“To keep the body in good health is a duty…otherwise we shall not be able to keep the mind strong and clear.” – Buddha
While the start of 2026 is months away, it’s not too early to be thinking about what your company will do for health coverage in the new year. Keep in mind that you need to begin giving notices to employees by early November, so you’ll need your plans in place by then. Start thinking about choices and shopping around now so you can be ready.
1. Rates are expected to rise considerably
According to one source, premiums could rise by 15% for insurers providing coverage through the government marketplace (ACA coverage)! Coverage for the small group market—typically up to 50 employees—could increase by an average of 24%.
2. Penalty for ACA increased
If your business has 50 or more full-time or full-time equivalent employees in 2025, then you must provide minimum affordable health coverage in 2026 or pay a penalty. The penalty—which is called the shared responsibility payment—for 2026:
- Penalty A: If an ALE that does not offer minimum essential coverage to at least 95% of its full-time employees and at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace, the penalty is $3,340 per employee (with the first 30 employees excluded).
- Penalty B: If an ALE member that does offer minimum essential coverage to at least 95% of its full-time employees and at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace because the coverage offered was not affordable, the penalty is $5,010 for each employee that receives the premium tax credit.
3. Note changes to Health Savings Accounts
Employers can offer a high-deductible health plan (HDHP) combined with a Health Savings Account (HSA) to provide meaningful health coverage for employees at a more affordable price than traditional small group market coverage. And it’s up to employees, and not the employer, to handle distributions from HSAs and determine whether they are tax-free medical expenses or taxable (and subject to a penalty if under age 65). The IRS adjusts annually the contribution limits and parameters for HDHPs. For 2026:
- Higher contribution limits. The maximum contribution is $4,400 for self-only coverage and $8,750 for family coverage. Those age 55 and older can add another $1,000 (spouses must have separate accounts to do this).
- Changes to HDHPs. An HDHP is defined as having an annual insurance deductible of $1,700 for self-only coverage or $3,400 for family coverage. The plan must limit annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) to $8,500 for self-only coverage or $17,000 for family coverage.
4. Increase to excepted benefit HRAs
An employer can supplement health coverage by offering an excepted benefit health reimbursement arrangement (EBHRA). This is a relatively modest add-on that can cover vision, dental, hearing, and other medical needs not covered by the basic health plan. For 2026, the maximum benefit for an employee is $2,200 (up from $2,150 in 2025).
5. Watch for increases to Health FSAs
The IRS has not yet announced the dollar limit for health flexible spending accounts (FSAs) for 2026. For 2025, the limit is $3,300, with a permissible carryover of unused amounts up to $660. Expect these limits to increase for 2026, although they may not be known until November 2025.
Final thought
Whatever you decide to do with respect to health care for 2026, it’s probably going to cost you more. Be sure to adjust your budget accordingly. Talk to your CPA or other financial adviser to help you make an informed decision.
For additional information about health care coverage for your business, see this list of blogs here.
