Employer-sponsored health insurance plans are projected to face their steepest cost increase in 15 years, with total health benefit costs per employee expected to rise 6.5% in 2026, according to new survey data. Without intervention, employers estimate that costs would soar nearly 9%, highlighting the pressure on organizations to implement cost-control measures.
The projections are based on responses from more than 1,700 U.S. employers in Mercer’s 2025 National Survey of Employer-Sponsored Health Plans. Complete findings from more than 2,000 organizations are set to be released later this year.
This marks the fourth consecutive year of elevated growth in health benefit costs, a stark contrast to the prior decade when annual increases averaged just 3%. The 2026 surge is prompting many employers to rethink their healthcare strategies, blending short-term cost-sharing changes with longer-term structural reforms.
What’s Driving the Cost Spike?
Experts point to two intertwined factors behind the trend: rising Employer-sponsored health insurance prices and higher service utilization.
The cost of medical treatments is climbing as innovative therapies, such as advanced cancer drugs and weight-loss medications, replace older, less expensive options. Consolidation among providers has also given large health systems greater leverage in setting reimbursement rates, while broad economic inflation, including higher wages in the healthcare sector, continues to push prices upward.
Technology is also influencing costs. AI-driven platforms are being used to streamline billing processes, which may inadvertently contribute to higher spending.
On the utilization side, healthcare services are in greater demand. Many patients are now seeking care they deferred during the pandemic, while expanded provider capacity, aided by AI and virtual health tools, is making it easier for people to access services. The growth of telehealth, particularly in behavioral health, has also boosted demand by lowering barriers to care.
How Employer-sponsored health insurance Are Responding?
Nearly six in ten employers plan to modify their health plans in 2026 to manage costs, up from 48% in 2025. The most common changes include raising deductibles and copays, shifting more of the financial burden onto employees.
However, many organizations are exploring strategies that aim to reduce costs without cutting affordability. Survey respondents cited two top priorities: targeting high-cost claims through case management and evaluating health programs to ensure they deliver value. Both approaches aim to contain expenses at the source rather than through broad cost-sharing.
Behavioral healthcare remains a focus as well. About two-thirds of large employers plan to expand mental health support, adding on-site services, training for managers, and digital well-being tools. Companies increasingly recognize that mental health is critical for workforce stability and productivity.
What Employees Can Expect in 2026
For employees, the impact of rising costs will be tangible. Premium contributions are projected to increase 6% to 7% on average, while higher deductibles and copays will likely push out-of-pocket costs higher.
To help workers navigate these changes, employers are emphasizing education around plan selection. Non-traditional options, such as high-performance networks and variable copay models, are gaining traction. These plans often limit provider choice but can offer lower premiums and more predictable out-of-pocket expenses.
As organizations weigh cost controls against employee well-being, the coming year is set to test the balance between affordability, access, and innovation in Employer-sponsored health insurance .
Also Read :- United Healthcare Insurance: What It Is & Why It Might Be Right ?
