Preparing for Rising Costs: Employer Health Plans in 2026

Understanding the Coming Sticker Shock in Employer Health Plans

As we head towards 2026, a significant rise in employer health care costs is imminent, fueled by a surge in the popularity of certain medications such as GLP-1 drugs used for weight management. The anticipated increase in employer-sponsored health insurance costs, projected to exceed $18,500 per employee, raises alarm for both employers and employees alike. This unprecedented spike highlights critical issues surrounding health care affordability, impacting quality of life and corporate budgets.

The Impact of Medication on Health Care Costs

The increasing utilization of GLP-1 medications like Ozempic and Wegovy, which help in managing obesity, has already seen a dramatic rise in coverage amongst large employers—from 44% in 2024 to 49% in 2025. While these drugs offer potential health benefits, their high costs are a significant contributor to the rising premiums and out-of-pocket expenses that employees are likely to face. The fortunes of these medications illustrate the broader systemic issues within health care pricing and access.

Employer Health Benefits: An Affordability Crisis

According to Mercer’s survey data, health insurance costs have risen by 6% this past year—outpacing inflation and wage growth. With the current trajectory, employers are bracing for another 6.7% increase next year. This constant escalation places immense pressure on companies struggling to maintain competitive benefits packages while ensuring their workers can still afford health care. A startling 28% of workers with lower household incomes reported being unable to afford necessary health care, illuminating the disparity in access.

Strategies for Affordability in Health Plans

Employers are urged to explore various strategies to mitigate rising costs and enhance affordability for their employees. Ed Lehman, Mercer’s US Health and Benefits Leader, emphasizes the significance of providing diverse medical plan options tailored to the varying needs of workers. Additionally, reducing out-of-pocket costs through enhanced preventive care options and utilizing value-based care strategies can help employees manage their health expenses more effectively without sacrificing quality.

Innovative Approaches: Navigating the Challenges

The Business Group on Health’s 2026 Employer Health Care Strategy Survey highlights that employers can no longer afford to rely solely on traditional health plans. Innovative approaches such as value-driven models, enhanced utilization of telehealth services, and targeted wellness programs focusing on chronic illness management are critical in combatting the financial strain. Employers’ proactive engagement in these areas can pave the way for a healthier workforce and a more sustainable financial strategy.

The Role of Mental Health in Overall Health Care Costs

In the evolving landscape of employer health benefits, mental health has surfaced as a considerable cost driver, with many employers reporting increased utilization of mental health services. This surge necessitates a dual focus on expanding access while ensuring the quality of care. By integrating mental health support within health plans, employers can address the long-term financial implications typically associated with untreated conditions.

Predicting Future Trends in Health Care Affordability

As we look ahead, the convergence of rising costs from chronic illness management, medication utilization, and mental health services present a perfect storm impacting both employers and employees. Understanding these dynamics will be crucial in shaping strategic plans for the immediate future, with companies needing to embrace innovative solutions that amplify value and improve outcomes.

Employers and employees together must navigate this impending affordability challenge by seeking transparent, smart options that focus not only on cost but also on quality of care. The time to act is now—employers must step up by exploring new models that prioritize health care access while keeping financial sustainability in sight.

For a more robust discussion on how employers can adapt their health plans and tackle rising costs, keep informed of the latest trends by subscribing to our periodic updates. Being equipped with knowledge is crucial as we gear up for the health care challenges in the years to come.