 to 2025, the share of firms with 10-49 employees offering coverage dropped from 78% to 54% [4]. The primary driver of this trend…cost. A 2025 KFF survey found that the average annual premium for family coverage reached nearly $27,000, a figure that is simply unsustainable for many small businesses [4].

Health Insurance Trends: 3 Key Impacts on Small Businesses

The convergence of these trends has created a challenging environment for small businesses, forcing them to make difficult decisions that impact their financial stability and ability to attract and retain quality employees.

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1. Higher Health Insurance Premiums and Financial Strain

The most immediate impact is the significant increase in health insurance costs. Small businesses, which already pay as much as twice what larger companies pay for health insurance, are now facing even greater financial strain [5]. This forces business owners to choose between absorbing the additional costs, passing them on to employees, or dropping coverage altogether.

2. Decreased Ability to Offer Benefits Results in Less Competitive Edge

As costs rise, fewer small businesses are able to offer health benefits. This puts them at a significant disadvantage in the competition for talent. In a tight labor market, a robust benefits package is a key differentiator. Without it, small businesses struggle to attract and retain the skilled employees they need to grow.

3. Limited Health Plan Quality and Difficult Trade-offs

For those who continue to offer health insurance coverage, the options are often limited and of lower quality. To manage costs, employers may be forced to choose plans with higher deductibles, narrower networks, and fewer covered services. This shifts a greater financial burden onto employees and can lead to dissatisfaction and a perception that the benefits offered are not valuable.

Navigating the New Reality: Health Strategies for Small Businesses

The current health insurance landscape may be challenging, but it is not without solutions. The good news is that there are paths and strategies that small businesses can deploy to mitigate these trends and still provide valuable benefits to their employees. At Meridio, we are laser-focused on ensuring small businesses get the advice and options most ideal for their unique situation.

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As we navigate this new reality, it is more important than ever for small business owners to have a trusted partner who can help them understand the complexities of the market and make strategic decisions. We believe that by working together, we can find solutions that are both affordable and sustainable, allowing small businesses to thrive in the years to come.

Understanding the Ideal Health Benefit Options for Your Business

As the health industry continues to evolve, understanding the impact and more importantly, the most strategic path for your business - based on your goals and individual scenario - is key. Our practical guide: Health Benefit Strategies for Small Businesses—is a great resource to learn more about the different paths and the changing health insurance landscape.

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Our team of health industry experts can also provide further insights based on your specific scenario, and share our options that include our full-service model to ensure enrollment and on-going management of benefits doesn't put a strain on your daily operations. Ready to see if Meridio is a good fit for your business, schedule a call with our team today. 

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References

[1] Lo, J., Levitt, L., Ortaliza, J., & Cox, C. (2025, September 30). ACA Marketplace Premium Payments Would More than Double on Average Next Year if Enhanced Premium Tax Credits Expire. KFF. https://www.kff.org/affordable-care-act/aca-marketplace-premium-payments-would-more-than-double-on-average-next-year-if-enhanced-premium-tax-credits-expire/

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[2] Casolo, E. (2025, September 17). States ranked by uninsured increases as ACA subsidies expire in 2025: Report. Becker's Payer Issues. https://www.beckerspayer.com/payer/aca/states-ranked-by-uninsured-increases-as-aca-subsidies-expire-in-2025-report/

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[3] Dever, T. (2025, September 3). Small Businesses Face Health Care Affordability Crisis. NFIB. https://www.nfib.com/content/analysis/2025/small-businesses-face-health-care-affordability-crisis/

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[4] Walker, E. (2026, January 5). Why Fewer Small Businesses Are Offering Group Health Insurance. PeopleKeep. https://www.peoplekeep.com/blog/why-fewer-small-businesses-are-offering-group-health-insurance

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