East Tennessee Businesses Grapple with Steep Health Insurance Premium Increases Following Expiry of ACA Tax Credits
KNOXVILLE, Tenn. — Small and medium-sized businesses across East Tennessee are facing significant health insurance premium hikes in 2026 as Affordable Care Act (ACA) tax credits have expired. The loss of these subsidies has left many local employers scrambling to manage escalating costs that directly affect their employees’ healthcare coverage.
Advent Electric, a local full-service contractor based in Knoxville, provides a telling example of this challenge. The company covers 100% of its employees’ healthcare costs, a commitment that co-owner Nicholas Hodge described as increasingly difficult to maintain amid rising premiums. “It is the last thing I thought I would be dealing with as a business owner, trying to guess health insurance — trying to guess what’s best,” said Hodge.
To mitigate the impact, Advent Electric regularly navigates the ACA marketplace on behalf of its employees, switching carriers when necessary to secure better rates. This year, the company shifted from Blue Cross Blue Shield to United HealthCare. Despite these efforts, the business has seen a 14% increase in health insurance premiums in 2026. Hodge underscored the difficulty small to mid-sized companies face, noting an industry-wide trend where insurers are increasingly reluctant to bid on plans for businesses with around 100 employees.
The Tennessee Small Business Development Center (TSBDC) reports that some of its clients have experienced even steeper premium increases of up to 25% this year. Gregg Bostick, director of the TSBDC, advises businesses to maintain a sharp focus on their financials: “Know your numbers. Know where your costs are increasing, where there’s opportunities to drive costs down.”
Business owners are now confronted with tough decisions to balance rising expenses. Bostick highlights two primary options for increasing revenue to offset higher insurance costs: “Increase the number of products or services that you provide or sell, or raise your prices.”
In an effort to keep coverage affordable for employees, Advent Electric negotiated with their health insurance provider to limit carrier competition in exchange for cost containment commitments. “We just felt like it was important that every guy’s covered, and they don’t have to make that decision when it comes down to their paycheck,” explained Hodge. “We just thought it was something that they needed.”
The sharp premium hike is directly linked to the expiration of Affordable Care Act tax credits, which were scaled back following the passage of former President Trump’s “One Big Beautiful Bill Act.” Attempts by Democrats to extend these tax credits during the recent 43-day federal government shutdown were unsuccessful, leaving many business owners unprotected from increasing costs.
As health insurance costs climb without the cushioning effect of ACA subsidies, East Tennessee business owners must brace for further financial strain in 2026 and beyond. The situation underscores broader concerns about the affordability and sustainability of employer-sponsored health coverage in the post-subsidy era.
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