Half of Employers Plan to Shift Health Care Costs to Employees

Dealing with rising health care costs and a shifting economic environment, a significant number of employers are planning to shift more costs to employees over the next year.

Roughly half of large employers (51%) — defined as organizations with 500 or more employees — said they are likely or very likely to make design changes to their benefits plans in 2026 that would shift more costs to employees, such as raising deductibles or out-of-pocket maximums, according to new data from Mercer. That’s up from 45% who said the same about 2025 strategies.

The survey of 711 U.S. employers found that 19% said they were very likely to shift costs and 33% said they were likely to do so in 2026. For 2025, 14% of employers said it was very likely they would pass on more health costs, and 31% said it was likely.

The health care strategy — which many employers say they try to avoid so as not to rock the boat with employees — comes as growing health costs become a bigger concern for organizations. Employers’ health care costs grew 4.5% in 2024, according to Mercer, and they are expected to increase by an average of 5.8% this year — a figure that accounts for cost-saving measures. Without cost-saving measures, costs may grow by an estimated 8%. 

And while this year has been tough for health care costs, 2026 “may be even more challenging from a cost perspective,” said Ed Lehman, Mercer’s U.S. health and benefits leader.

The prevalence of costly GLP-1 drugs, which are about $1,000 per month per patient, is one of the reasons for rising employer health care costs. Seventy-seven percent of employers say that managing those costs is extremely or very important, according to Mercer.

Due to looming increases in health care costs, employers could potentially cut back on GLP-1 coverage for weight loss, said Alysha Fluno, pharmacy innovation leader at Mercer. “While the trend over the past couple of years has been to add coverage for GLP-1s approved for weight loss, some employers facing large cost increases in 2026 may feel this coverage is out of reach.”

A Shifting Strategy

In recent years, Mercer reported, a tight labor market and concerns about health care affordability have made employers reluctant to raise deductibles or make other changes that shift more responsibility for health care cost to employees. But this year, more employers seem likely to use this tactic to slow health plan cost growth.

More recently, many organizations say they are less concerned with retaining and attracting employees and more concerned with addressing economic volatility. Many employers are also doling out less generous pay increases as a result. 

“Uncertainty around future trends in employer costs remains high, particularly as they relate to rising health care costs,” said Andrea Medici, labor economist at SHRM. “The interplay between slowing wage growth and rising health care expenses presents a nuanced outlook for employers. Employers should monitor these trends closely to balance competitive compensation packages with long-term cost sustainability.”

In addition to shifting costs to employees, some employers plan to embrace other strategies to slow cost growth. For instance, 35% of large employers said they will offer a nontraditional medical plan option in 2026, such as a co-pay plan, as they seek to provide employees with higher-quality, more cost-efficient care.  

Others are focusing on prescription drugs. More than half of large employers (61%) said they are actively exploring some type of alternative to standard pharmacy benefits contracts that would potentially provide more clarity about the cost of drugs or specific services offered by pharmacy benefits managers, Mercer said.