Covered California Announced 2027 Rate Increases
The state's small business health marketplace confirmed an average 8.6 percent rate hike for the upcoming plan year.
Updated on Oct. 13, 2026 in Healthcare
Live Poll
Are rising health insurance costs making it more difficult for your small business to operate?
Covered California for Small Business has announced an 8.6 percent average rate increase for 2027. The marketplace also revealed that Western Health Advantage will join the program as a new carrier to expand options for employers.
Why it matters
The program aims to provide competitive rates and expanded plan options to help small businesses manage rising healthcare costs. This update arrives as the state seeks to maintain coverage accessibility for thousands of enrolled businesses.
The program currently covers 82,905 individuals across 9,969 enrolled small businesses in California. Employers can select from 44 distinct plan options, with for-profit businesses eligible for tax credits covering up to 50 percent of premium costs.
The players
Covered California for Small Business
This is a state-operated health insurance marketplace designed to provide coverage options for small businesses.
Western Health Advantage
This is a health insurance carrier that will begin offering coverage plans through the state marketplace in 2027.
The details
Businesses with up to 100 full-time equivalent employees are eligible to participate by contributing at least 50 percent toward premiums. Tax-exempt employers can receive credits for up to 35 percent of expenses, while plan options continue to grow with the addition of new carriers.
Timeline
Enrollment increased by five percent between 2025 and 2026.
There were 82,905 individuals enrolled in the program as of September 2026.
The new plan year with the 8.6 percent rate change begins in 2027.
Market Landscape
California's rate increase of 8.6 percent remains slightly more favorable than the 9.2 percent hike projected by the Business Group on Health for large national employers. This positions the state marketplace as a competitive alternative for small firms navigating broader industry-wide cost pressures.
Small business owners should prepare for an average premium increase of 8.6 percent starting in 2027. Employers can mitigate these rising costs by utilizing available tax credits, which cover up to 50 percent of premiums for for-profit entities and 35 percent for tax-exempt organizations.
The takeaway
Small business owners are encouraged to review the 44 available plan options to identify the most cost-effective coverage for their staff. Maximizing available tax credits remains the primary strategy for offsetting the upcoming premium adjustments.
Further reading
Find more details on state coverage options in the California Healthcare section.
More information
For more information on plan eligibility and enrollment, visit Covered California small business enrollment information.
Live Poll
Are rising health insurance costs making it more difficult for your small business to operate?
