Nearly three in four small and mid-sized employers that still offer traditional group health insurance say they are considering dropping it for 2027, according to a survey of more than 500 business owners and managers released by eHealth on September 16, 2026 — and the workers those plans cover will need somewhere to go. For independent health insurance agents, that is the whole story. An employer that stops offering coverage does not create a new kind of customer; it creates a familiar one — a person shopping for health coverage on their own, usually in a hurry, often for the first time — in much larger numbers than the individual market has seen in years.
Premier Health Solutions is a third-party administrator based in Frisco, Texas that has been administering health and supplemental benefit plans since 2012. PHS works with independent agents and agencies across 48+ states, partnering with A-rated insurance carriers. PHS does not sell insurance; the products described below reach consumers through licensed independent agents, and PHS handles enrollment, billing, member services and agent support behind them. This article summarizes what the research says and what agents selling PHS-administered products should keep in mind when a client’s employer coverage is on the line.
What the eHealth survey actually found
The headline number is 73%, but the numbers underneath it explain why employers are looking for the exit. The survey, fielded August 24–28, 2026 by a third-party vendor for eHealth with a margin of error of ±4%, covered owners and managers of businesses with up to 500 employees. The findings were reported by Insurance Business America on September 17, 2026.
| Finding | Share of respondents |
| Facing a group premium increase of 10% or more for 2027 | 54% |
| Facing an increase of 15% or more | More than one in five |
| Surprised by the size of their increase (44% “very surprised”) | 80% |
| Considering dropping traditional group health benefits in 2027 | 73% |
| Of those, citing high cost as the primary reason | 85% |
| Worried they cannot afford group benefits within three years | 85% |
| Already pursuing or considering an alternative to fully insured group coverage (level-funded, self-funded or other arrangements) | 58% |
| Find administering a group plan burdensome (41% call it a “huge burden”) | 79% |
| Among businesses that do not offer coverage: want to, but cannot afford it | 65% |
Two cautions before repeating any of this to a client. First, “considering dropping” is not “dropping”; the survey measures intent under renewal-notice stress, and the sponsor sells individual and small-business plans, so the framing favors alternatives to group coverage. Second, the survey’s own data shows that many employers who move away from traditional group plans move to level-funded or self-funded arrangements, where employees keep employer-sponsored coverage. Neither caution changes the direction of the trend. Both change how an agent should talk about it.
Why the renewals look the way they do
Small-group premiums are rising because medical costs are rising faster than they have in several years, and the small-group risk pool is getting thinner. The Peterson-KFF Health System Tracker reviewed 2027 rate filings from 295 small-group insurers in every state and the District of Columbia and found a median proposed increase of 14%, with 59% of insurers asking for between 10% and 20%. Among the 82 filings with detailed actuarial memoranda, the median underlying medical cost trend was 10.8%.
| Driver cited in 2027 small-group filings | What it means for the renewal |
| Medical cost trend of roughly 10.8% | Hospital, physician and pharmacy prices are the base of every increase |
| High-cost specialty drugs and GLP-1 utilization | Pharmacy is growing faster than the rest of the claim |
| Behavioral health spending growth above 20% a year over the past two years | A category that was small is now material |
| No Surprises Act dispute-resolution costs | Out-of-network settlements are landing in premiums |
| Healthier groups leaving for level-funded and self-funded plans | The fully insured pool skews sicker, so rates climb for everyone left |
The same analysis notes that fully insured small-group enrollment fell from roughly 17 million to 10 million between 2013 and 2024, in large part through migration to self-funded arrangements rather than employers dropping coverage outright. That distinction matters: a client whose employer switches to a level-funded plan is not losing coverage. A client whose employer drops the plan is.
The individual market is not a soft landing either. Peterson-KFF’s separate review of 2027 ACA Marketplace filings from 276 insurers found a median proposed increase of 15%, and the enhanced premium tax credits that had held net premiums down expired on December 31, 2025; roughly 3 million people left the Marketplace in 2026 as their subsidized premiums rose. The 2026 ACA coverage playbook covers that side in detail.
Where displaced workers actually land
When a small employer drops its plan, its workers split into four groups, and each one needs a different conversation. The EBRI–Morgan Health 2026 employer survey of nearly 1,000 benefits decision-makers, published July 28, 2026, found that about 80% of small employers are at least somewhat concerned that individual-market premiums would be too expensive for their workers, and more than 80% are at least somewhat worried about the out-of-pocket costs. Employers understand what the individual market costs. Agents should assume the client does too.
| Group | Situation | Where the conversation starts |
| Subsidy-eligible households | Income qualifies for a premium tax credit at the 2026 (non-enhanced) levels | Marketplace plan through a special enrollment period; supplemental products to cover the higher deductible |
| Above the subsidy line, healthy | Full-price Marketplace premium is the alternative; no chronic conditions | Compare a Marketplace plan against short-term medical for the bridge period, with the trade-offs stated plainly |
| Above the subsidy line, with ongoing conditions | Needs coverage that cannot exclude pre-existing conditions | Marketplace plan; supplemental products for out-of-pocket exposure; short-term medical is not the answer |
| Employer kept coverage but shifted cost | Higher deductible, higher employee contribution, or a level-funded plan with leaner benefits | Accident, critical illness and hospital indemnity as a voluntary layer under the employer plan |
The fourth group is easy to overlook and may be the largest. Of the 58% of employers already pursuing alternatives in the eHealth survey, many are not eliminating coverage; they are buying less of it. A family on a plan whose deductible just moved from $2,000 to $6,000 has a supplemental-insurance need that did not exist a year ago.
The rules agents need to get right
Four regulatory facts come up in nearly every one of these conversations, and getting any of them wrong exposes the agent and the client. Regulatory status verified as of Sept. 2026.
| Rule | Status as of Sept. 2026 | What to tell the client |
| COBRA after an employer cancels its plan | COBRA continues an existing group plan. If the employer stops offering any group health plan, there is no plan to continue and COBRA is not available. Federal COBRA also applies only to employers with 20 or more employees; smaller employers fall under state continuation laws that vary. | “If your employer ended the plan, COBRA is likely not an option. If they changed plans or you left the job, it may be.” |
| Special enrollment period | Losing employer coverage is a qualifying life event. The household generally has 60 days from the loss of coverage to enroll in a Marketplace plan, and can apply up to 60 days before the coverage ends. | “You have a window, and it closes. Do not wait for open enrollment if your coverage ends before it.” |
| 2027 open enrollment | HealthCare.gov open enrollment for 2027 runs November 1, 2026 through January 15, 2027; enroll by December 15 for January 1 coverage. State-based exchanges may differ, and the federal dates are subject to pending litigation over the 2025 Marketplace rules. | “If the employer’s plan ends December 31, open enrollment is the path — but the deadline for a January 1 start is December 15.” |
| Short-term medical duration | The 2024 federal rule defining short-term, limited-duration insurance (three-month initial term, four months including renewals) remains on the books. On August 7, 2025 the Departments of Labor, HHS and Treasury stated they do not intend to prioritize enforcement of that definition pending new rulemaking. State law and each carrier’s filed policy terms govern what is actually sold in a given state. | “How long a short-term plan can run depends on your state and the specific policy. I’ll show you the exact term and renewal rules before you enroll.” |
One more point that is best practice rather than mandate: fixed indemnity and other limited-benefit products are not major medical insurance and do not satisfy the ACA’s minimum essential coverage standard. The expanded federal notice requirement adopted for fixed-indemnity sales in 2024 was vacated by a federal court in December 2024. Whatever notice a given state or carrier still requires, a clear, written disclosure that the plan pays fixed amounts and is not comprehensive coverage remains the right way to sell it.
How each PHS-administered product fits
No single product replaces employer group coverage, and an agent who suggests otherwise will eventually have a member on the phone with a claim the plan was never designed to pay. The products PHS administers are designed to be combined, and the product stacking guide explains the combinations in detail. The table below maps them to the displaced-worker groups above.
| Product | Fits when | Does not fit when | The honest talking point |
| Short-term medical | The client is healthy, needs coverage for a defined gap (until open enrollment, a new job’s waiting period, or a Marketplace effective date), and understands the term limits | The client has a pre-existing condition, needs maternity or mental-health benefits, or is looking for a permanent replacement | “This is a bridge. It is priced like one and it excludes things a Marketplace plan cannot exclude.” See short-term medical as bridge coverage. |
| Fixed indemnity | The client has, or is buying, a plan with a high deductible and wants predictable cash benefits for doctor visits, hospital days and procedures | The client has no underlying medical coverage and expects this to pay hospital bills in full | “It pays you a set amount per covered event, regardless of what the bill is. It sits alongside coverage; it is not coverage.” See what fixed indemnity is and who it’s for. |
| Accident | Any household that just moved to a higher deductible, especially with children or physically active adults | Rarely a poor fit; the question is the benefit amount | “One ER visit under a $6,000 deductible is the whole reason this exists.” |
| Critical illness | Clients whose new plan’s out-of-pocket maximum would be a financial emergency after a serious diagnosis | Clients who cannot pass the health questions for the benefit amount they want | “A lump sum on diagnosis, paid to you, not the hospital.” |
| Hospital indemnity | Clients on Marketplace bronze or level-funded plans with high inpatient cost-sharing | Clients who already carry a rich fixed-indemnity plan with hospital benefits | “A daily cash benefit for the days you are admitted.” |
| Direct primary care (NextStep Health) | Clients who want routine care handled by a membership while a catastrophic-level plan covers the rest | Clients who expect it to cover specialists, hospitals or prescriptions on its own | “Unlimited primary care for a flat monthly fee. It is not insurance, and it works best with a plan behind it.” See what direct primary care is. |
PHS also administers ACA Marketplace enrollment for agents who hold the appropriate appointments; the ACA health insurance product page describes that arrangement. For most displaced workers, the right answer is a Marketplace plan first and a supplemental layer second, not a supplemental product instead of a Marketplace plan.
What to keep in mind when the client calls
Start every one of these conversations by finding out what the employer actually did, because “my company is dropping our insurance” describes at least three different situations. The employer may be ending the plan, switching to a leaner or level-funded plan, or raising the employee contribution until people drop themselves. Each triggers different rights and different products, and the client often does not know which one applies until they see the notice.
Ask the health questions before you quote short-term medical, not after. The eHealth survey’s headline creates a temptation to lead with the lowest-premium option. A short-term plan quoted to someone managing a chronic condition wastes the client’s time and, if it is issued, sets up a denied claim. The short-term medical pros, cons and real scenarios piece is written for exactly this triage.
Treat the timeline as the product. A worker whose plan ends October 31 has a 60-day special enrollment window that overlaps with open enrollment; a worker whose plan ends December 31 has open enrollment and a December 15 deadline for a January 1 start. Short-term medical is the tool for the gap between those dates, not a substitute for using them.
Sell the supplemental layer to the people who kept their coverage, too. Employers that stay in the group market are raising deductibles to hold premiums down. Accident, critical illness and hospital indemnity products exist for the family that still has an employer plan but can no longer absorb its cost-sharing, and those clients are easier to reach through the same employer than one at a time.
Put every disclosure in writing and let the member verify who is behind the plan. Displaced workers are being approached by a great many people right now, and some of those people are not licensed. A client who can see the agent’s license, the carrier’s name, and the administrator’s contact information — and who knows that the charge on their statement will read PHS-HEALTH-BILL — is a client who stays enrolled. The how to verify your benefits administrator post exists so agents can send it before the first payment posts.
A closing note on the numbers
The eHealth survey measures what employers are thinking during a renewal season that Peterson-KFF’s filing data shows is the steepest in years. Some of the 73% will find a level-funded plan, some will raise contributions, and some will drop coverage. Every one of those paths produces a worker with a new coverage question, and the agent who answers it accurately — with the right product in the right order and the disclosures in writing — is the one who keeps that client through 2027 and beyond.
