Covered California Small Business Rates Rose 8.6 Percent
Employers on the state marketplace will face higher premiums for 2027 while evaluating new plan options.
Updated on Oct. 13, 2026 in Healthcare
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Covered California for Small Business announced an 8.6 percent average rate increase for the 2027 plan year. This adjustment arrives as 9,969 small businesses currently utilize the marketplace to provide coverage.
Why it matters
The program aims to offer competitive options for employers with up to 100 full-time equivalent employees facing rising healthcare costs. This update balances premium growth with the addition of Western Health Advantage to the network of 44 plan options.
The statewide average rate increase for 2027 is 8.6 percent, impacting 9,969 enrolled small businesses. This follows a period of growth that saw enrollment rise five percent between 2025 and 2026.
The players
Covered California for Small Business
The state-run insurance marketplace serving employers with up to 100 full-time equivalent employees.
Western Health Advantage
A health plan provider adding coverage options to the Northern California marketplace for 2027.
Business Group on Health
A non-profit organization that tracks national healthcare cost trends for large employers.
The details
Businesses eligible for the marketplace include those with up to 100 full-time equivalent employees, provided they contribute at least 50 percent toward premiums. Employers can mitigate these costs by utilizing tax credits of up to 50 percent for for-profit firms or 35 percent for tax-exempt organizations. Participants choose their specific contribution levels and offer employees access to a range of plan tiers across 44 options.
Timeline
Enrollment increased by five percent between 2025 and 2026.
82,905 individuals were enrolled in the program as of September 2026.
The new 8.6 percent rate change takes effect in 2027.
Market Landscape
The 8.6 percent rate increase reflects broader cost pressures in the employer-sponsored insurance market. It aligns closely with the Business Group on Health projection of a 9.2 percent increase for large employers nationally.
Business owners should review their premium contribution structures and eligibility for tax credits to manage the 8.6 percent rate hike. Consult with your accountant or benefits advisor to assess if the 44 plan options meet your team's current coverage needs.
The takeaway
Small employers face a moderate rate hike for the 2027 plan year, necessitating a fresh look at contribution strategies. Evaluate your current plan tier against the new options provided by carriers like Western Health Advantage to optimize your group's insurance spend.
Further reading
For more information on state insurance options and compliance, review Healthcare.
More information
Review the Covered California small business enrollment information to evaluate available plans.
Source note: This article includes information reported by Contra Costa News.
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