Small Businesses Face New Healthcare Cost Hikes

Connecticut residents and small businesses are bracing for increased healthcare costs after major insurers requested double digit increases for the 2027 plan year.

Employer-sponsored small group plans face average increases of nearly 18%, with individual plan hikes averaging 16% based on rate filings with the Connecticut Insurance Department.  

For many small businesses—those with 50 or fewer employees—health insurance is already one of the largest operating expenses.

The proposed increases could intensify financial strain, especially employers striving to offer competitive benefits in a tight labor market.

Small businesses in Connecticut already have few options to provide employees with affordable, quality plan options.

Cost Drivers

In their filings, insurers point to several cost drivers: 

• Rising medical and prescription drug costs, which continue to outpace inflation. 
• Higher utilization of healthcare services, including delayed care from the pandemic period now coming due. 
• The expiration of enhanced federal premium subsidies, which may cause healthier individuals to drop coverage, increasing risk in the remaining pool.  

The public comment period on the proposed rate filings began on June 5 and will remain open for at least 30 days.

There will be a public informational session on the rate increases in August.  

Legislative Efforts Fall Short 

Legislative efforts to address the small business employee healthcare crisis have faced significant headwinds at the state legislature in recent years.

A bipartisan bill legalizing association health plans—allowing small businesses to pool risk and purchase insurance through trade associations—failed in the final weeks of the 2026 legislative session.

That despite broad support from small businesses, local chambers of commerce, and nonprofit organizations. 

#Smallbiz have been asking for help for years—Unfortunately, some Appropriations Committee members put politics in front of good policy—penalizing employers rather than helping them and their employees navigate Connecticut’s growing affordability crisis. https://t.co/LL5Aan0ocO

— Chris DiPentima (@ChrisDipentima) April 14, 2026

“For years, small businesses have asked for help as they face soaring healthcare costs amid a shrinking small‑group insurance market,” said CBIA president and CEO Chris DiPentima.

“Unfortunately, some members of the Appropriations Committee put politics ahead of good policy—penalizing small businesses rather than helping them and their employees navigate Connecticut’s growing affordability crisis.

“Claims that these plans would offer lower quality benefits, discriminate based on health status or pre-existing conditions, or be financially vulnerable are simply not true.  

“There’s simply no excuse for this kind of misinformation to prevent a meaningful option for employers to do the right thing by their employees.”

ICHRAs

One measure that did pass was a tax credit for small businesses that offer an Individual Coverage Health Reimbursement Arrangement.

Under this model, employers contribute a fixed monthly amount to help employees purchase plans on the state-run health insurance exchange. 

While ICHRAs provide an option for some employers, they also shift the responsibility of selecting and managing health coverage onto employees. 

Action on healthcare affordability fell far short of what is needed again in 2026.

While the credit will help the smallest of employers, hundreds of thousands of other small business employees were left in the cold.

Action on healthcare affordability fell far short of what is needed again in 2026, as costs continue to soar—particularly for small businesses and their employees.

“Unfortunately, our state lawmakers did not meet the moment,” DiPentima said.