The Memorial Hermann health plan closing affects commercial employer groups across Houston and southeast Texas. Memorial Hermann is winding down three products — its HMO, PPO, and self-funded administration platform — and every employer group will lose coverage at its next renewal date through 2027. If your company relies on a Memorial Hermann commercial plan today, you have a defined deadline and a clear set of steps to protect your employees.
This post covers exactly what is ending, the timeline that applies to your group, what to verify before you switch carriers, and the replacement options available to Houston-area employers with five to one hundred employees.
What Is the Memorial Hermann Health Plan Closing?
Memorial Hermann is exiting the commercial employer health insurance market entirely, discontinuing its HMO, PPO, and self-funded administration products. Three entities are involved in the wind-down: Memorial Hermann Commercial Health Plan (the HMO), Memorial Hermann Health Insurance Company (the PPO), and Memorial Hermann Health Solutions (the self-funded administration platform). According to the Memorial Hermann employer Program Closing page, groups renewing before December 1, 2026 may elect one final plan year, and each group’s coverage ends with that plan year. No new groups are being written.
This is not a merger or an acquisition. The commercial book of business is simply closing. That means your current network, your negotiated rates, and your plan design all go away at renewal. There is no automatic transition to another carrier.
Which Employers Are Affected?
Any employer in Texas currently enrolled in a Memorial Hermann commercial group health plan is affected. That includes fully insured HMO and PPO groups as well as self-funded groups administered through Memorial Hermann Health Solutions. The wind-down is specific to commercial employer plans; it does not affect the Memorial Hermann health system’s hospital and clinic operations, which continue as normal.
What Is the Timeline?
The timeline is renewal-driven. Groups with a renewal date before December 1, 2026 may take one additional plan year, meaning their last day of coverage could fall as late as November 30, 2027. Groups renewing on or after December 1, 2026 should expect coverage to end at that renewal. Confirm your specific end date with your broker or directly with Memorial Hermann’s employer services team, because the cutoff is tied to your group’s anniversary date, not a single industrywide termination date.
Run the numbers on better benefits for your team. The PEO Calculator shows what companies your size are paying.
How Does Network Continuity Work When a Health Plan Closes?
Network continuity means ensuring your employees can keep seeing the same doctors, specialists, and facilities after switching carriers. When a commercial plan closes, that obligation does not transfer automatically to a new carrier — your team needs to verify in-network status under whatever replacement plan you choose.
Steps to Protect Employee Care
Start by collecting a list of the providers your highest-utilization employees currently see, including primary care physicians, specialists, and any ongoing therapists or behavioral health providers. Then run each provider through the network directories of your shortlisted replacement carriers before you sign anything. The Texas Department of Insurance maintains guidance on continuity of care rights during plan transitions, which may apply during the gap between termination and new coverage effective date.
For employees in active treatment — mid-chemotherapy, post-surgical recovery, or high-risk pregnancy — continuity of care is a legal and HR priority. Most Texas-regulated carriers are required to honor continuity of care for a defined transition period under state law. Confirm the specific terms with each carrier you are evaluating.
Memorial Hermann Hospitals and Clinics After the Plan Closes
It is worth repeating: the Memorial Hermann health system — its hospitals, emergency rooms, and outpatient clinics — is not closing. What is closing is the insurance entity that administered employer group coverage. Many replacement carriers in the Houston market already include Memorial Hermann facilities in their networks. Verifying that the system remains in-network under your replacement plan is one of the most important steps a Houston employer can take right now.
What Are the Replacement Options for Houston Employers?
Houston-area employers in the five-to-one-hundred-employee range have four primary paths: buying a fully insured group plan directly from a carrier, moving to a level-funded arrangement, joining a Multiple Employer Welfare Arrangement (MEWA), or working through a Professional Employer Organization (PEO) that provides group health benefits as part of a co-employment model.
| Option | Best For | Key Advantage | Key Consideration |
|---|---|---|---|
| Fully insured carrier (HMO/PPO) | Groups wanting predictable monthly premiums | Simple to administer; fixed cost | Rates reset at every renewal |
| Level-funded plan | Healthier groups, 10–100 employees | Potential refund if claims run low | Requires underwriting; stop-loss caps risk |
| MEWA / association plan | Industry associations or trade groups | Group buying power for small employers | Eligibility tied to association membership |
| PEO co-employment model | 5–100 employees seeking Fortune-500-level benefits | Large-group rates; HR and payroll bundled | Co-employment relationship; PEO selects carrier |
How Does a PEO Work as a Replacement Option?
A Professional Employer Organization enters a co-employment relationship with your business, putting your employees on a large shared employer group for benefits purposes. Because PEOs aggregate employees across many client companies, they negotiate health insurance as a large employer — which typically means richer plan designs and more stable rates than a small group can access independently. According to NAPEO, PEO clients grow 7–9% faster than comparable non-PEO businesses, and employee turnover is 10–14% lower. Based on our analysis of 40+ vetted PEOs, businesses that move to a PEO model often reduce operation and benefit costs by 20–40%.
The tradeoff is that the PEO selects the health carrier, so you give up some control over plan design. For many small and mid-size employers, the access to large-group networks — which in Houston often include Memorial Hermann facilities — more than offsets that limitation. You can explore how different PEOs compare on benefits and pricing at our guide to the best PEOs for small business or use the Benefits Benchmark tool to see what companies your size are paying in your industry.
Carriers Active in the Houston Market for 2027
Several fully insured and level-funded carriers actively write small and mid-size group business in the Houston metro area, including Blue Cross Blue Shield of Texas, Aetna, UnitedHealthcare, Cigna, and Oscar Health. Network breadth varies by plan tier, so a plan that lists Memorial Hermann in its directory at a broad tier is not the same as one that lists it only in a premium or buy-up tier. Request network tiering detail — not just a provider directory — when you shop.
The IRS HSA contribution limits, out-of-pocket maximums, and other cost-sharing figures that govern plan design for 2027 are set by IRS guidance issued in 2026. Confirm current figures at IRS.gov before finalizing plan selections. ACA employer shared responsibility thresholds for 2027 follow SSA cost-of-living adjustment announcements; check SSA.gov for updated figures once published.
How to Plan the Switch by Your Renewal Date
Planning the switch means working backward from your coverage end date to build a decision timeline with enough room for underwriting, enrollment, and employee communication. Rushing this process is the primary way employers end up with a gap in coverage or a plan their employees do not understand.
A Practical Transition Checklist
Start ninety days before your Memorial Hermann end date. Confirm your exact termination date in writing. Collect provider lists from your top benefits users. Issue a request for proposals to at least three alternatives — including at least one PEO quote if you have not evaluated that model before. Narrow to two finalists, verify network status for key providers, and confirm continuity of care terms for employees in active treatment. Finalize your decision sixty days out, complete enrollment, and issue employee communications no later than thirty days before the new effective date.
If your renewal falls in the first quarter of 2027, that means your RFP process should be underway now. Comparing multiple options side by side is the most effective way to avoid overpaying — see how leading platforms compare and review the Insperity cost comparison if you are evaluating larger national PEOs.
NAPEO provides additional resources on the PEO co-employment model at NAPEO.org. The Department of Labor’s Employee Benefits Security Administration offers guidance on group health plan rights and continuation coverage at DOL.gov/agencies/ebsa.
How PEO Marketplace Helps Houston Employers Through This Transition
PEO Marketplace is a licensed insurance agency that matches employers with vetted benefit and HR solutions. Our network includes 40+ vetted PEOs, and our matching process is built around your industry, headcount, location, and benefit priorities — not a commission incentive to push one provider. The problem with the employer benefits buying process is that most business owners see only one or two options at a time, often from a single agent representing a single carrier. Seeing several options side by side, with apples-to-apples cost and network data, produces better decisions.
Use the Find Your PEO tool to begin a structured comparison, or book a call below to walk through your Memorial Hermann transition with an advisor who works across multiple carriers and PEO platforms.
Your Memorial Hermann coverage has a known end date. Start your replacement search now.
An advisor from PEO Marketplace will map out your options across carriers and PEOs with no obligation and no sales pressure — just a clear comparison.
Prefer to compare on your own timeline first. Run the Benefits Benchmark for your industry and we will email you a breakdown of what companies your size are paying for HR, benefits and workers comp.
Frequently Asked Questions
When exactly does Memorial Hermann health plan coverage end for my group?
Your coverage ends at the conclusion of your current plan year. Groups renewing before December 1, 2026 may elect one final plan year, so the latest possible end date for most affected groups is in late 2027. Confirm your specific termination date in writing with Memorial Hermann’s employer services team, because the date is tied to your group’s anniversary date.
Will my employees still be able to use Memorial Hermann hospitals after the plan closes?
Yes. The Memorial Hermann health system — its hospitals, emergency rooms, and outpatient clinics — is not closing. Only the commercial insurance entities are winding down. Employees can continue using Memorial Hermann facilities as long as those facilities are in-network under your new replacement plan, so verifying network status before you switch carriers is a critical step.
Is there a COBRA continuation option when the plan terminates?
Federal COBRA rules generally apply when group health plan coverage ends, but COBRA continuation is tied to the original plan, which will no longer exist after termination. Employees will need to enroll in a new group plan through your replacement carrier or explore individual marketplace coverage. The Department of Labor’s guidance on group health continuation rights is available at DOL.gov/agencies/ebsa.
How much does it cost to switch to a new carrier or PEO?
Direct carrier replacement costs vary by plan design, employee demographics, and the carrier’s small-group rating methodology; 2027 benchmark figures have not been universally published yet, so request quotes specific to your group. Employers who move to a PEO co-employment model often see operation and benefit costs reduce by 20–40%, based on our analysis of 40+ vetted PEOs, primarily because PEOs access large-group underwriting that small employers cannot reach independently.
How far in advance should Houston employers start shopping for a replacement plan?
Start the replacement process at least ninety days before your Memorial Hermann coverage end date. That window allows time for underwriting, network verification, enrollment, and employee communication without creating a gap in coverage. Employers with complex workforces or employees in active treatment may need to start earlier to address continuity of care requirements.
