Your 2027 health insurance renewal was largely priced this summer, months before you see the letter — carriers filed their 2027 small group rates with state regulators in June and July.
An owner opens the renewal packet in October with about eight weeks to decide anything. The number is up double digits. Nobody added dependents, the plan didn’t change, and the reasonable first reaction is that somebody didn’t negotiate hard enough.
That’s a fair instinct, and it’s usually wrong. The rate you’re being handed in October was set in a filing spreadsheet in June, based on a risk pool you’re a rounding error inside of. Reading those filings now tells you most of what your renewal is going to say — and gives you four months to do something about it instead of eight weeks.
What the 2027 filings actually say
Insurers submit proposed rates to state regulators well ahead of the plan year, and those filings are public. KFF’s analysis of the preliminary 2027 filings — 295 small group insurers across all 50 states and D.C. — puts the median requested increase at about 14%. For 2026, that same median was 11%.
Roughly six in ten small group carriers asked for something between 10% and 20%. Single-digit requests were the exception, not the middle of the range.
Two caveats, because I’d rather you trust the number than be impressed by it. These are requested rates — regulators push back, and approvals often land below the ask. And a median hides a wide spread; your state and your carrier can put you well on either side of it. The filings give you direction and rough magnitude, not your quote.
New York makes both halves of that concrete. For 2027, carriers filed for a weighted average small group increase of roughly 25.7% — well north of the national median, and a number that would reprice a lot of businesses out of the plan they’re on.
Then look at what happened the year before. For 2026, New York carriers asked for about 24% in the small group market. The Department of Financial Services approved 13% — cutting the requested increases by 45.8% and saving small businesses an estimated $810.8 million. Same market, same process, and the number that actually landed on renewal letters was close to half the ask.
Worth knowing that New York is a prior approval state, so a regulator sits between the request and your renewal and has a track record of using that authority. Not every state reviews rates that aggressively, so check how yours works before you assume the ask gets cut. Either way, the lesson holds: read a filing as a range, not as a quote. A 25.7% request doesn’t tell you your renewal — it tells you the direction, and that nobody in that market is getting a flat one.
Where the increase is actually coming from
Three things are pushing 2027, and only one of them has anything to do with your company.
The first is pharmacy. Segal’s 2027 cost trend survey puts projected prescription drug trend in the neighborhood of 11.5%, and the fastest-growing line inside that is GLP-1 medications. A drug class that barely registered in a small group’s cost structure five years ago is now a material driver of the whole book’s trend, and it’s being spread across every group in the pool whether or not anyone on your plan has a prescription.
The second is hospital pricing. Multi-year contracts that carriers signed with health systems during the high-inflation stretch are now taking effect. Those higher facility and physician rates get baked into the baseline and they don’t come back out. Overall median medical trend in the 2027 filings sits near 10.8%.
The third is the one almost nobody explains to an owner, and it compounds. Healthier small groups keep leaving the community-rated small group market for level-funded and captive arrangements, because when your claims are good those structures let you keep the savings. Every group that leaves takes good risk with it. What stays behind is older and sicker on average, the pool reprices accordingly, and the next round of healthy groups looks at that price and leaves too.
So a chunk of your 2027 health insurance renewal isn’t a claims problem or a negotiation problem. It’s the cost of being one of the groups that stayed.
What a PEO does and doesn’t do about a 2027 health insurance renewal
Here’s the honest version, because the sales version oversells it.
What a PEO changes is which pool you’re rated against. Instead of your 22 employees being priced inside your state’s ACA small group market, you’re inside a master plan covering tens or hundreds of thousands of lives. That does two useful things. It buys you plan designs and networks a 22-life group generally can’t access on its own — which matters most where benefits are the whole retention argument, like restaurants and hospitality or an early-stage tech company hiring against funded competitors. And it takes you out of the specific pool that’s deteriorating — the community-rated small group market your healthy competitors keep leaving.
Worth knowing, since it cuts the other way too: in the fully insured small group market you are already shielded from your own claims. ACA adjusted community rating bars a carrier from pricing your renewal off your group’s health status or one catastrophic claim — rates move on age, geography, family size, and tobacco, and on how the whole state pool performed. That protection is exactly what you give up when you leave for a level-funded arrangement. Good claims year, you win. Bad one, it’s yours.
What it doesn’t do is exempt you from medical trend. Specialty pharmacy and hospital pricing hit large pools too. PEO renewals in 2027 will be up. Anyone telling you a PEO makes the increase go away is selling, and you should discount everything else they say by the same amount.
Whether the trade is worth it depends on your actual numbers: your current renewal, your census and age curve, your claims experience if you can get it, your state’s market, and what the PEO’s administrative fee adds on top. I can tell you which direction the math points and which providers are worth putting your census in front of — then I make them confirm final underwriting before you commit. For some companies the pooling and plan access clear the fee comfortably. For a young, healthy group with clean claims, level funding often does better, and I’ll tell you that. It goes both ways, and which way is a math question, not a philosophy.
What to do between now and October
Ask your broker for your carrier’s filed 2027 rate change for your state and market segment. It’s a public document. If they can’t or won’t produce it, that tells you something about the relationship — and about what you should expect from a broker in the first place.
Then get your census and, if you’re large enough that the carrier will release it, your claims experience — in hand before the quote arrives, not after. Plenty of bad renewals are just the market — a 14% pool increase lands on you no matter how organized you are. But the ones that were fixable and didn’t get fixed tend to look the same: the owner started gathering information in week two of an eight-week window, so there was never enough runway to price a real alternative. Four months out, you have options. Six weeks out, you have whatever’s in front of you.
And decide now what you’d actually do at 14%, and at 25%. If the answer at 25% is “we’d have to change something structural,” start pricing that structure in September, not December. The alternative is the thing I see most often: the renewal lands, there’s no time, and the company renews into it by default and eats the increase for a year.
Want to know what your 2027 health insurance renewal is likely to look like — and whether a PEO, level funding, or staying put is the better math for your group?
I’ll go through your current plan, your census, and your renewal history, and give you a straight read on which direction is worth pricing out. No sales pitch. Just the numbers.
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