Employers face 6.5% benefit cost surge in 2026 — how benefit leaders can prepare

• Key Insight: Discover how employers are shifting from cost-shifting to value-based high-cost claims management.  
• What's at Stake: Rising benefits costs threaten employer budgets, employee affordability and workforce competitiveness.  
• Supporting Data: Mercer projects a 6.5% per-employee health cost rise in 2026; up to 9% without action.  
• Source: Bullets generated by AI with editorial review

Employers are preparing for the steepest rise in health benefit costs in more than a decade.
According to Mercer's 2025 National Survey of Employer-Sponsored Health Plans, total health benefit costs per employee are projected to increase by 6.5% in 2026 — the highest jump since 2010. Without employer interventions, the increase could reach nearly 9%. This marks the fourth consecutive year of accelerated cost growth following a decade of moderate 3% increases, signaling intensifying pressure on employer budgets.

The drivers behind these increases include cancer treatments and weight loss drugs, as well as a consolidation of healthcare providers into fewer, larger health systems, according to Mercer's data. More broadly, inflation has further pushed prices upward. At the same time, utilization is increasing as patients return for care they delayed during the pandemic, and virtual health services have made it easier to access care. 

"Health benefit cost trends have two primary components — healthcare price and utilization," explained Sunit Patel, Mercer's U.S. chief actuary for health and benefits, in a release. "This period of faster cost growth stems from a convergence of factors. Right now, both are rising."

Rethinking healthcare strategies

Mercer's survey shows that nearly six in ten employers plan to implement cost-cutting changes in 2026, a sharp increase from previous years. Traditionally, these changes involve raising deductibles or adjusting cost-sharing provisions, which can result in higher out-of-pocket expenses for employees. 

Read more: Here's how much employees need to save for healthcare in retirement

However, employers are increasingly pursuing strategies that emphasize value rather than shifting costs directly onto employees. The top priorities over the next few years include improving the management of high-cost claims, closely measuring the performance of health programs to ensure they deliver value, and expanding access to behavioral health care — a benefit that nearly two-thirds of large employers plan to enhance, according to Mercer. 

"The rise of virtual healthcare — and growing consumer acceptance of it, particularly in behavioral health — is also affecting utilization patterns because it removes geographic barriers to care and can be a more convenient option for patients," Patel said in the release. 

Read more: These technology-driven healthcare benefits are improving access to care 

For employees, the implications are significant. Paycheck deductions for health coverage are expected to rise by about 6-7% on average in 2026, as employee contributions generally increase proportionally with overall plan costs, Mercer's data predicts. Some employees may also encounter higher deductibles and copayments, which could shift additional expenses to the point of care. 

An opportunity to rethink open enrollment

Open enrollment will be more important than ever: For benefit leaders, the challenge lies in balancing financial sustainability with employee support. One critical step is to focus on the drivers of high-cost claims, using analytics to identify trends and expanding case management programs to ensure employees with complex conditions receive evidence-based, cost-effective care. 

Another key lever is employee engagement. By enhancing decision-support tools and providing transparency into provider costs and quality, employers can empower employees to make smarter healthcare choices. Offering plan navigation resources and financial wellness education can further help employees select coverage aligned with their needs. 

Read more: Financial wellness benefits that help — and hurt — employees

Finally, benefit leaders should establish rigorous methods for measuring the return on investment of health programs, tracking utilization, outcomes and employee satisfaction. This data-driven approach makes it possible to identify underperforming vendors, redirect resources, and continuously refine the benefits strategy.

"You want to have a vendor that is evaluating their providers for use of [evidence-based] treatments that work, and that's measuring all of the outcomes for their clinical care episodes," Joe Grasso, VP of workforce transformation at mental health platform Lyra Health, previously shared with EBN. "You [also] need the data that says, this is how many people engaged with care, got that care, improved and recovered. And one step further, this is what that can mean for cost savings in the health plan and for productivity and retention." 

Ultimately, employers must recognize that controlling costs is not simply about shifting expenses to employees. Excessive cost-sharing can deter individuals from seeking necessary care, which in turn worsens health outcomes and drives higher costs in the long run. A balanced approach requires maintaining investments in areas like behavioral health, chronic condition management, and preventive care — all of which improve well-being while reducing the likelihood of costly interventions down the line.

"Employers have been unwavering in their commitment to supporting employees' health since the early days of the pandemic," Ed Lehman, Mercer's U.S. health and benefits leader, said in the release. "They recognize it's essential for employee well-being and overall business performance."