Open enrollment season is arriving earlier and moving faster this year, and small employers who wait until October to start planning are going to feel the squeeze. Between a shortened federal enrollment window, another year of steep premium increases, and a higher ACA affordability threshold, the businesses that come out ahead this fall are the ones that start the conversation with their broker now rather than in the final weeks of the year.
The enrollment calendar looks different this year
For plan years starting January 1, 2027, the federal Marketplace open enrollment period runs from November 1 through December 15, 2026, in most states — a full month shorter than the window consumers have used in recent years. The change comes from provisions in the One Big Beautiful Bill, which trimmed the individual market enrollment period nationwide. If your business offers coverage through the fully-insured small group market rather than the individual exchange, your renewal timing is set by your carrier and broker rather than the federal Marketplace calendar, but the shift still matters. Employees who supplement group coverage with individual plans for dependents, or who are weighing whether to waive your plan in favor of a subsidized Marketplace option, now have less time to make that decision. If you plan to communicate open enrollment materials to your team, building in an extra one to two weeks of lead time helps make sure nobody gets caught flat-footed by the compressed calendar.
Separately, small group carriers in many states continue to offer an annual special enrollment window, typically running from mid-November through mid-December, that lets small employers enroll in a group plan without meeting the usual minimum participation or minimum employer contribution requirements. If your business has struggled to hit an insurer’s normal participation threshold — a common issue for employers with a lot of part-time staff or a workforce that already has coverage through a spouse — this window is worth asking your broker about directly, since it does not automatically apply everywhere and rules vary by state and carrier.
Premiums are still climbing, and the reasons are consistent
If your renewal notice landed with a larger number than you expected, you are not alone. Insurers filed for a median rate increase of roughly 14% in the small group market for 2027, up from an 11% median increase the year before, according to analysis of rate filings compiled by KFF. More than half of small and mid-sized employers report facing double-digit increases on their 2027 renewals. The drivers behind the trend are fairly consistent across carriers: higher negotiated prices for hospital and physician care, increased utilization of medical services generally, and a fast-growing share of prescription drug spending tied to GLP-1 medications, which now account for roughly a fifth of total prescription costs among employer plans.
None of that means a 14% increase is what your business will actually see — rate filings are requests, not guarantees, and your final renewal depends on your group’s claims history, plan design, location, and carrier. But it does mean this is a good year to ask your broker to shop your renewal against two or three alternative carriers rather than simply accepting the incumbent’s number, and to look seriously at plan design changes — a higher deductible paired with an HSA, a narrower network, or a different metal tier — that can meaningfully offset a rate increase without eliminating the benefit altogether.
The affordability bar just moved for larger small employers
If your business is an applicable large employer under the ACA — generally 50 or more full-time equivalent employees — the affordability percentage used to test whether your lowest-cost self-only plan is “affordable” is rising from 9.96% in 2026 to 10.22% for 2027, per the IRS’s Revenue Procedure 2026-26. In practical terms, that gives employers slightly more room: you can charge employees a marginally higher share of the premium for your lowest-cost qualifying plan before it fails the affordability test, since the test compares the employee’s required contribution against a larger share of their household income than it did last year.
That extra room is worth having, because the penalties for getting it wrong are climbing too. The Section 4980H(a) penalty — triggered when an applicable large employer fails to offer minimum essential coverage to at least 95% of full-time employees and at least one employee receives a premium tax credit — rises to $3,780 per full-time employee (minus the first 30) for 2027. The Section 4980H(b) penalty, which applies when coverage is offered but is either unaffordable or does not provide minimum value, rises to $5,670 per affected employee. Both figures represent roughly a 13% increase over 2026 and mark the second consecutive year of a double-digit jump. If your business sits near the 50-employee threshold, or your workforce mix has shifted this year, it is worth confirming your full-time equivalent count before finalizing plan contributions, since crossing into ALE status changes your compliance obligations substantially.
What to actually do between now and your renewal date
Start by confirming your renewal date and working backward. Most fully-insured small group renewals require rate and plan decisions 30 to 60 days before the effective date, and carriers generally want enrollment paperwork finalized well before that. If your plan year runs on the calendar year, that means late September through October is the realistic window for reviewing options, not just receiving your renewal letter — waiting until November to start comparing plans leaves little room to negotiate or switch carriers if the numbers don’t work.
Next, have an honest conversation with your broker about affordability, not just total premium. A plan can look attractive on a top-line cost basis and still fail the ACA affordability test for your lowest-paid employees, which creates penalty exposure even if the plan feels generous. Ask your broker to run the actual math for your lowest-cost self-only tier against the new 10.22% threshold before you finalize contribution levels.
Finally, use this year’s renewal as an opportunity to revisit whether your current structure — fully insured, level-funded, or a small group plan through a PEO — still fits your business. A level-funded plan, where you pay a fixed monthly amount but get a refund if claims come in under projections, has become a more common option for employers in the 20 to 200 employee range who want more predictability or a partial hedge against a bad claims year, though it carries more variability than a traditional fully-insured plan. None of these structures is inherently better; the right one depends on your claims history, your risk tolerance, and your cash flow.
Bottom line
This year’s combination of a shorter enrollment calendar, a steeper premium trend, and a higher affordability bar rewards employers who start early. Confirm your renewal timeline now, get your broker shopping the market in earnest before October ends, and run the affordability numbers before you lock in employee contribution levels for 2027.
Sources
- ACA 2026 Special Open Enrollment Window for Small Groups — Word & Brown
- 2027 ACA Open Enrollment Survival Guide — Healthcare Insider
- IRS Releases 2027 Employer Mandate Penalty Amounts — Groom Law Group
- ACA Penalties Climb Again for 2027: $3,780 to $5,670 Per Worker — BoomTax
- 2027 ACA Affordability Percentage Reaches Double Digits — Selerix
- Mercer: 2027 affordability percentage for employer health coverage increases
- Small group premiums face 14% hike in 2027, KFF data shows — Insurance Business
- How Much and Why Premiums Are Going Up for Small Businesses in 2027 — KFF
- Survey: 54% of Small- to Mid-Sized Businesses Report Double-Digit Health Plan Premium Increases for 2027 — eHealth
This post is general information only and is not legal, tax, or insurance advice. It is not a substitute for reviewing your actual plan documents or speaking with a licensed insurance agent or advisor about your business’s specific situation.