The HŪMNZ Element: Issue 03

🌟 Editor's Note

Rising healthcare costs are back in focus as policy shifts and federal budget changes drive 2026 premiums higher. This issue explores how SMBs can turn to captive and group captive benefit strategies to control costs, stabilize budgets, and protect their bottom line.

⚠️ Employers Facing Sticker Shock Seek Cheaper Health Options

Bottom line: the One Big Beautiful Bill (OBBB) and the risk around 2025 ACA subsidy policy are amplifying 2026 employer health cost growth and forecasting volatility. Many SMBs are turning to benefit captives and group captives for cost containment and year-over-year predictability.

What changed: if enhanced ACA premium tax credits lapse at the end of 2025, net marketplace payments would jump sharply in 2026, lifting the regional pricing tide that feeds into employer negotiations. KFF estimates average net payments would more than double. In parallel, employers already expect about 6.5% cost growth in 2026 even after plan changes, per Reuters coverage of Mercer’s national survey.

Why it matters: reduced public support increases provider revenue pressure and uncompensated care, which tends to shift costs to private payers, a key mechanism linking OBBB-era policy to employer premiums (see Urban Institute). In this environment, captives’ underwriting discipline, stop-loss structure, and data transparency can stabilize unit cost and trend for SMBs.

Subsidy risk will amplify 2026 premium pressure.

• Evidence: KFF estimates net marketplace payments would more than double on average in 2026 if enhanced ACA tax credits expire.

• Implication: Expect tougher carrier rate posture and choppier renewals.

• Action: Map exposure by rating area; scenario-test 2026–2027 claims with and without ACA subsidy extension.

Employers brace for the biggest cost jump in years.

• Evidence: Reuters (Mercer) reports ~6.5% average increase in 2026 with plan changes; nearly 9% without.

• Implication: Even with plan tweaks, budgets tighten; CFOs need stronger funding mechanisms.

• Action: Set a hurdle rate: captive or group captive must beat 6.5% trend on a 3-year rolling basis.

SMB interest in benefit captives is rising in 2025.

• Evidence: WTW notes 40%+ of employers are using or considering captives, with growth among SMBs under 500-employees.

• Implication: Captives are no longer just for jumbo employers; SMBs can pool to reduce volatility with Group Captive Plans.

• Action: Build a 24-month captive roadmap with governance, capital plan, and data prerequisites.

Group captives reduce cost and smooth year-over-year variance.

• Evidence: Alliant cites 5–15% long-term savings vs fully insured and increased SMB participation.\

• Implication: Practical, near-term lever on trend and reserve volatility for mid-market finance teams.

• Action: Issue an RFI to captive managers; compare stop-loss layers, collateral terms, and governance fit.

Stat of the Week

In June 2025, private-industry employer benefit costs averaged $13.58 per hour (civilian: $15.03). BLS

Do you know your CAGR?

Understanding your Compound Annual Growth Rate (CAGR) for benefits costs is the first step to benchmarking your progress and making smarter decisions. If you’re not sure, reply “I want to know my CAGR”—and we’ll walk you through it and potential cost containment strategies.

Until next time,

The HŪMNZ Element - Bi-Weekly Pulse

If this was useful, pass it to your CFO or Head of People—one good decision now can stabilize 2026–2028 costs.