Rising Health Insurance Costs: What Employers and Employees Need to Know

Understanding Employer-Sponsored Health Insurance Premium Hikes

If you’re among the 165 million Americans who secure health coverage through their job rather than government programs, you may be questioning the potential impact of rising health insurance premiums—especially following the anticipated increases for Affordable Care Act (ACA) plans next year.

Are Premiums Going Up for Employer-Sponsored Plans?

While experts believe there won’t be a universal premium hike affecting everyone with employer-sponsored plans, many individuals may still face higher costs. Notably, even if your monthly premium remains unchanged, increased deductibles or copayments could lead to higher overall expenses.

“Health insurance premiums saw an increase last year, another increase this year, and we can expect the same trend next year,” says Dr. Kevin Schulman, a professor at the Stanford University School of Medicine specializing in employer-based insurance.

What to Watch For

Have you received a notification about rising health insurance premiums for the upcoming year? Whether you’re under an ACA plan or a private employer plan, we would love to hear your experiences. Contact us at tips@nbcuni.com.

Projected Increases: What You Might Expect

Unlike ACA plans—where insurers must publicly disclose proposed rate increases—employers usually negotiate directly with insurers. This means that any premium hikes may not become clear until open enrollment periods.

Survey Insights

Recent employer surveys provide insight into projected costs for next year. According to a September report from Mercer, employers predict an average health plan cost increase of nearly 9% for 2026 if no measures are implemented to manage costs. Similarly, an analysis from Aon estimates a 9.5% rise next year, while Segal projects around 9% for health plans and 11% for prescription drugs.

Employee Cost Responsibilities

Some of this increased cost may be passed on to employees through higher premiums. The Mercer report indicates that, on average, coverage costs per employee might rise by 6% to 7%—the steepest increase in over a decade.

“If we observe an overall increase of about 6.5%, it’s probable that employee premium contributions will rise by a comparable amount,” notes Beth Umland, director of research at Mercer.

Alternatives to Premium Hikes

However, many companies might opt to keep premiums stable while increasing deductibles or copays. In a competitive job market, some employers may absorb the entire cost increase to retain valuable employees—recognizing that recruitment can be more expensive than absorbing some costs.

Factors Influencing Premium Costs

Company Size and Employee Health

The decision to pass on costs can also depend on the size of a company and the general health of its workforce. Smaller businesses, for instance, may see significant premium increases if just a few employees face serious health issues. Conversely, younger workforces typically have lower premiums.

“If you have many younger employees, your premiums will likely be lower,” explains Gary Claxton, director at KFF, a health policy research group. “On the other hand, companies with older workforces may face higher costs.”

Cost Control Measures

To mitigate expenses, companies might restrict their employees’ choices regarding which doctors and hospitals they can access, adopting a “narrow network” plan.

The Underlying Causes of Rising Insurance Costs

Employers attribute the rising costs to similar pressures affecting ACA premiums: increasing hospital expenses, high-cost prescription drugs, and more individuals seeking healthcare services—including via telehealth options.

An Overall Increase in Healthcare Spending

According to JoAnn Volk from Georgetown University, these trends can be traced back to rising healthcare expenses, which jumped approximately 8.2% in 2024 and are projected to grow another 7.1% this year, surpassing overall economic growth. Though there might be a slight slowdown in 2026 due to anticipated declines in coverage, costs will likely continue to increase.

“While some employers may be bound by previously established rates, others may adjust premiums as new employees—previously covered under the ACA—are integrated into their plans,” Volk adds.

Conclusion: Staying Informed

As we head into the new year, it’s crucial for both employers and employees to stay informed about potential premium increases and navigate these changes proactively. Understanding these dynamics can empower consumers and help them make informed decisions regarding their healthcare coverage for 2026 and beyond.

For personalized updates, employee feedback, or queries, feel free to reach out and share your experiences regarding rising health insurance costs.