3 Forces Reshaping Small and Midsize Business Benefits Programs

This article first appeared in BenefitsPro on January 13, 2026, written by Ann Clifford.

 

Rising healthcare costs continue to ripple through small and midsize businesses (SMB), impacting how they fund, design and communicate employee benefits. The average annual family medical premium for small businesses reached $26,054 in 2025, up from $16,977 in 2020 — a 53% increase.¹

 

"With continued increases projected for medical spending, small and midsize businesses must find new ways to protect employees and manage costs," says Chris Nordstrom, assistant vice president of Employee Benefits Sales at The Hartford. "More than ever, benefits advisors play a critical role in helping employers evaluate options and optimize the strategic value of their programs."

 

There are three key benefit trends shaping how advisors and consultants can help SMB clients navigate cost-containment decisions and maximize their employee benefits. These include evaluating the benefits mix, making benefits engagement a year-round priority and embracing technology solutions that help employees and employers alike.

 

Nearly 40% of small business owners report that additional premium increases could create severe financial strain, prompting some to scale back benefits or shift more costs to employees. ² Others are moving to less traditional options, such as Individual Coverage Health Reimbursement Arrangements (ICHRAs) and self-funded medical plans.

 

In tandem with guiding clients through medical cost-containment strategies, advisors can help SMBs minimize the impact on employees and create competitive benefits programs that support recruitment and retention objectives. This opens the door for advisors to spend more time exploring the right mix of supplemental benefits with their clients, according to Nordstrom.

 

Offering a range of voluntary benefits — from life and disability to accident, critical illness and hospital indemnity insurance — can play a significant role in enhancing employee financial well-being, satisfaction and loyalty without straining the company's overall benefits budget. SMB leaders are receptive. The Hartford's Future of Benefits Study reports that 39% of SMB employers say they anticipate adding benefits in 2027.³

 

In addition to voluntary benefits, enhanced mental health and paid medical leave options offer opportunities for SMBs to differentiate their programs and stay competitive in the competition for talent.

 

"Advisors can help small and midsize businesses stay ahead of trends and requirements, especially with paid leave, where changing regulations require consultant and carrier expertise to ensure compliance," Nordstrom says.

 

When cost pressures are high, unused benefits equal unrealized value. The Hartford's study found that 81% of SMB employers say educating employees about benefits is a challenge. ³  

 

"Employees often make quick enrollment decisions and move on," Nordstrom says. "Ongoing and relevant communication keeps the value of benefits top of mind throughout the year."

 

Advisors and carrier partners can help employers shift from once-a-year enrollment to ongoing engagement through digital tools, personalized recommendations and short, real-life storytelling that shows how benefits apply to their unique situation. This approach builds greater employer trust, helps boost benefits participation and encourages better company retention — all outcomes that increase the strategic value of benefits.

 

 With sometimes very limited HR resources, SMBs rely on technology to simplify benefits administration and adoption. As automation and artificial intelligence (AI) capabilities advance, advisors can help clients maximize technology options while maintaining a human touch.

 

"Technology can simplify administrative processes and provide personalized employee decision support, but it can't replace empathy," Nordstrom says. "Employees want to know someone is also there when they need help."

 

Today, 38% of U.S. workers at SMBs would trust AI to make benefits recommendations.³ For advisors, guiding clients toward carriers whose technology balances efficiency with clear and compassionate support can deliver measurable improvements in cost efficiencies and employee experience.

 

As healthcare cost containment remains a defining challenge, advisors who help clients refine their benefits mix, build year-round engagement and leverage technology effectively will be essential in enabling SMBs to deliver benefits that are valued, competitive and financially sustainable.

 

 

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¹ KFF, 2025 Employer Health Benefits Survey, viewed January 2026.

 

² CNBC, Small Business Playbook, “Health Insurance Premiums Rising for Main Street Business Owners, Employees, With Little Relief in Sight,” viewed January 2026.

 

³ The Hartford’s 2026 Future of Benefits Study

The Hartford Insurance Group, Inc., (NYSE: HIG) operates through its subsidiaries, including underwriting companies Hartford Life and Accident Insurance Company and Hartford Fire Insurance Company, under the brand name, The Hartford,^® and is headquartered at One Hartford Plaza, Hartford, CT 06155. For additional details, please read The Hartford’s legal notice at https://www.thehartford.com.