Workers may face significant increases in their health insurance costs as employers prepare for the highest growth in health benefit expenses in 15 years, according to Mercer’s National Survey of Employer-Sponsored Health Plans released recently. The anticipated rise in costs comes despite overall inflation showing signs of moderation, highlighting a challenging financial landscape for employees already grappling with high consumer prices.
Mercer’s research indicates that employees should expect to see premium increases of around 6% to 7% in 2026. While some employers may attempt to mitigate these hikes, they are likely to do so by imposing higher deductibles and copays, consequently shifting more financial burden onto workers.
“The cost of coverage is going up,” noted Beth Umland, Mercer’s director of research for health and benefits. She attributed the overall increase to rising prices for healthcare services and an uptick in the use of these services. During the pandemic, many employers absorbed escalations in healthcare expenses to shield their workforce, but this trend is waning as companies shift back to passing on costs to employees.
In fact, the survey revealed that 59% of employers are planning cost-reduction strategies for their health insurance plans next year, a marked increase from 44% in 2024. Such changes often involve higher deductible requirements and increased out-of-pocket expenses for employees when accessing care.
As open enrollment approaches this fall, employees will receive detailed information regarding their healthcare coverage for 2026. Some employers are responding to cost pressures by diversifying plan offerings, which may include options with lower costs for enrollees. One notable trend is the introduction of plans featuring broad networks of physicians alongside varying out-of-pocket costs depending on the provider.
The forecasted 6.5% increase in healthcare costs for 2026 marks the fourth consecutive year of heightened cost growth, contrasting sharply with the decade prior, which saw average annual increases of around 3%. This projection is derived from data collected from over 1,700 employers with 50 or more employees.
Additional analyses from the Business Group on Health corroborate these findings, indicating an expected 7.6% increase in costs for 2026, following years of actual healthcare expenses outpacing earlier projections. “The story this year is perhaps more daunting and sobering than it ever has been,” stated Ellen Kelsay, CEO of the Business Group on Health.
Healthcare costs from insurers are expected to rise by 8.5%, marking consistent growth for the third year in a row. Rising expenses are being fueled particularly by cancer care, which has been a primary cost driver for employers over the last four years due to increasing diagnoses and expensive treatment options. Consequently, many companies are now focusing on cancer prevention initiatives and expanding coverage for screenings.
The use of GLP-1 drugs, which are both popular and expensive, is also on the rise, pushing employer costs higher. Almost all surveyed companies plan to provide coverage for these medications for diabetes in 2026, with just under three-quarters extending that coverage to obesity treatments. Approximately 80% of employers are already witnessing increased usage of these drugs, with additional companies expecting this trend to continue. In response, many will implement cost-control measures requiring prior approvals or participation in weight management programs for employees using these medications.
As mental health services usage continues to rise, employers are facing additional financial challenges. Many are actively working to expand access to mental health care while addressing stigma around seeking help.
Looking ahead, businesses are keeping an eye on potential cost spikes related to tariffs and the implications of legislative agendas that could increase the number of uninsured Americans. However, analysts caution that it remains too early to make definitive predictions due to numerous unresolved factors.
