Health Insurance Premiums to Surge as Costs Climb in 2026

Workers can expect a substantial increase in their health insurance premiums in 2026, as employers confront the highest rise in health care costs in 15 years. According to new data from Mercer, health care expenses are projected to increase by 6.5%, while wage growth is anticipated to lag at just 3%. This disparity indicates that a larger share of employees’ incomes will be allocated to health care.

Employers are responding to these rising costs by planning to increase employee payroll contributions. Approximately 60% of employers will not only raise contributions but also implement higher cost-sharing measures at the point of service. This could manifest in increased co-pays, deductibles, co-insurance, or out-of-pocket maximums. Sunit Patel, chief actuary of U.S. Health at Mercer, highlighted that employers previously absorbed many of the rising costs during the pandemic, but changing economic conditions have shifted this approach.

Patel explained, “The cost pressures are more significant, and even though there is a focus on employee health and well-being, there’s certainly just a financial reality.” The factors contributing to these increases are multifaceted, including persistent inflation, an aging population that requires more healthcare services, and newer treatments that come with elevated price tags.

Historical Context and Future Projections

Mercer’s projections indicate that 2026 will mark the fourth consecutive year of rising health care costs, following a decade characterized by more moderate increases. The Kaiser Family Foundation reported that from 2019 to 2024, the cost of coverage rose by about 24%, although wage growth largely kept pace during that period.

As employers prepare for these changes, the financial burden on workers will likely intensify. Many are already feeling the strain of rising costs in other areas of their lives due to inflation and economic pressures. The forthcoming increases in health insurance premiums are set to compound these challenges, making it essential for individuals to carefully plan their finances for the coming year.

With such significant changes on the horizon, stakeholders in health care, government, and the business community will need to consider strategies to mitigate the impact on workers. The upcoming year could serve as a pivotal moment for employee health benefits, as both employers and employees navigate the evolving landscape of health care costs.