Plan year 2027 is shaping up to be one of the most expensive in years. Employers are bracing for large increases, individual market premiums are rising for a second straight year, and ICHRAs now go by a new name. Here's a checklist to work through with clients over the next few weeks.
The cost picture
Employer plans
Marsh released preliminary results from its 2026 National Survey of Employer-Sponsored Health Plans on September 2 (published through its Mercer business). Based on more than 1,800 employers, it found:
- Total health benefit cost per employee is expected to rise 8.2% on average in 2027, the highest increase since 2003, even after planned cost-cutting changes.
- Without those changes, employers said costs would rise 11%.
- Marsh estimates rising GLP-1 use for weight management accounts for a full percentage point of 2027 cost growth.
- 59% of employers plan cost-cutting changes for 2027, including plan design changes such as higher deductibles.
Individual market
KFF's analysis of 2027 rate filings from 276 Marketplace insurers in all 50 states and DC found a median proposed increase of 15%. That follows a median finalized increase of 20% for 2026. If these increases hold, typical Marketplace premiums will have risen by more than a third over two years. That matters for every CHOICE Arrangement (ICHRA) allowance and for every employee who buys their own coverage.
Key numbers for 2027
- Affordability percentage: 10.22% for plan years beginning in 2027
- Federal poverty line safe harbor: about $135.92 per month for January 2027 plans (using the 2026 guideline of $15,960)
- 4980H(a) penalty: $3,780 per full-time employee (minus 30)
- 4980H(b) penalty: $5,670 per affected full-time employee
Deadlines to calendar
- CHOICE Arrangement (ICHRA) notices for January 1 plans: were due at least 90 days in advance, by October 3. If a client missed it, talk to counsel about options before going further.
- Medicare Part D creditable coverage notices: employers must notify Medicare-eligible participants whether their prescription drug coverage is creditable before October 15, and report creditable coverage status to CMS through the online disclosure form after the plan year begins.
- HealthCare.gov open enrollment: November 1, 2026, through January 15, 2027. Employees must enroll by December 15 for coverage starting January 1. State-based marketplaces may set different dates.
- Gag clause prohibition attestation: group health plans and issuers attest annually by December 31 that their contracts don't contain prohibited gag clauses.
- ACA reporting for 2026: Forms 1095-C and 1094-C will be due in early 2027. Start collecting monthly offer and enrollment data now.
Conversations to have
1. Renewal strategy
With average increases in the high single digits, many clients will see double-digit renewals. Before accepting a renewal, compare:
- The incumbent renewal and alternative carriers
- Plan design changes (deductibles, copays, networks)
- Funding alternatives such as level funding for groups with good claims history
- A CHOICE Arrangement scenario, either for the whole workforce or for specific classes
2. Contribution strategy
The higher 2027 affordability percentage gives employers slightly more room to adjust employee contributions without failing affordability. Marsh reported that about two-thirds of large employers (500 or more employees) in a separate survey expect to increase employees' share of premiums for 2027. Model the effect on take-up and retention, not just the budget.
3. Pharmacy and GLP-1s
GLP-1 costs are now a measurable part of overall trend. Marsh noted that some employers needing immediate relief chose to drop weight-loss coverage for 2027. Review utilization, prior authorization criteria, and PBM contract terms before deciding.
4. CHOICE Arrangement allowances
For January 2027 arrangements, the notice is out, but allowances and employee support still need attention:
- Recheck affordability for ALEs at 10.22%, using the safe harbor and look-back month the employer chose.
- Prepare employees for higher premiums. Even with an allowance increase, some employees will pay more.
- Plan enrollment support for the November 1 to December 15 window so coverage starts January 1.
- Explain the cafeteria plan rule: pre-tax salary reductions are available only for off-Exchange coverage under current law.
5. The new name
CMS and the SBA announced on September 3 that ICHRAs are now called CHOICE Arrangements. The rules didn't change. Use the new name with clients ("a CHOICE Arrangement, previously called an ICHRA"), and point employers to CMS's employer guide at cms.gov/choicearrangements.
Communication tips for employees
- Lead with what's changing and why. Employees will see higher costs; explain the drivers.
- Highlight lower-cost options such as HSA-eligible plans, high-performance networks, or plans with lower premiums.
- Remind CHOICE Arrangement participants to shop carefully, since the plan they had in 2026 may not be the best value in 2027.
Bring the analysis to the table
If a CHOICE Arrangement is part of a client's 2027 discussion, Choice Arrangement Deck can help you compare it with their group renewal using their census and current individual market premiums for HealthCare.gov states, and deliver the results in a branded proposal.
The bottom line
This open enrollment will test client relationships. Brokers who start early, bring data, and lay out a range of options, from plan design changes to funding alternatives to CHOICE Arrangements, will help clients make decisions they can live with in a difficult cost year.