Health Insurance Costs Jump 13% for Long Island Businesses

Long Island small business owners are facing their steepest health insurance cost increases in years, with New York's Department of Financial Services approving an average 13% premium hike for small-group plans in 2026. Some businesses are seeing increases as high as 50%, pushing monthly premiums to levels that now rival commercial rent payments for many Nassau and Suffolk County employers.

The Numbers Behind the Spike

Small businesses—which make up roughly 90% of Long Island's business landscape and employ hundreds of thousands of workers—are bearing the brunt of these increases. The 13% average represents what the state approved after insurance carriers requested even higher rates, meaning many employers had hoped for smaller increases that simply didn't materialize.

The timing couldn't be worse. Enhanced ACA premium tax credits that helped offset costs expired at the end of 2025, leaving nearly half of under-65 adults in individual ACA plans (many linked to small businesses with fewer than 25 workers or self-employed owners) facing higher out-of-pocket expenses just as group plan costs surge.

Bottom Line Impact on Your Business

These aren't just numbers on a renewal notice—they represent real threats to your business operations. When health insurance premiums consume budget space previously allocated to growth, hiring, or equipment, it forces difficult decisions. Many Long Island business owners are discovering they have three equally unappealing options: absorb the increased costs and reduce profitability, pass more costs to employees and risk turnover, or reduce coverage and potentially lose good workers to competitors with better benefits.

The ripple effects extend beyond immediate costs. Nassau Council of Chambers leaders warn these increases could stifle business creation and success across Long Island, as entrepreneurs face higher barriers to starting companies and existing businesses struggle to compete for talent.

Making Your Benefits Investment Count

With costs rising this dramatically, every dollar of your benefits spending needs to deliver maximum return. The biggest waste occurs when employees don't understand or appreciate the coverage you're providing. If your team doesn't realize the value of their health plan—especially now when you're paying significantly more for it—you're essentially throwing money away while getting zero credit as an employer.

This is where strategic benefits management becomes critical. Professional benefits guidance helps ensure your increased investment actually translates to employee appreciation and retention, rather than becoming an invisible expense that workers take for granted.

Strategic Responses to Rising Costs

Smart Long Island employers are taking several approaches to manage these increases:

• Plan design optimization: Adjusting deductibles, copays, and network options to balance costs while maintaining adequate coverage
• Alternative funding strategies: Exploring level-funded arrangements that can provide cost stability for businesses with good claims experience
• Enhanced employee education: Making sure workers understand the full value of their benefits package, especially important given the higher employer investment
• Comprehensive cost analysis: Looking beyond premiums to administrative costs, compliance expenses, and hidden fees that add to total benefits spend

Don't Navigate This Alone

With premium increases this substantial, the margin for error in benefits management has essentially disappeared. A poorly designed plan or inadequate employee communication can turn your increased benefits investment into a retention liability rather than a competitive advantage.

Benton Oakfield helps Long Island employers maximize the return on their benefits investment through strategic plan design and comprehensive employee education. When your team understands and appreciates their coverage, your higher premiums translate to measurable employee loyalty and easier recruitment—making the increased cost worthwhile rather than wasteful.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This summary is for informational purposes only. Please contact your Benton Oakfield representative to review how these changes impact your specific plan documents.

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