Employee Benefits 2027: Steps Owners of Small and Midsize Businesses Can Take Now

When it comes to open enrollment for employee benefits, small and midsize businesses (and their employees) have a lot to consider. As prescription drug spending increases, especially with the growth of GLP-1s, to AI’s potential influence on how benefits can be shared and understood, there’s no shortage of shake-ups in the employee benefits world.

To help your business stay prepared, we’ve compiled this guide with information on:

• Key cost drivers in 2026
• Open enrollment trends for 2027
• What employers can do next

Let’s get started!

What 2026 taught us about healthcare costs
Managing healthcare costs is certainly a benefits concern for employers, including many small and midsize businesses. PWC’s medical trend report projects that the commercial healthcare cost trend is expected to rise to 9% in 2027, the highest trend in nearly two decades.¹

Many things are driving costs, and Zywave’s Employee Benefits 2026 Midyear Market Outlook notes the following:

·      Chronic and mental health conditions, with ~3 in 4 American adults living with at least one

·      Specialty drugs like GLP-1s, which account for nearly 80% of all new U.S. Food and Drug Administration (FDA) approvals overall

·      Cancer care

·      Medical inflation, which is outpacing general inflation, digging into both employee budgets and household incomes

·      AI capabilities for providers and payers

All of these cost drivers point to one thing: now is the time to strategically position your business.

As you prepare for open enrollment this fall, here’s what your benefits team should pay attention to.

Open enrollment trends for 2027 and what employers can do next

1.    Affordability: As costs increase, some SMBs may need to adjust employee contributions, deductibles, copays, or plan choices.

What can SMBs do? Talk with your broker to model and understand how these changes will impact your employees.

2.    Purchasing Prescription Drugs: Employees have more ways to purchase prescription drugs with the emergence of new platforms.

What can SMBs do?

• Employers should ask their broker who manages their pharmacy benefit, what is driving pharmacy spending, and whether rebates or discounts are reflected in their rates.
• Employers should keep an eye on Direct-to-employer (DTE) platforms, which connect pharmaceutical manufacturers with self-funded employers to provide selected medications (like GLP-1s) through an alternative fulfillment model. Some SMBs may not be large enough to contract with a DTE, but it’s still worth understanding what a DTE is.
• Additionally, employers should be aware of TrumpRX. It is a direct-to-consumer site people can visit, then select a medication and receive either a coupon redeemable at a participating pharmacy or a link to purchase the drug directly from the manufacturer. If your employee purchases at this point, the claim won’t move through your pharmacy benefits package, which can mean missed data and rebates for the employer and missed spend toward an employee’s deductible.²

3.    GLP-1s. GLP-1s are driving healthcare costs. GLP-1 prescriptions accounted for 10.5% of annual pharmacy claims in 2025 across many employer-sponsored plans. ³ Further, nearly 8 in 10 employers report that GLP-1s are driving an increase in their company’s healthcare costs.⁴

What can SMBs do? This is important to address, with GLP-1s and specialty drugs on the rise. It can help to look at workforce-specific factors, carefully determine eligibility under plans, consider using FSAs and HSAs to supplement costs if your plans don't cover GLP-1s, and more.

4.    Family Health Benefits. Family health benefits continue to expand, as infertility affects 1 in 6 people worldwide.⁵  The expansion of IVF treatment has been discussed by the Trump administration.⁶ At the state level, mandates continue to roll out. Now, 25 states require fertility benefit coverage.⁷

What can SMBs do? Employees should ensure that their health benefits meet state requirements. Employees in states without the mandate should keep their eyes peeled for changes, and in the meantime, consider offering supplemental benefits.

5.    Voluntary Benefits: Voluntary benefits such as dental, vision, accident, critical-illness, hospital-indemnity, and other voluntary benefits can expand an SMB’s offering without requiring the business to absorb the entire cost.

What can SMBs do? Discuss with your broker which options could be most helpful, without overwhelming your employees with too many add-ons that could go unused.

6.    Artificial Intelligence (AI). AI has the potential to shape healthcare in many ways, like how benefits are being designed, delivered, and understood.

What can SMBs do? For HR and benefits teams, AI tools (with privacy safeguards in place) can help administrators answer FAQs, compare plans, prepare employee communications, and more. With human oversight, this could be helpful for small HR teams. Additionally, AI compliance monitoring tools can track regulatory changes in real time, signal upcoming deadlines, and alert administrators to required actions.

7.    Extra Payroll Period. Years with an extra biweekly payroll occur roughly every 11 or 12 years. Two-thousand-twenty-six is one of those years. This means group health premiums, retirement plan contributions, HSAs and FSAs, voluntary and supplemental benefits, and PTO need to be properly configured to avoid errors.

What can SMBs do? Your benefits won’t automatically correct with an extra pay period. Take action before December 2026 to avoid errors:

• Audit deduction schedules
• Coordinate with payroll vendors and benefits admins to confirm configurations
• Clearly communicate with employees in advance

Preparing for what’s next

As employee benefits continue to evolve, owners of small and midsize businesses should remain proactive, informed, and engaged with their broker. Open enrollment is an opportunity to build a stronger business and a workforce that is well-cared for and well-informed.

If you would like personalized guidance, please get in touch with employee benefits team!

Sources:

(1) PWC Behind the Numbers 2027

(2) Zywave’s Employee Benefits 2026 Midyear Market Outlook

(3) International Foundation of Employee Benefits Plans GLP-1 Drugs Responsible for Over Ten Percent of Annual Claims

(4) Business Group on Health: GLP-1 Costs Loom Large for Employers

(5) WHO: 1 in 6 people globally affected by infertility

(6) Fact Sheet: President Donald J. Trump Announces Actions to Lower Costs and Expand Access to In Vitro Fertilization (IVF) and High-Quality Fertility Care

(7) Maven Clinic: In what states is IVF covered by insurance? A comprehensive guide for HR leaders

Other Resources:

·      SHRM Exploring an AI Framework for Benefits and Workforce Well-Being

·      National Insurance Services 2027 Healthcare Costs Projected to Rise 9%

·      DTE Pharma Models – A New Frontier for Industry Disruption

Disclaimer: This information is for informational purposes only and does not constitute legal, financial, or benefits consulting advice. Employers should consult with their qualified benefits advisors or legal counsel to address their specific needs and ensure compliance with all applicable laws and regulations.