Arguably, one of the most annoying parts of running a business is handling health insurance. With healthcare premiums rising sharply over the past year, many people are looking for alternatives. Unfortunately, the conversations I have with business owners have a feeling more like they are stuck in place than having options. The good news is that understanding more about the health care insurance landscape and why premiums went up can lead to better decisions and strategies for your plan or your employee’s plan.
Key Takeaways
- There are two options for insurance: private plans with big insurance companies or public plans run at the federal level, namely Medicaid and Medicare.
- The Affordable Care Act (ACA) set up public marketplaces to help people compare and purchase private plans. It also offered income-based tax credits to reduce the cost of health insurance for ACA-compliant plans.
- Premiums increased in 2026 due to rising medical costs, tariffs, and other economic factors. Increased premiums were exacerbated by the reduction in ACA tax credits.
- To manage premium costs, be sure to evaluate group vs. individual plans, shop around, and consider getting a high-deductible plan and taking advantage of an HSA.
Current Health Insurance Landscape
As a quick primer, health insurance can generally be broken down into private or public plans. Private plans are insured by big insurance companies, namely Aetna, Anthem, UnitedHealthcare, etc. Public plans are generally run at the federal level, namely Medicaid and Medicare, and they are funded by public tax dollars. Technically, Medicare Advantage plans through Humana or other companies are still considered public, but for most business owners, their group plan will likely be privately insured.
The Affordable Care Act (ACA), also known as Obamacare, along with many other recent health care reform laws, has changed the health insurance landscape for small business owners and individuals. Two major changes that still have implications today were the creation of state health insurance marketplaces and the introduction of premium tax credits. These public marketplaces help people compare private plans and make changes if needed.
Plans are either individual or group plans, depending on whether a self-employed person needs insurance or a company with dozens of employees. The number of people who need insurance can change the strategy around which plans are best. But importantly, even if an individual or owner uses Kynect (Kentucky’s ACA marketplace) to get insurance, they are typically shopping between different private health insurance plans.
Affordable Care Act (ACA) Tax Credits
The Tax Credits were designed to reduce the cost of health insurance, even for private plans, as long as they were ACA-compliant. Depending on household income, hundreds of dollars could be reduced from the premium in the spirit of affordable health care.
One of the main reasons why premiums increased so much was due to the reduction in the ACA tax credits. Especially for those who were 400% above the federal poverty line (around 60k for a single filer and 130k for a household of 4 in 2026). Technically, the premiums did not increase due to this, but the credit was reducing the amount you paid each month. For example, if premiums were $1,000 and you got a $200 credit, you paid $800/mo. With the removal of some of these credits, your cost would revert to the same $1,000 premium.
The reason many of us owners saw a spike in cost was not only the reduction of the credit, but also the increase in the premiums. So why did all the premiums across the board increase in 2026? What changed?
Group Plans
Some of the main reasons cited for higher premiums in 2026 were rising medical costs, tariffs, economic factors, and changes in the number of group plans in general. Many insurers estimated that medical costs would increase by 9% from 2025 to 2026. These costs included hospitalizations, diseases, administrative costs, specialists’ prices, and so on. For example, roughly a fourth of insurers cited costs related to GLP-1 drugs as a factor.
As of November 2025, insurers were expected to increase premiums in group plans by 11% on average in 2026. It will still take time to learn exactly how that shakes out. Anecdotally, the premiums for our company of 8, including my family plan, both increased by 11%. Paying $1,700/month in health insurance for a family of 4 may be the new standard, and it is not hard to see why people are looking for other options.
However, there is always an additional problem with insurance that gets compounded by rising prices. The more premiums increase, the more healthy people think they don’t need insurance and pull out. While that is their decision, they leave behind a now slightly riskier group of people who want to be insured. Taken to its extreme, premiums will go up even faster if all the healthy people leave the group and only the “unhealthy” remain.
Key Moves to Manage Costs
There are many routes to take when it comes to changing your health insurance. The issue is, however, that it is generally opaque to determine whether a change in insurance would actually be positive. Some options could potentially reduce your premiums, but it is very important to understand any trade-offs for doing so.
- Evaluate group plans vs. individual plans
If you remove the thought that employers must provide health insurance, then it may make more sense and cost less for group plans to switch to individual plans. This was more popular before the expiration of some of the ACA credits last year, but it still can be useful. It may make more sense to purposely close the group plan at the company level and help each employee file for insurance separately. This strategy is very dependent on the income levels of all employees and would probably work best if most employees make less than, say, $70,000.
- Shop insurance carriers
Similar to home or auto insurance, it is important to at least shop insurance carriers. While there aren’t too many choices in Kentucky, switching from Anthem to UnitedHealthcare, or vice versa, may help around the edges. Each insurer is required to estimate and adjust the premiums for its plans. It could be the case that Anthem makes larger adjustments than UnitedHealthcare, so switching could save on premiums for the same coverage.
- Switch to a high-deductible plan
After looking through group plans, different insurers, etc., the next option would be to change to a plan with a higher deductible. Selecting a plan with a higher deductible, by definition, should reduce your premiums. Make sure to weigh the risks of any changes in coverage or any more out-of-pocket expenses. Past that, a healthy individual or family may save hundreds of dollars simply by raising their deductible.
- Take Advantage of an HSA
As an extension of #3, switching to a high-deductible plan could open the window for HSA contributions for you and your family. HSAs are tax-deductible accounts that can help cover healthcare expenses if they come up. Would you rather pay $100 for health insurance, regardless of whether you use it, or pay $80 and save $20 into an HSA, knowing you can keep the $20 if you don’t use your insurance, or just pay with your HSA funds if you need to? I am generalizing here, but the point remains.
Get Help
Health insurance is one of the most complicated pieces of personal and business finance. It is critical to have someone in your corner who can objectively provide advice on which plan is right for you and your company. Understanding the current insurance landscape, as well as why premiums went up, can help you make better decisions and create a strategy for your health insurance.
TC Falkner 