Employers Project 10% Jump in Health Care Costs for 2026

Driven by catastrophic claims and costly specialty and prescription drugs including popular GLP-1 injectable medications, employers are bracing for a double-digit increase in health care costs next year.

Organizations are projecting a 10% hike in health care costs in 2026, according to new data from the International Foundation of Employee Benefit Plans (IFEBP), a nonprofit organization based in Brookfield, Wis., with 31,000 employer members. The increase in expenses is up from the 8% rise employers projected for 2025 and in line with other recent estimates for health care costs from benefits and employer organizations.

Health care costs are consistently a pain point for employers, but the figures show an even steeper trajectory for costs next year, indicating that organizations may turn to cost-sharing and other strategies in an effort to help.

“Uncertainty around future trends in employer costs remains high, particularly as it relates 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.” 

High catastrophic claims and soaring specialty and prescription drug costs are fueling much of the rise, according to IFEBP’s survey. Utilization due to chronic health conditions and medical provider costs were other top reasons cited by employers.

Specialty Credential: Total Rewards

Of respondents who said specialty and costly prescription drugs were a primary reason for the health care cost increase, the majority cited GLP-1 drugs as the top contributor, followed closely by cancer drugs. 

Indeed, GLP-1 drugs have proliferated in the workplace in the past couple of years as employee interest and employer coverage grows. But the costly 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 said that managing those costs is extremely or very important, previous research from Mercer found. The high costs for the popular drugs may also make employers rethink coverage, industry experts said. 

“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,” said Alysha Fluno, national pharmacy practice leader at Mercer in Vernon Hills, Ill.

Related Article: How GLP-1 Drugs Are Reshaping Employee Wellness

How Employers Are Responding

Employers are looking at several strategies to manage the ballooning costs, said Julie Stich, vice president of content at IFEBP. 

“Employers have indicated that cost-sharing, plan design and purchasing/provider initiatives will be the most impactful techniques to manage costs,” she said.

Cost-sharing is the top strategy employers are turning to, according to IFEBP, with 27% of employers saying that they are passing more costs to employees by raising deductibles, co-pays, and premiums for their workers. That’s up from 21% from empoyers surveyed last year.

That finding also comes on the heels of other data from Mercer, which recently found that significantly more 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, Mercer found. That’s up from 45% who said the same about 2025 strategies.

IFEBP further noted that, to hold down costs, employers are also looking at plan design initiatives such as conducting dependent eligibility audits and offering high-deductible health plans (cited by 17% of employers, up from 15% last year), and implementing purchasing or provider initiatives such as telemedicine, price transparency tools, and centers of excellence (17%, up from 9% last year). Employers also said they are considering putting in place utilization control initiatives such as prior authorization and nurse advice lines (12%, down from 27% last year). That method is down as cost-shifting looks to become the top strategy.