Why Your Health Insurance Copays, Deductibles and Premiums Will Probably Surge Next Year
Employees should brace for a significant jump in the cost of their workplace health coverage beginning in 2026.
Although overall inflation has cooled compared with the past few years, businesses are bracing for the sharpest rise in health benefit expenses in a decade and a half, according to Mercer’s National Survey of Employer-Sponsored Health Plans released Thursday.
For workers, this means higher deductions from paychecks and steeper out-of-pocket bills at the doctor’s office—adding to the financial pressure already caused by persistently elevated consumer prices, which may rise further once President Donald Trump’s new tariffs take effect.
Mercer projects that employees will pay an additional 6% to 7% in premiums on average. While some employers may attempt to hold down premium hikes, they often do so by shifting costs elsewhere, such as increasing copays and deductibles.
“The cost of coverage is going up,” explained Beth Umland, director of research for health and benefits at Mercer. “That’s a combination of higher prices for health care services and higher utilization.”
During the COVID-19 pandemic, many companies absorbed rising medical costs to shield their employees, but Mercer found that fewer are continuing that practice.
According to the survey, 59% of employers plan to make cost-cutting adjustments to their health plans in the coming year, up from 44% in 2024. These adjustments typically include raising deductibles and out-of-pocket expenses for workers who seek medical care.
Employees will learn the full details of their 2026 benefits during open enrollment periods, which are usually held in the fall.
Sunit Patel, Mercer’s U.S. chief actuary for health and benefits, noted that many companies are trying to give workers more plan options, sometimes with lower price points. A common approach is offering broader provider networks but varying out-of-pocket charges depending on the doctor chosen.
Mercer’s forecast of a 6.5% increase in 2026 would mark the fourth straight year of steep cost growth, following a decade when yearly hikes averaged about 3%. The projection factors in anticipated employer strategies to curb spending. More than 1,700 companies with at least 50 employees were surveyed.
Other research aligns with these findings. The Business Group on Health said employers expect costs to rise 7.6% in 2026, after actual expenses in the past two years exceeded projections by wide margins.
“The story this year is perhaps more daunting and sobering than it ever has been,” Ellen Kelsay, the group’s CEO, said last month.
Health insurers are also preparing for steep increases, with PwC projecting medical costs for employers will grow 8.5% for the third consecutive year. The firm noted that its forecasts for 2024 and 2025 had to be revised higher based on insurers’ actual spending.
Cancer care continues to be the leading factor in rising costs for employers, fueled by higher diagnosis rates and increasingly expensive treatments, the Business Group on Health reported.
This trend has pushed companies to put more emphasis on prevention and early detection, such as expanding coverage for breast cancer screenings and less invasive alternatives to colonoscopies.
The rapid uptake of costly GLP-1 medications has also added to employers’ burdens. Nearly all large companies plan to cover these drugs for diabetes by 2026, while about three-quarters will cover them for obesity.
Around 80% of employers say usage of GLP-1s has already increased, and another 15% expect demand to climb further. To control expenses, many companies plan to require employees using the medications for weight loss to obtain prior authorization, join weight management programs, or fulfill other requirements.
Another contributor to rising costs is the growing demand for mental health services, which more employees are using. Businesses have been working to expand access and reduce stigma, but the additional utilization is driving up overall spending.
Looking ahead, employers are monitoring the potential for tariffs to push health care costs even higher, along with possible ripple effects from Trump’s domestic agenda, dubbed the “big, beautiful bill.” Analysts suggest the legislation could lead to more uninsured Americans, but Patel said it is too soon to measure its full impact given the many uncertainties that remain.
{Matzav.com}