Employers Plan 51% Increase in Employee Health Care Costs by 2026

Employers across various industries are increasingly feeling the pressure to reduce costs, with health care benefits being a primary target for cuts. The rising costs of health care have been a persistent issue for employers, who are now more willing to shift a larger portion of these expenses onto their employees. Around 51% of companies are considering changes to their health care plans in 2026 that will increase the financial burden on employees. This marks a significant increase from the 45% of companies that were considering similar changes last year. The proposed changes include raising deductibles and out-of-pocket maximums for employees.

The average cost of health care benefits for workers is expected to rise by 5.8% this year, up from 4.5% last year. This increase is largely attributed to the rising costs of prescription drugs, with over 61% of employers actively seeking alternatives to traditional pharmacy benefit contracts. The popularity of GLP-1 weight-loss medications, which can cost around $1,000 per month per patient, is also contributing to the higher benefit costs. Most organizations rank managing the costs of these drugs as their highest priority when it comes to pharmacy benefits. However, the future of coverage for these medications remains uncertain, as employers weigh the immediate costs against potential long-term savings.

Employers are exploring various strategies to manage these rising costs. Some are considering requiring more documentation from employees who use GLP-1s, increasing eligibility requirements, or limiting the number of providers and pharmacies for the medication. Others are looking at longer-term strategies, such as offering narrow network plans that emphasize high-quality, high-value care. These strategies aim to improve health outcomes or make health care more affordable for employees.

Employers are also looking to reduce training on race and gender to avoid government scrutiny, focusing instead on neurodivergence and generational differences. Additionally, with economic uncertainty looming, Americans are pulling back on travel spending, downsizing vacations, and taking shorter trips. These cost-cutting measures reflect a broader trend of companies and individuals seeking to reduce expenses in response to financial pressures.