Small Group Special Enrollment Period Rules for 2027

Most small employers who ask us about this window have already been turned down once. A carrier wanted 70% of eligible employees enrolled, or wanted the company to pay half of each employee's premium, and the group came up short. For one month a year that answer has to change. This article covers the rule itself, then the parts the carrier summaries skip: what happens at the first renewal, what a zero contribution plan does to your employees' marketplace subsidies, and why the window does nothing for level-funded or PEO quotes.

What the federal rule actually requires

The rule is 45 CFR 147.104(b)(1)(i)(B). Insurers in the group market generally have to sell coverage to any employer at any time of year. The exception lets a small group insurer refuse an employer that fails a contribution or participation rule allowed under state law, but only outside an annual period that "begins November 15 and extends through December 15 of each calendar year."

In practice that means three things for the 2026 window:

• No participation minimum. One eligible employee enrolling is enough for the carrier to issue the group.
• No contribution minimum. The employer can pay any share of the premium, including nothing.
• A January 1, 2027 start date. The same regulation says an application received between the 1st and the 15th of a month must be able to start on the first of the next month. An application completed by December 15 can therefore start January 1.

General agencies and carriers set earlier internal cutoffs. Word & Brown, a California general agency, told brokers its 2026 submission deadline is December 4, even though the federal window runs to December 15. Plan on finishing paperwork in the first week of December. Kilpatrick Insurance also notes that carriers want the employer's signature dated on or before December 15, even when they accept the file later.

Who the window does not help

The window waives two underwriting rules and nothing else. A group still has to be a real small employer, and some common situations fall outside it entirely.

You need at least one employee. 45 CFR 144.103 defines a small employer as one that employed an average of at least 1 but not more than 50 employees in the prior year and has at least 1 employee on the first day of the plan year. Carriers ask for payroll proof, usually the latest quarterly wage report. A business where the only people on payroll are the owner and spouse should expect to be pointed to the individual market, not a group plan.

"Small" means 50 or fewer in most states. California, New York and Vermont sell small group coverage to employers with up to 100 employees, according to healthinsurance.org. Colorado was on that list until it changed its definition for 2026.

Self-funded and level-funded plans are not covered. The guaranteed availability rule binds health insurance issuers selling insured coverage. A level-funded plan is a self-funded plan with stop-loss insurance, and the stop-loss carrier underwrites on its own terms. A PEO decides who joins its master plan under its own enrollment rules, which we covered in PEO Health Plan Enrollment Minimums.

The first renewal is where the window stops helping

This is the part nobody else seems to cover. 45 CFR 147.106(b)(3) lets an insurer nonrenew a small group whose plan sponsor "has failed to comply with a material plan provision relating to employer contribution or group participation rules." Nothing in that section exempts a group that bought its plan during the window.

So a group that enrolls 3 of 12 employees on January 1, 2027 and still has 3 of 12 enrolled a year later can be nonrenewed at the January 1, 2028 renewal. Some carriers renew these groups anyway. Some don't. Ask for the answer in writing before you sign.

The calendar works in your favor if you keep a January 1 plan year. The next window opens November 15, 2027, six weeks before that renewal. If the carrier does nonrenew, you can reapply with the same carrier or a different one under the same waiver, effective January 1, 2028. That only works if you start shopping in early November, not when the nonrenewal letter arrives.

What window coverage costs at 2027 rates

Under 45 CFR 147.102, small group rates can vary only by family size, rating area, age and tobacco use. Participation and contribution level aren't on that list. A 12-person company with 3 people enrolled pays the same age-based rate as a 12-person company with all 12 enrolled. The window doesn't add a surcharge, but it doesn't give you a discount for 2026 pricing either. Every window plan starts on 2027 rates.

Those rates moved a lot. Benefitra's 2027 state funding data, which feeds our health insurance funding pages by state, puts the median filed small group change at 12.8% across 50 states, from 3.69% in Mississippi to 20.55% in North Carolina. Seventeen of those states have final approved rates. The rest are still requests.

The number to plan around is the second year. Our 2028 Small Group Renewal Forecast puts the national enrollment-weighted 2028 renewal at 10.7%, with a likely range of 7.7% to 16.7%, and its highest state forecasts are New Mexico and Ohio at 13.5%. A plan that only just makes sense in January 2027 needs to survive a renewal in that range, on top of the participation question above.

A zero contribution plan and your employees' subsidies

The window lets you offer a plan and pay nothing toward it. Owners sometimes do this to get themselves group coverage while staff stay on the marketplace. Whether that works for the employees depends on affordability.

An employee offered employer coverage can only get a premium tax credit if that coverage is unaffordable or below minimum value. For 2027 the IRS set the affordability percentage at 10.22% of household income in Rev. Proc. 2026-26, up from 9.96% for 2026. If the employer pays nothing, the employee's cost is the full self-only premium.

Take a self-only premium of $650 a month, or $7,800 a year. That offer is unaffordable for any employee whose household income is below $76,321 ($7,800 divided by 0.1022). Those employees keep their eligibility for marketplace help. An employee with household income above that figure is treated as having an affordable offer and loses the credit, even though the employer pays nothing. Run this test for each employee before you set the contribution at zero, because the employees who lose out are usually the ones you most want to keep. Our article on the 2027 ACA affordability percentage has the payroll safe harbor tables.

The 51 to 100 employee trap in California, New York and Vermont

In most states a company with 50 or more full-time equivalent employees is too big for the small group market, so the window is irrelevant to it. In California, New York and Vermont it isn't. A 60-employee company there can buy small group coverage in the window, and it is also an applicable large employer under the ACA.

That combination is expensive with a zero contribution. Offering coverage to 95% of full-time employees avoids the larger 4980H(a) penalty. But if the offer is unaffordable, 4980H(b) applies for each full-time employee who gets a premium tax credit. The 2027 amount is $5,670 per employee, set by the IRS in Rev. Proc. 2026-22. If 9 of the 60 claim credits, the bill is $51,030. The (b) penalty can never exceed what (a) would have been, which here is (60 minus 30) × $3,780 = $113,400. We set out both penalties in ACA Penalties for Employers, 2026 and 2027 Exposure.

California employers have a second reason to watch the 2027 window. Health Net is leaving the California and Oregon group markets, with all group coverage ending February 28, 2027, according to Venbrook's employer notice. A Health Net group that can't meet another carrier's participation rule can use the window to move on January 1 rather than wait.

The tax credit you give up below 50%

Very small employers sometimes qualify for the Small Business Health Care Tax Credit, worth up to 50% of the premiums a business pays. The IRS lists the conditions: fewer than 25 full-time equivalent employees, coverage bought through a SHOP marketplace, and an employer payment of at least 50% of the cost of employee-only coverage. The credit lasts two consecutive tax years.

A window plan with a 20% contribution, or none, fails that last test. If the credit is part of why you are setting up a plan, the window's contribution waiver doesn't help you. Pay 50% and use the window only for the participation waiver.

When the window is the wrong tool

The window is for groups that can't get in any other way. If your group can meet a 50% to 75% participation rule, you have more choices, and some of them cost less than fully insured small group.

Our funding simulator models a 10-employee group in every state for 2027. Across 50 states, the median odds that a PEO plan costs less than fully insured over five years are 95% (range 88% to 97%). For level funded, across the 46 states where we model it, the median is 81% (range 71% to 85%). Both results assume the group gets accepted, which means meeting the PEO's or stop-loss carrier's enrollment rules. Neither one is available through the window.

For very small crews there is a third route. A 7-person delivery contractor we worked with in 2026 got onto a pooled Taft-Hartley plan with a BCBS PPO network after small group quotes came back thin and expensive with strict participation rules.

A checklist for the 2026 window

1. Count your employees the way the carrier will, using the rules in How Insurers Count Employees. Confirm you have at least one employee who isn't an owner or spouse.
2. Decide the contribution after running the 10.22% affordability test on each employee, and after checking whether 50% keeps a tax credit alive.
3. Ask the carrier in writing whether it nonrenews groups below its participation minimum, and at what point.
4. Get a level-funded or PEO quote at the same time if you could reach their enrollment minimum. Some groups find they qualify once they ask.
5. Submit by early December to clear general agency cutoffs, with the employer signature dated no later than December 15.
6. Put early November 2027 on the calendar to review the renewal before the next window opens, and flag any employees who moved to a new residence, since they may qualify for a separate enrollment review.

Frequently asked questions

Sources

1. U.S. Government Publishing Office via Cornell Law School Legal Information Institute, 45 CFR 147.104, Guaranteed availability of coverage, current as of October 2026, https://www.law.cornell.edu/cfr/text/45/147.104
2. U.S. Government Publishing Office via Cornell Law School Legal Information Institute, 45 CFR 147.106, Guaranteed renewability of coverage, current as of October 2026, https://www.law.cornell.edu/cfr/text/45/147.106
3. U.S. Government Publishing Office via Cornell Law School Legal Information Institute, 45 CFR 144.103, Definitions, current as of October 2026, https://www.law.cornell.edu/cfr/text/45/144.103
4. Word & Brown, ACA 2026 Special Open Enrollment Window for Small Groups, 2026, https://www.wordandbrown.com/NewsPost/Small-Group-Annual-Special-Open-Enrollment-Window
5. healthinsurance.org, Small group health insurance (glossary), 2026, https://www.healthinsurance.org/glossary/small-group-health-insurance/
6. Internal Revenue Service, Rev. Proc. 2026-26, July 21, 2026, https://www.irs.gov/pub/irs-drop/rp-26-26.pdf
7. Internal Revenue Service, Small Business Health Care Tax Credit and the SHOP Marketplace, last reviewed October 1, 2026, https://www.irs.gov/affordable-care-act/employers/small-business-health-care-tax-credit-and-the-shop-marketplace
8. Venbrook, Health Net exits commercial group market in California and Oregon: What employers need to know, September 10, 2026 (updated October 14, 2026), https://venbrook.com/media/health-net-exits-commercial-group-market-in-california-and-oregon-what-employers-need-to-know
9. Benefitra, 2027 state health insurance funding analysis (small group filed and final rates, funding simulator results), September 2026, https://benefitra.com/health-insurance-funding/
10. Benefitra Research, 2028 Small Group Health Insurance Renewal Forecast, September 29, 2026, https://benefitra.com/renewal-forecast-2028/
11. Internal Revenue Service, Rev. Proc. 2026-22 (2027 employer shared responsibility payment amounts), May 2026, https://www.irs.gov/pub/irs-drop/rp-26-22.pdf
12. Kilpatrick Insurance, Small Group Participation Holiday Explained, https://kilpatrickcos.com/blog/small-group-participation-holiday-explained
13. U.S. Government Publishing Office via Cornell Law School Legal Information Institute, 45 CFR 147.102, Fair health insurance premiums, current as of October 2026, https://www.law.cornell.edu/cfr/text/45/147.102