Self-funded employer plans grew as the individual market shrank, with Medicaid work requirements next in January 2027
The expiration of enhanced Affordable Care Act (ACA) premium subsidies is changing who enrolls in employer health plans heading into 2027 renewals. Total US health insurance enrollment fell 2.8 percent in the 12 months to June 30, 2026, to approximately 312.5 million people, according to Mark Farrah Associates (MFA). Losses were concentrated in Medicaid, the individual market and fully insured employer plans. Self-funded employer coverage grew.
The enhanced subsidies, introduced in 2021 and extended through 2025, expired on January 1, 2026. Before they lapsed, a projection from the Urban Institute and the Commonwealth Fund estimated that roughly 3.2 million people would move toward employer-sponsored coverage as a result. That migration is landing on plans already facing Marsh's projection of an 8.2 percent rise in 2027 health benefit costs, the largest increase since 2003.
Where health plan enrollment moved
MFA, a Pennsylvania-based health plan data aggregator, compiles its figures from statutory filings with the National Association of Insurance Commissioners (NAIC), the Centers for Medicare & Medicaid Services (CMS) and state agencies. Its data show the individual market fell 17.2 percent year over year, from 26.5 million members to 22 million.
Employer group administrative services only (ASO) plans gained just over 1.1 million members to reach approximately 135.8 million, an increase of 0.8 percent. Under an ASO arrangement, the employer carries the claims risk and pays an insurer or third-party administrator to run the plan. MFA estimates that ASO business now accounts for 43.5 percent of US health enrollment, the largest single segment. Fully insured employer group plans fell 4.3 percent, a loss of about 2 million members. MFA notes that its ASO figures are partly estimated.
People who stayed in the marketplace are paying more. The average ACA marketplace deductible rose 37 percent, from $2,759 in 2025 to $3,786 in 2026, the steepest increase in the program's history, according to KFF's analysis of 2026 marketplace deductibles and plan selections. Bronze plans, which carry the lowest premiums and highest deductibles, rose from 30 percent to 40 percent of plan selections. Average monthly premium payments climbed 58 percent, from $113 to $178. KFF projected that average effectuated marketplace enrollment could fall to about 17.5 million in 2026, down from 22.3 million in 2025.
How the shift affects employer health plan costs
The movement into employer plans is likely to be heaviest at small and mid-market employers with large hourly or lower-wage workforces, where many workers previously declined their employer's plan in favor of subsidized individual coverage. Some new enrollees will have deferred care while uninsured or on high-deductible bronze plans, which can lift utilization above the assumptions built into current plan pricing.
The timing compounds an existing squeeze. Low layoffs mean most employers are carrying costs across a large, stable covered population, and stable headcount is leaving little room to manage 2027 renewals. New enrollees add to that base rather than replacing it.
Cost-sharing decisions carry particular weight for this group. Zurich Insurance Group's Global People Resilience Study 2026, a survey of 11,175 working-age adults in 16 countries, found that only half of workers could cover a few months without income, which limits how much deductible or copay exposure lower-wage employees can absorb. Plan eligibility thresholds, cost-sharing structures and enrollment communications written for workers who have not used an employer plan before all bear on how the new population uses its coverage.
Medicaid work requirements add a second wave
Medicaid enrollment fell by 4.1 million members over the same period, MFA data show. The decline reflects the end of pandemic-era continuous enrollment and new eligibility restrictions under Public Law 119-21, the 2025 budget reconciliation law commonly known as the One Big Beautiful Bill Act.
The same law requires Medicaid expansion enrollees aged 19 to 64 to document at least 80 hours a month of work, education, job training or community service to keep their coverage. States must implement the requirement no later than January 1, 2027, under a CMS interim final rule published in June 2026, although states can request temporary exemptions. Forty states and the District of Columbia have expanded Medicaid and are subject to the requirement. Workers who lose eligibility will face the same choice marketplace enrollees faced this year: take up employer coverage, buy individual coverage without enhanced subsidies, or go uninsured.
The January 2027 start falls in the first month of most calendar-year plans. Any resulting enrollment shift will therefore land inside the 2027 plan year, not at the following renewal.
