Small group employers often ask why their premiums increase each year and whether their group is being rated based on its own claims or health history. The Affordable Care Act completely changed how small group health insurance is priced, and many employers are still operating under old assumptions. With the recently published North Carolina rate filings for 2026 showing approved increases between 12.66 percent and 17.50 percent, now is a perfect time to step back and review how the system works.
ACA Rating Is Community Based, Not Claims Based
Under the ACA, small group plans are underwritten using a standard rating structure. Insurers cannot adjust premiums based on health status, medical conditions, prior claims, or a groups specific utilization. Instead, every small group is placed into a statewide rating pool. Rates are based on a few limited factors such as age, geographic region, and tobacco use. This means that groups with very low claims experience pay the same base rates as groups with higher claims.
Why Rates Still Increase Each Year
If insurers cannot rate based on claims, then why do premiums still rise? Several drivers impact annual ACA rate development.
- Medical inflation and rising prices for hospital services, physician visits, and prescription drugs
- Higher utilization of care across the entire ACA small group pool
- New specialty drugs with higher costs
- Adjustments to provider contracts and network reimbursements
In the small group filings published by the North Carolina Department of Insurance, the approved increases for 2026 reflect these pressures. Blue Cross Blue Shield of NC received approval for a 17.50 percent increase, while the two UnitedHealthcare entities received approval for increases between 12.66 percent and 14.98 percent.
These increases apply regardless of how healthy or unhealthy an individual employer group may be.
Why You Cannot Shop Based on Your Own Claims
One of the most common points of confusion during renewal season is the idea of shopping based on the groups claims history. In the ACA small group market, insurers do not request or use your claims data to calculate your renewal. Your claims experience does not follow you from carrier to carrier and does not change your rates when you switch plans.
This is very different from level funded and self funded arrangements, where group specific performance does drive pricing.
What Employers Can Do Now
Even though you cannot change how ACA underwriting works, there are meaningful steps employers can take.
- Evaluate alternative funding arrangements to determine whether level funded options may provide savings
- Review contribution strategies to manage cost increases without overwhelming employees
- Consider offering multiple plan choices to balance affordability and coverage needs
- Communicate proactively with employees so they understand why rates increase and what is within your control
Final Thoughts
ACA small group underwriting does not reward a group for being healthy and does not penalize a group for having a difficult claims year. Although this system simplifies enrollment and guarantees access to coverage, it also means that statewide trends drive premiums more than individual group performance.
This years approved rate filings offer a clear reminder that annual increases reflect broad shifts in medical costs, not the specific experience of any single employer. Understanding how ACA underwriting actually works can help employers make informed decisions, set realistic expectations, and build a benefits strategy that supports both their team and their budget.
