If your health insurance premiums felt expensive in 2025, brace yourself for 2026. Workers are likely to pay between 6% and 7% more for their employer-sponsored health insurance this year, according to a new analysis from consulting giant Mercer—a rate more than double current inflation and the highest annual increase since 2010.

For the 154 million Americans under age 65 who rely on employer-sponsored coverage, this isn't just a line item on a benefits statement. It represents a meaningful reduction in take-home pay at a time when household budgets are already stretched thin.

The Numbers Behind the Squeeze

Premiums for job-based health insurance increased 6% in 2025 to an average of $26,993 per year for family coverage. This marks the first time in 20 years that the cost of covering a family of four has increased by 6% or more for three consecutive years.

Companies, which typically pick up the bulk of their employees' health insurance costs, are projected to spend more than $18,000 on average to insure each worker in 2026. The total health benefit cost per employee is expected to rise 6.5% on average—the highest increase since 2010—even after accounting for planned cost-reduction measures.

Industry experts are painting an even more concerning picture for what lies ahead. The Business Group on Health forecasts a 7.6% jump in costs, while PwC predicts medical expenses will surge 8.5% for a third consecutive year.

What's Driving the Surge?

Several factors have converged to create this perfect storm of rising healthcare costs:

The GLP-1 Drug Explosion

The meteoric rise of weight-loss drugs like Ozempic, Wegovy, and their competitors has added billions to employer healthcare spending. While these medications show promise for treating obesity and related conditions, their high cost—often exceeding $1,000 per month—is straining benefit budgets.

Employers face a difficult choice: cover these increasingly demanded medications and absorb the costs, or restrict access and face employee dissatisfaction. Many are threading the needle by adding coverage requirements, prior authorizations, and wellness program participation mandates.

Cancer Care Costs

Cancer care has been the top driver of employer cost increases for four years running. The problem is twofold: more Americans are being diagnosed with cancer (partly due to better screening), and treatments are becoming more sophisticated—and expensive. Immunotherapy, targeted therapies, and precision medicine offer better outcomes but at substantially higher price points.

An Aging Workforce

The workforce is getting older, and older employees typically require more medical care. As Baby Boomers delay retirement and healthcare utilization increases with age, employers are seeing costs rise across their insured populations.

Small Businesses Hit Hardest

While large employers have bargaining power and resources to manage rising costs, small businesses face the brunt of the squeeze. For 2026, the median proposed premium increase among 318 small group insurers across all 50 states and the District of Columbia is 11%—significantly higher than the increases facing large employers.

For a small business owner already operating on thin margins, an 11% jump in one of their largest expense categories can mean the difference between profitability and loss. Some may respond by reducing coverage, increasing employee cost-sharing, or dropping coverage altogether.

How Employers Are Responding

Faced with unsustainable cost growth, employers are taking action—and employees are increasingly bearing the burden. Mercer's survey found that 59% of employers will make cost-cutting changes to their plans in 2026, up from 48% making changes in 2025 and 44% in 2024.

These measures generally involve requiring employees to pay more when they seek care:

  • Higher deductibles: The amount you pay before insurance kicks in continues to rise
  • Increased copays: Fixed amounts for doctor visits and prescriptions are climbing
  • Greater coinsurance: The percentage of costs employees share is expanding
  • Narrower networks: Plans are limiting which doctors and hospitals are covered
  • Prior authorization requirements: More treatments require advance approval

What This Means for Your Budget

For a family paying 30% of their health insurance premium—a common cost-sharing arrangement—a 7% increase on a $27,000 annual premium translates to roughly $570 more per year, or about $47 per month. Add in higher deductibles and out-of-pocket costs, and the true increase in healthcare spending could be substantially higher.

Financial advisors recommend several strategies for managing rising healthcare costs:

  • Maximize HSA contributions: Health Savings Accounts offer triple tax advantages and can help cover higher out-of-pocket costs
  • Review plan options carefully: Higher-deductible plans paired with HSA contributions may offer better value for healthy families
  • Use preventive care: Most plans cover preventive services at no cost—take advantage of them
  • Shop for care: Prices for the same procedure can vary dramatically between providers
  • Review bills carefully: Medical billing errors are common and can cost thousands

Looking Ahead

Unfortunately, relief is not on the horizon. The structural factors driving healthcare cost growth—expensive new treatments, an aging population, and consolidation among healthcare providers—show no signs of abating. While Washington debates various healthcare reforms, meaningful cost containment remains elusive.

For workers and families, the message is clear: healthcare costs will continue consuming a growing share of income. Planning for this reality—through emergency savings, HSA contributions, and careful plan selection—has never been more important.