As we have mentioned in other blog posts this year, employers are facing higher group health insurance premiums in 2026. The communications firm Chartis reported that premiums for coverage through the federal marketplaces are up about 30% on average. Forecasts project even more premium hikes for 2027.

KFF says employers are facing group health insurance premium increases averaging between six and 10 percent this year. Some businesses have experienced hikes of as much as 32%.

With increases like that, it’s not surprising that many employers are sayings, “Help! I can’t afford it.” So, what can you do? Here are five moves worth considering.

Five Ways to Manage Rising Group Health Insurance Costs

1. Switch to a High-Deductible Health Plan (HDHP) with an HSA

A High-Deductible Health Plan (HDHP) can reduce your health insurance premium and unlock access to a tax-advantaged Health Savings Account (HSA). It’s often ideal for those seeking to minimize their fixed premium, while building a reserve for the future. An HDHP offers lower costs than traditional PPO or HMO coverage. An HSA offers triple tax advantages, too. Contributions are 100% tax deductible. Funds grow and earn interest, tax free. Withdrawals are tax-free when used for qualifying medical expenses. The icing on the cake is that HSAs roll over year after year, unlike Flexible Spending Accounts (FSAs). Employees can build a fund for future health care expenses.

Key advantages of an HDHP + HSA:

• Lower monthly premiums than traditional PPO or HMO coverage
• Triple tax advantages: contributions are 100% tax deductible, funds grow tax free, and withdrawals are tax free for qualifying medical expenses
• HSA funds roll over year after year — unlike Flexible Spending Accounts (FSAs) — so employees can build long-term savings for health care

2. Consider a Narrower Provider Network

Transitioning to or adding a non-traditional narrow network plan can help as well. It limits providers to a high-quality, lower-cost provider subset. That will usually reduce your overall costs.

3. Switch to Defined Contribution Through CaliforniaChoice

One of the most effective ways to control rising health insurance costs is to move from a traditional group plan to a Defined Contribution model through the CaliforniaChoice multi-carrier exchange.

Here’s how it works: instead of picking one plan for everyone, you set a fixed contribution amount — and employees choose the plan that fits their life. Think of it like a health benefits gift card. You give them $450; they shop for the plan that fits their needs. If they want the “Ferrari” plan, they pay the difference.

The math: By contributing a flat $450 per employee, you cap your liability while giving your team access to 7 different carriers and 100+ HMO, PPO, and HSA plan options.

And offering more doesn’t mean paying more. CaliforniaChoice’s Defined Contribution model means your costs stay predictable at renewal — no surprise spikes — while your employees gain real choice.

4. Take Advantage of Metal Tiers and Plan Variety

With CaliforniaChoice, employees can choose from Bronze, Silver, Gold, and Platinum metal tier plans across seven carriers. This matters because not every employee needs the same level of coverage.

A young, healthy employee may prefer a low-premium Bronze plan with an HSA. A parent with kids may want a Gold PPO. A retiree-adjacent employee may want Platinum coverage. With Total Choice, employees select what works for their situation — and your contribution stays the same regardless of what they pick.

5. Offset Medical Costs with Ancillary Benefits Through CaliforniaChoice

Medical isn’t the only place costs can add up. Through CaliforniaChoice, employees can also access ancillary benefits that help offset out-of-pocket expenses and support overall well-being, including Dental (DHMO and PPO), Vision, Chiropractic care and acupuncture, and Life and AD&D Insurance.

Plus, value-added extras through the Business Solutions Suite and Member Value Suite — including free initial setup of a Premium Only Plan (POP), a no-cost FSA for eligible groups, prescription discounts, gym memberships starting at $28/month, and pet insurance from MetLife or Spot. These options can make your overall benefits package more competitive without significantly increasing your costs.

Talk to a Broker to Learn More

Your employee benefits broker can help you shop the market and compare different ways you can save. If you don’t already have a broker, it’s easy to search for one at MyCalChoice.com.

Frequently Asked Questions About Managing Rising Group Health Insurance Costs

Why are group health insurance premiums rising in 2026? Several factors are driving premium increases in 2026, including rising hospital and physician costs, higher prescription drug spending, an aging workforce, and broader economic inflation. Small group plans are seeing a median proposed increase of 11% this year, with some businesses experiencing hikes as high as 32%.

What is the fastest way to reduce my group health insurance premium? Switching to a High-Deductible Health Plan (HDHP) paired with a Health Savings Account (HSA) is one of the quickest ways to lower your monthly premium. It trades a higher deductible for a lower fixed cost, and employees benefit from the tax advantages of an HSA.

What is a Defined Contribution health plan and how does it help control costs? A Defined Contribution health plan lets employers set a fixed dollar amount toward employee health insurance. Employees use that contribution to choose their own plan from multiple carriers and coverage levels. This caps the employer’s liability while giving employees more flexibility — making costs more predictable at renewal.

Can I offer employees more plan options without increasing my costs? Yes. With CaliforniaChoice’s Defined Contribution model, your contribution stays fixed regardless of which plan an employee selects. Employees who want more comprehensive coverage simply pay the difference, giving you cost control while expanding their choices.

What are metal tiers in health insurance? Metal tiers — Bronze, Silver, Gold, and Platinum — refer to how costs are split between the insurer and the employee. Bronze plans carry lower premiums but higher out-of-pocket costs. Platinum plans have higher premiums but lower out-of-pocket costs. Offering multiple tiers through CaliforniaChoice lets each employee pick what fits their budget and health needs.

How can ancillary benefits help offset rising medical costs? Dental, vision, chiropractic, and life insurance benefits reduce out-of-pocket medical expenses and improve overall employee well-being. Through CaliforniaChoice, these can be bundled alongside medical coverage under one simplified program — helping employees feel more covered without a significant cost increase for the employer.

How do I find a broker to help manage my group health insurance costs? You can find a licensed employee benefits broker at MyCalChoice.com/find-a-broker. A broker can help you compare plans, model different contribution scenarios, and find the best strategy for your business size and budget.