Small Businesses Abandon Health Insurance for Telehealth

Mooresville, United States, 5 February 2026 – As healthcare costs continue to escalate and subsidies for the ACA Marketplace expired at the end of December, small businesses across the United States are increasingly abandoning traditional health insurance, instead turning to telehealth as a more affordable alternative. Experts warn that as many as 4.8 million Americans could be uninsured this year due to the sharp rise in plan premiums, hitting small businesses particularly hard.

According to the nonpartisan health policy research organisation, Kaiser Family Foundation (KFF), nearly 48% of adults with ACA Marketplace coverage are either small business owners, employees of small businesses, or self-employed. Small business owners are three times more likely than other enrollees to depend on Marketplace plans, highlighting the disproportionate impact on this segment of the workforce.

Small Business Owners Grapple with Rising Premiums

Chiropractor Eric Frankenfeld and his wife, office manager Lisa, have opted to forgo coverage for 2026 after discovering their ACA Marketplace plan would jump from $340 per month to an astonishing $1,928. “We are healthcare providers who cannot afford benefits. The irony is not lost on us. Buying a plan simply doesn’t make financial sense. We’re just hoping for the best,” Eric remarked.

Similarly, Rick Cole of Martinsburg Service, West Virginia, stated, “High healthcare costs have forced us to lose employees, made hiring difficult, slashed our net profit, and placed enormous strain on our work families.” In Vermont, Kathy and Jeffrey Many, who operate a garage door business, decided to go uninsured when they learned their monthly premium would rise from $625 to nearly $2,670. Kathy described the situation as “extremely nerve-wracking.”

Employer Health Benefits Under Pressure

A recent report from the Employee Benefit Research Institute (EBRI) reveals that only 49% of employers currently offer health benefits, with small businesses dropping coverage at the fastest rate. Forecasts indicate a 9% surge in employer health costs in 2026, pushing the average total healthcare cost per employee past $17,000—the steepest increase in 15 years.

Paul Fronstin, Ph.D., Director of Health Benefits Research at EBRI, warned, “If premiums continue to rise faster than wages and general inflation, small employers—particularly those with fewer than 100 workers—will face intensified financial pressure, accelerating the decline in employer-sponsored health plans.”

Telehealth: A Practical Alternative

In response, many small businesses are exploring telehealth subscription packages. These plans, while not traditional insurance, cover basic medical and mental health needs, helping to maintain workforce stability. With 24/7 access, they reduce missed workdays, boost productivity, and promote healthier staff.

Wendy Jordan of Jordan Capital Consulting, which brokers such plans, noted, “When traditional insurance isn’t viable, $40 a month per employee provides a baseline level of care for employees and their families.” Jordan added that business associations and local chambers of commerce are increasingly promoting telehealth as a member benefit, reflecting the growing demand for alternative health coverage.

For nearly half of all small businesses, offering traditional insurance at an average of $17,000 per employee is unaffordable. Telehealth and other lower-cost virtual care models are helping employers provide essential support, improve staff retention, and sustain their operations in a challenging healthcare environment.