US Employers Brace for Steepest Health Benefit Cost Rise Since 2010 in 2026

American workers and employers alike are confronting a significant escalation in the cost of employer-sponsored health insurance. According to Mercer's 2025 National Survey of Employer-Sponsored Health Plans — based on responses from over 1,700 US employers — the total health benefit cost per employee is projected to rise an average of 6.5% in 2026, even after accounting for planned cost-reduction measures. This represents the steepest increase since 2010 and the fourth consecutive year of elevated cost growth, following a decade in which annual increases averaged only about 3%.

Without any cost-cutting interventions, employers estimated that plan costs would have risen by nearly 9% on average. Other industry forecasts paint an even more concerning picture: the Business Group on Health projects a 7.6% increase, while PwC predicts medical costs will surge 8.5% for a third consecutive year. Around 154 million Americans under age 65 rely on employer-sponsored coverage, making these increases broadly consequential for household budgets.

Several converging forces are driving the cost surge. Healthcare price inflation has accelerated, while utilization rates have risen over the past two years — partly due to the lingering effects of care delayed during the COVID-19 pandemic, and partly because the rise of virtual healthcare has removed geographic barriers and increased convenience, particularly for behavioral health. High-cost specialty and prescription drugs, especially GLP-1 weight-loss medications, are a major cost driver: about 60% of employers offering GLP-1 drugs in 2025 said costs exceeded expectations. Consolidation among health systems has also strengthened providers' negotiating leverage on rates.

The consequences for employees are direct. With 59% of employers planning cost-cutting changes in 2026 (up from 48% in 2025 and 44% in 2024), workers can expect paycheck deductions for health coverage to rise approximately 6–7% on average, as employee contributions typically increase proportionally with overall plan costs. Many employers are also raising deductibles, copays, and out-of-pocket maximums, meaning higher out-of-pocket spending at the point of care. Some are introducing non-traditional, high-performance network plans that limit provider choice in exchange for lower costs. Experts note that with wages not keeping pace, employees may increasingly question the value of their coverage.