Health Plan Costs for 2026: What Employers Need to Know

by PWS Marketing Department | Feb 27, 2025 | Healthcare

As we approach 2026, businesses and HR professionals are bracing for changes in healthcare costs. The economic landscape, evolving healthcare policy, and rising healthcare demands from employees will all play a role in shaping the costs of employer-sponsored health plans in the coming years. With healthcare expenses consistently outpacing inflation, companies are facing a challenge in balancing the quality of benefits with affordability.

In this article, we’ll explore the key factors influencing the projected increase in employer health plan costs for 2026, what employers can expect in terms of spending, and strategies to manage these expenses without compromising on care.

Rising Premiums and Overall Healthcare Spending: Employer health plan costs have been rising steadily over the past decade, and experts predict this trend will continue into 2026. According to a report from the National Business Group on Health, the average employer health plan cost in 2026 could rise by as much as 6-8% annually, following a similar trend observed in recent years.

Several factors are driving these cost increases:

Medical Inflation: The cost of medical services is consistently growing, driven by the rising prices of pharmaceuticals, hospital services, and outpatient care. Additionally, the increased use of high-cost specialty drugs and advanced medical treatments contributes to this inflation.
Aging Population: As the workforce ages, there is a higher demand for healthcare services, particularly chronic disease management, long-term care, and age-related treatments, which adds to overall healthcare costs.
Pandemic Aftermath: The COVID-19 pandemic led to delayed treatments, health complications, and a rise in mental health issues, all of which are expected to continue influencing healthcare spending for years to come.
Government Cuts and Administration Changes: Broader economic trends, such as inflation or the impact of global events and tariffs could also drive healthcare costs higher. Healthcare costs can increase or decrease due to specific administration policies, as this will depend on both the political landscape and decisions made by the government. If drug pricing remains unregulated or the administration fails to implement significant changes, it could result in higher drug costs.

For employers, this means that premiums for employee health plans will likely increase, with some employers projected to pay an average of $15,000 per employee per year for a comprehensive health benefits package by 2026, an increase from the $13,000-$14,000 range in 2024.

Shift Toward High-Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs): To manage rising costs, more employers are likely to shift toward high-deductible health plans (HDHPs) in 2026. HDHPs, which typically come with lower premiums but higher out-of-pocket costs, are designed to encourage employees to make more cost-conscious decisions about their healthcare. These plans are often paired with Health Savings Accounts (HSAs) that allow employees to save pre-tax dollars to cover their medical expenses.

Employers see these plans as an effective strategy to control costs while still offering employees flexibility in how they access care. According to the Kaiser Family Foundation’s Employer Health Benefits Survey, nearly 30% of employers with 50 or more employees offered HDHPs in 2023, and this number is expected to rise in the coming years as companies look for ways to reduce premium increases.

Although HDHPs shift more cost responsibility onto employees, they also provide a way for employers to cap their overall healthcare expenditure while promoting a more consumer-driven approach to healthcare.

The Growing Importance of Telemedicine and Virtual Care: Telemedicine has exploded in popularity over the past few years, and it is expected to remain a key tool for reducing healthcare costs for employers and employees in 2026. Virtual care offers a cost-effective solution for managing minor illnesses, mental health issues, and chronic disease management without the need for expensive in-person doctor visits.

Employers are increasingly integrating telehealth services into their health benefits packages. A 2023 survey from Mercer indicated that 60% of employers are planning to expand their telemedicine offerings in 2026, and nearly half of these employers expect to see a reduction in overall healthcare costs as a result. The convenience of virtual care also helps employees avoid emergency room visits and more costly in-person consultations, leading to reduced healthcare spending.

By leveraging telehealth, employers can better manage the costs of preventive care, which has the potential to lower overall claims by addressing health issues before they escalate. In 2026, we can expect telemedicine to become an even more integral part of employer health plans.

Focus on Mental Health and Wellness Programs: Mental health has emerged as a priority for employers, especially after the disruptions caused by the pandemic. Employee well-being is no longer just about physical health; mental health is now a critical part of comprehensive benefits packages. Employers are recognizing that mental health issues, such as anxiety, depression, and stress, can significantly impact employee productivity, engagement, and retention.

In 2026, mental health and wellness programs are expected to become even more embedded in employer health plans. This could include access to counseling services, wellness apps, and therapy coverage. Employers will likely expand coverage for teletherapy services and in-network mental health professionals, helping employees access care without high out-of-pocket costs.

The cost of mental health support is likely to increase, but the return on investment (ROI) for employers in terms of improved productivity, lower absenteeism, and higher employee retention could outweigh the initial expenditure. A 2022 study by the American Psychiatric Association found that companies that invested in mental health programs saw a $4 return for every $1 spent due to improved employee performance.

Legislative and Policy Changes: The healthcare regulatory environment is continuously evolving, and new policies could have significant implications for employer health plans by 2026. For example, proposals to expand or cut the Affordable Care Act (ACA) or implement new policies related to prescription drug pricing could impact employer-sponsored insurance costs.

The U.S. government is also exploring ways to address the high cost of healthcare and improve access. Employers will need to stay abreast of any new legislation that could affect their health plans, especially regarding prescription drug pricing and cost-sharing requirements.

Moreover, some states are considering their own healthcare reforms, which could lead to additional administrative complexities and potential cost shifts for employers. Companies will need to factor these possible changes into their 2026 health plan strategies.

Focus on Value-Based Care: The shift toward value-based care is another trend that is expected to continue influencing employer health plan costs in 2026. In a value-based care model, healthcare providers are compensated based on the outcomes of the care they deliver, rather than the volume of services provided. This approach encourages providers to focus on preventive care and more efficient treatment, ultimately reducing the need for costly interventions down the road.

Employers will increasingly adopt value-based care models as a strategy to lower long-term healthcare costs. By collaborating with insurance carriers and healthcare providers that embrace value-based care, employers can control spending while improving the quality of care their employees receive.

Conclusion: Preparing for 2026 Healthcare Costs The projected rise in employer health plan costs for 2026 presents a significant challenge for businesses, but it also offers an opportunity to rethink healthcare delivery and cost management. By focusing on strategies like high-deductible health plans, telemedicine, mental health programs, and value-based care, employers can mitigate rising costs while continuing to provide valuable benefits to employees.

It’s important for employers to stay informed, plan strategically, and engage in open dialogue with employees about the changes they may face in their healthcare plans. With careful planning and the right investments, employers can continue to provide comprehensive, affordable health benefits even as costs continue to rise. Looking for innovative solutions to implement in 2026? Schedule a quick 30-minute Zoom meeting with one of our dedicated HR consultants to discover strategies that our clients and partners are already putting into action. Now’s the perfect time to start planning your 2026 strategy!

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