Employers across the United States are preparing for a significant rise in health care costs in 2026, marking what could be the sharpest increase in more than two decades. According to recent surveys conducted among employers and benefits consultants, the average cost per worker for health coverage is expected to rise between 8 and 11 percent next year, even after many companies make adjustments to their health plans.
A survey by Marsh, a benefits consulting firm, found that more than one-third of 1,800 employers anticipate their health care expenses will increase by at least 10 percent post-benefit modifications. This would represent the steepest annual rise since 2003. Another industry projection from insurance broker Aon estimated a 9.5 percent increase, which would push the average employer cost per employee above $19,000 if no changes are implemented.
The growing financial burden is expected to affect the roughly 160 million Americans under the age of 65 who receive health insurance through their employers. Workers will likely face increased premiums, deductibles, and co-payments, leading to higher out-of-pocket expenses. Aon projected that employees’ average out-of-pocket costs will rise by about 10 percent next year, amounting to an additional $2,167 compared to 2025.
Employers attribute higher costs to several factors, including rising hospital care charges and prescription drug prices, particularly for therapies such as cancer treatments and GLP-1 drugs used for diabetes and obesity. The demand for GLP-1 medications has been described as “robust,” which adds pressure on the overall system. Additionally, some specialists’ out-of-network charges have risen, partly due to a consumer protection law enabling providers to appeal reimbursement rates, leading to higher payments by employers.
Emerging contributors to cost increases include the use of artificial intelligence by hospitals and doctors to more comprehensively document care, resulting in higher reimbursements. Meanwhile, potential reductions in government funding programs like Medicaid may prompt hospitals to seek greater reimbursements from employer-sponsored insurance plans to compensate for rising numbers of uninsured or underinsured patients.
Employers are responding to these challenges by reevaluating health benefit offerings and exploring alternative approaches to care delivery. For instance, Miami-Dade County Public Schools, which provides coverage for approximately 45,000 employees and their families, is considering new strategies such as contracting directly with hospitals and physicians for specific services and demanding greater transparency and audits regarding medical claims.
Many employers are also revisiting their relationships with insurers and pharmacy benefit managers, with some shifting away from the largest pharmacy benefit managers toward smaller companies that promise more transparency in drug pricing. Additionally, some firms are implementing narrower provider networks to steer patients to select hospitals or doctors, potentially offering financial incentives or limiting access to non-network providers.
Experts note that smaller employers may experience the greatest financial strain and consequently are making more significant changes to their health plans. Overall, industry observers suggest there is an increased openness within the employer community to pursuing disruptive changes in health care purchasing and delivery in an effort to contain escalating costs.
As health care expenses continue to rise faster than general inflation—potentially increasing by 76 percent over the next decade—employers and employees alike face increasing pressures in managing affordability and access to medical services.