Health Benefit Costs on Pace to Rise 6.7% in 2026

Health benefit costs are on pace to increase 6.7% in 2026, pushing the average cost above $18,500 per employee, according to recent data from consulting firm Mercer.

That’s slightly higher than what Mercer estimated last fall, when it projected that total health benefit costs would rise 6.5% this year and warned that cost increases were on pace to reach a 15-year high. Health benefit costs rose 6% in 2025. 

The latest figures underscore what many employers already know: Rising healthcare costs continue to put pressure on benefit budgets.

“It’s unsustainable,” John Tournet, the U.S. CEO of Gallagher’s benefits and HR consulting division in Charlotte, said of rising healthcare costs. He added that the “old ways of doing things” — such as raising both premiums and deductibles each year for employees — are equally unsustainable. 

Indeed, shifting more costs onto employees continues to be the primary strategy employers are using, and plan to use, in response to rising healthcare costs. According to Mercer, 66% of employers with more than 500 employees told Mercer they’re likely or very likely to raise premiums next year. About half said they would increase cost sharing through other means, such as raising deductibles and increasing out-of-pocket maximums.

But employers are also increasingly exploring other strategies to help hold down costs so that employees aren’t bearing the brunt of those increases. 

“Employers are under intense pressure to manage another year of elevated health benefit cost growth, but they also know that affordability matters deeply to employees,” said Simon Camaj, Mercer’s U.S. Health Leader. 

Article: What To Know About Health Care Costs in 2026 

Strategies to Manage Costs

Employers are increasingly considering new approaches to manage costs alongside traditional cost-sharing tactics, according to Mercer. 

Camaj said employers are using different levers to manage costs, including both traditional cost-sharing tactics and strategies that steer employees toward higher-value care and provide support where it can have the greatest impact. 

Nearly one-third (31%) of large employers currently offer, or plan to offer, at least one non-traditional medical plan in 2027, such as a high-performance network or variable copay plan, and another 38% are considering one of these approaches, Mercer said. Typically, these plans offer members lower cost-sharing when they use pre-selected, high-performing providers. 

Rethinking GLP-1 Coverage

Another way employers are working to hold down costs? Rethinking GLP-1 coverage, especially when the drugs are prescribed for weight loss. 

Mercer found that 6% of large employers dropped coverage of GLP-1 drugs entirely in 2026, and another 5% said they planned to drop or are actively considering dropping coverage next year. In addition, nearly 3 in 10 large employers said they have taken steps to tighten utilization controls for GLP-1s in order to control costs.

Article: How GLP-1 Drugs Are Reshaping Employee Wellness 

Given the high price tag, combined with strong demand, for GLP-1 drugs, it makes sense that employers are evaluating whether the medications deliver sufficient value relative to their cost, experts say.

SHRM’s newly released 2026 Employee Benefits Survey also found that a growing number  of employers are looking at pharmacy benefit changes as they struggle with rising prescription drug costs, including GLP-1s. 

The SHRM survey showed a 16-percentage point year-over-year decline in the number of employers that bundled prescription drug coverage with their health insurance — 77% of employers bundled coverage in 2026, down from 93% in 2025. At the same time, the percentage of employers utilizing independent pharmacy management programs jumped to 23% in 2026, up from 18% in 2025.

Those findings suggest that employers are becoming more deliberate about managing prescription drug costs. While fewer employers are offering prescription drug coverage as a simple bundled component of medical insurance, more are adopting pharmacy management programs to gain greater control over utilization, costs, and access to high-cost medications such as GLP-1s and specialty drugs.