The small-group market just split in two. Here is how to pick your 2027 path.
Fully insured or level-funded. A local brand or a national carrier. How UnitedHealthcare, Blue Cross and the rest of the Massachusetts market compare, and who each path fits.
If your company has fewer than 50 employees, your 2027 renewal is a real choice for the first time in years. The carriers are no longer offering the same thing.
Blue Cross Blue Shield of Massachusetts will discontinue all PPO and EPO plans in the merged market after 2026. Fully insured groups move to the nearest HMO Blue New England plan. Employers who want to keep PPO access are pointed to Blue Funding Solutions, a level-funded option for groups of 10 to 50 employees.
UnitedHealthcare is taking the other road. It still sells fully insured national-network plans to Massachusetts small groups, and it sells level-funded plans to groups as small as 2. In our 2027 quotes so far, it is pricing aggressively to win small groups.
For most employers, 11% is the best case. The approved 2027 increase of 11.0% is an average before age is applied. Massachusetts small group rates are priced on the age of each employee. If your team is a year older, or your new hires are older than the people who left, your increase lands above 11%, often well above it.
Two primary options, two different bets
We quote every carrier that will quote your group. For most Massachusetts small groups, the decision comes down to two of them: UnitedHealthcare and Blue Cross. Right now, UnitedHealthcare leads on flexibility and pricing. Here is how the two compare for 2027.
| What matters | Blue Cross Blue Shield of MA | UnitedHealthcare |
|---|---|---|
| Brand and service | Local, trusted and widely recognized; Massachusetts-based service | National carrier; service is less localized |
| Fully insured with national PPO access | Ends after 2026 Fully insured groups move to HMO Blue New England |
Still offered |
| Level-funded option | Blue Funding Solutions, groups of 10 to 50 | UnitedHealthcare Level Funded, groups from 2 |
| If the group does not pass level-funded underwriting | Fully insured HMO | Fully insured national-network plan |
| Network in Massachusetts | The long-time local standard | Broadly comparable for most employees |
| Network outside Massachusetts | National access through the Blue Cross PPO network | National network |
| 2027 pricing | Level-funded pricing still to be tested against the market | Aggressive in our quotes so far |
Sources: Becker’s Payer Issues; UnitedHealthcare Level Funded; Waugh Agency 2027 quotes.
Why UnitedHealthcare is our first call this year
Flexibility. Not every group qualifies for level funding. A carrier can rate a group up or decline it after underwriting, and some groups are simply too small for a 10-employee minimum. Those groups still need a national network. UnitedHealthcare can place them in a fully insured plan, and it can place healthier groups, from 2 employees up, in a level-funded plan. One carrier, both doors open.
The pricing is real too. This fall, one Massachusetts client leaving a discontinued Blue Cross plan saw UnitedHealthcare level-funded rates come in about 3% above what it pays today. Fully insured options ran about 24% to 41% higher.
When Blue Cross is still the right answer
Some employers value continuity above the last premium dollar. Blue Cross is local, trusted and accepted almost everywhere in Massachusetts. Employees know the card, and the service team is close to home. If your team is happy in an HMO, or your group fits the 10-to-50 level-funded window, Blue Cross can stay on the table. We will compare its level-funded pricing side by side as soon as quotes arrive.
The rest of the market
Other carriers have a place, and we quote them when they fit. For most groups they are not the first choice.
Aetna
Level-funded plans for groups as small as 2 or 3 employees. A useful third quote when a group wants to test level funding.
Cigna
Level-funded plans for groups of 25 or more employees. Worth a quote once a group reaches that size.
Harvard Pilgrim
Still offers both PPO and HMO plans to small groups. A solid local alternative with a strong regional network.
Mass General Brigham and other local plans
Competitive in the right situation, but with smaller networks. A fit when employees already use those systems.
Continuity with a local brand, or lower premiums with more flexibility. The choice is yours, and we put the numbers in front of you to make it.
What a level-funded plan actually is
A level-funded plan is a self-funded plan made predictable for a small employer. You pay one fixed monthly amount, much like a premium. That amount covers three parts:
Claims fund
Pays the medical and pharmacy claims of your employees.
Stop-loss insurance
Caps your exposure if claims run high, for one person or for the whole group.
Administration
The carrier or a third-party administrator (TPA) runs the network, claims, ID cards and customer service.
If claims come in under the fund, many plans return part of the surplus or credit it toward the next year. If claims run over, stop-loss pays the excess, so the monthly cost stays level for the plan year.
Why the rules are different: ERISA versus state insurance law
A fully insured plan is an insurance policy. The state insurance department regulates it, and under the Affordable Care Act (ACA) it must follow the small group market rules for insurers.
A level-funded plan is legally a self-insured employer plan under the federal Employee Retirement Income Security Act (ERISA). ERISA preemption generally keeps states from regulating self-insured plans as insurance. Several key ACA reforms were written for insurance issuers, not for self-insured plans. Only the stop-loss policy is insurance, and it covers the employer, not the employees.
What level funding can strip out
The savings come from ACA small group rules and state mandates that a self-insured plan does not have to follow. Pediatric dental and pediatric vision are the best-known examples, but they are not the biggest.
| Feature | ACA fully insured small group | Level-funded (self-insured under ERISA) |
|---|---|---|
| Essential health benefits (all 10 categories) | Required | Not required Most plans still cover the core medical categories |
| Pediatric dental | Required Embedded or stand-alone |
Can be excluded |
| Pediatric vision | Required | Can be excluded |
| State-mandated benefits (in MA: infertility/IVF, hearing aids for children, autism treatment) | Required | Not required by law Coverage varies by carrier, plan and document, sometimes with narrower limits |
| How rates are set | Modified community rating: age, location, family size; no health underwriting | Underwritten on the group’s own health and claims |
| Guaranteed issue | Carrier must offer coverage to any small group | Carrier can rate up or decline the group |
| Single risk pool and risk adjustment | Shares costs with every plan in the merged market | Not part of the state risk pool or risk adjustment |
| Medical loss ratio (MLR) rebates | Applies | Does not apply Surplus refund depends on the contract |
| State rate review | Rates filed and reviewed by the state | Not subject to state rate review |
| State premium tax | Taxed on the full premium | Generally applies only to the stop-loss portion |
| Federal mental health parity (MHPAEA) | Applies Through the ACA |
Employers with 50 or fewer employees are generally exempt; most plans follow parity anyway |
Sources: Newfront on essential health benefits; Self-Insurance and the Potential Effects of Health Reform on the Small-Group Market.
What does not change
Level funding is not a loophole around every consumer protection. These ACA rules apply to self-insured plans too:
- Preventive care covered at no cost to the employee
- Dependent coverage to age 26
- The annual out-of-pocket maximum
- No annual or lifetime dollar limits on the essential health benefits the plan covers
- No pre-existing condition exclusions
- No individual premium differences based on health status within the group
- The Summary of Benefits and Coverage (SBC), No Surprises Act protections, and price transparency rules
Mandates: what the law allows versus what carriers actually do
ERISA lets a level-funded plan skip Massachusetts mandates. That does not mean every carrier does. Some build Massachusetts benefits such as infertility treatment, hearing aids for children and autism therapy into their level-funded plans. Others leave them out, or cover them with different age limits, visit caps or dollar limits than state law requires.
We read the actual plan documents, and the proposal, the benefit summary and the full Summary Plan Description can each tell a different story. A national template can exclude a benefit that the Massachusetts version adds back.
- Whether in vitro fertilization (IVF) is covered or only the diagnosis of infertility, and whether fertility drugs are covered
- The age limit and dollar limit for hearing aids, measured against the Massachusetts rule of coverage for dependents up to age 21
- Coverage for Applied Behavior Analysis (ABA) for autism, and any therapy visit limits that apply
- Exclusions for weight-loss medications, bariatric surgery or other high-cost services
- Which document governs when the benefit summary and the plan document disagree
Waugh Agency keeps a carrier-by-carrier comparison of how each level-funded product handles these benefits in Massachusetts. We walk you through it in your free benefits review.
Why level funding has become the ACA escape valve
The ACA small group market works by pooling. Every fully insured small group in Massachusetts shares one risk pool, and rates cannot reflect the health of any one group. That protects groups with high claims. It also means a young, healthy group pays for everyone else.
When costs climb as fast as they are now, healthy groups look for a way out, and level funding is the door. Each group that leaves makes the remaining pool a little older and sicker, which pushes fully insured rates higher for the groups that stay. Carriers are responding in different ways. Some move their most flexible products to the self-insured side. Others, like UnitedHealthcare, keep both doors open.
The trade-offs, stated plainly
Your health status sets your price
Rates are underwritten on the claims and risk of your group. A carrier can quote aggressively, rate you up, or decline to quote.
Renewals can move
One large claim or a new diagnosis can drive a sharp increase at the next renewal, even with stop-loss in place.
Benefits you drop may matter to someone
Leaving out IVF, pediatric dental or another mandate saves money. Know who on your team relies on it before you decide.
Read the stop-loss contract
Check the terms for run-out claims, terminal liability, surplus refunds and any “lasering” of a high-cost individual.
A carrier with both doors open is your backstop. If level funding stops making sense, you can move back to a fully insured plan at renewal. With a carrier that sells both, you keep the same network.
Done right, a level-funded plan can deliver national network access, lower fixed costs and real visibility into where your health dollars go. See our self-funded and level-funded plan services.
The compliance you take on
With a fully insured plan, the carrier handles most federal and state filings. With a level-funded plan, the employer is the plan sponsor and is legally responsible, even when the TPA does the paperwork. Use this checklist.
| Requirement | What it is | When it is due | Who usually does the work |
|---|---|---|---|
| PCORI fee | Federal research fee per covered life, filed on IRS Form 720. $3.84 per covered life for plan years ending Oct 2025 to Sept 2026, indexed yearly | July 31 of the year after the plan year ends | Employer files and pays |
| Forms 1094-B and 1095-B (under 50 employees) or 1094-C and 1095-C (50+) | IRS reporting of who had coverage | Employee forms by Jan 31, or on request with a posted notice; IRS filing Feb 28 (paper) or Mar 31 (electronic) | TPA often prepares; employer is responsible |
| Massachusetts Form MA 1099-HC | Proof of Minimum Creditable Coverage for MA residents | Jan 31 to employees and the MA DOR | TPA on request; make sure it is in your contract |
| Prescription drug data collection (RxDC) | Annual pharmacy and medical cost report to CMS | June 1 | TPA and PBM usually file; employer confirms |
| Gag clause attestation | Annual attestation that no contract blocks access to cost and quality data | Dec 31 | TPA may attest for you; confirm in writing |
| Form 5500 | Annual ERISA return | Last day of the 7th month after plan year end | Generally required at 100+ participants; smaller plans may be exempt depending on how the plan is funded |
| Plan document and Summary Plan Description (SPD) | The written ERISA plan and the employee summary | Before the plan starts; SPD within 90 days of enrollment | TPA provides a template; employer adopts and distributes |
| Summary of Benefits and Coverage (SBC) | Standard plan summary | At open enrollment and on request | TPA prepares; employer distributes |
| HIPAA privacy and security | The plan is a covered entity; the employer needs privacy policies, a plan amendment and a business associate agreement with the TPA | Before the plan starts, then ongoing | Employer |
| Medicare Part D creditable coverage | Notice to Medicare-eligible members and a disclosure to CMS | Employee notice before Oct 15; CMS within 60 days of plan year start | Employer |
First, make sure that the plan design meets the state Minimum Creditable Coverage standards, so employees avoid the state tax penalty. Second, get written confirmation of which filings your TPA handles. A missed filing is still the employer’s problem.
How Waugh Agency helps you choose
Underwriting windows are short, quotes can change, and 2027 renewals are already arriving. Waugh Agency is a team of group health and health-reform compliance specialists: AHIP-certified, NABIP Accredited, multi-state licensed. We work from Andover, Massachusetts, with employers across Boston, New York City and the Northeast, and in all 50 states through trusted affiliates.
Shop the full market
We request proposals from every carrier that will quote your group, fully insured and level-funded, so you see the real alternatives side by side.
Weigh brand against budget
We put continuity, network, service and price on one page, so the decision reflects what your company values most.
Check your doctors first
Before any move, we test the providers your employees use against each carrier network.
Stay compliant
We map your PCORI, 1095, MA 1099-HC, RxDC, gag clause and plan document duties, and get written confirmation of what your TPA covers.
Enrollment runs on Employee Navigator, at no cost to eligible groups. We absorb the subscription. You get AI-assisted plan build, 600+ carrier, payroll and TPA integrations, and automated compliance tracking.
See both paths, priced for your team.
Book a 15-minute call, or send us your census and current renewal. We will run the numbers for your group and lay out fully insured and level-funded options from every carrier that quotes, side by side.
service@waughagency.com · Mon–Fri 8:30a–7:00p · Sat 10:00a–4:00p
Tell us about your group. We will reach out with two times for your review.
General information only — not legal, tax, or insurance advice for a specific situation. Rules vary by plan design and state; confirm your obligations with your TPA or counsel.