Employer-Sponsored Health Insurance Premiums to Rise 6-7% in 2025
Employer Sponsored Health Premiums Poised for Sharpest Rise in Over a Decade
If you are in the insurance industry or advising those who are, there is noteworthy change coming down the pipeline.
According to Mercer’s most recent survey, employer sponsored health insurance costs are expected to climb by an average of 6% to 7% in 2026, marking the steepest increase in 15 years even after cost saving efforts are factored in.
Why the Jump?
Two key drivers stand out:
-
Rising prices for specialty medications, such as GLP 1 weight loss drugs and advanced cancer treatments, are significantly inflating benefit costs. Behavioral healthcare services are also seeing increased utilization.
-
Overall utilization is up, particularly in behavioral health, supported by the growing acceptance of virtual care platforms. General inflation, higher healthcare wages, and continued consolidation of provider networks are adding to the squeeze.
As Mercer’s chief actuary, Sunit Patel, shared:
“The rise of virtual healthcare… removes geographic barriers to care and can be a more convenient option for patients.”
The Employer Response
Employers are bracing for impact and many are taking action:
-
59% of employers plan to implement cost reduction strategies in 2026, up from 48% the year before. These changes often mean higher deductibles and other cost sharing features, which can shift more burden onto employees.
-
Employers are also deploying longer term strategies such as focusing on high cost claims management and measuring the value of health programs, instead of relying solely on shifting costs.
-
About two thirds of large employers (500+ employees) are prioritizing greater access to behavioral health, reflecting a proactive stance on well being, not just cost containment.
Pull Quote
“Employers are still concerned about healthcare affordability... but they also need to manage the overall cost of healthcare coverage to achieve a sustainable level of spending.” — Tracy Watts, Mercer
What It Means for Industry Insiders
Here is a snapshot of what to keep front and center:
-
Cost forecasts show a 6–7% premium increase for employer sponsored plans in 2026
-
Nearly 60% of employers are preparing to redesign plans, with many pushing more onto employees
-
High cost drugs and virtual or behavioral health usage are accelerating spending
-
Employers are combining short term tactics such as deductible hikes with smarter investments in cost management and better member care
In Summary
2026 is shaping up to be a pivotal year for employer sponsored health benefits. The steepest premium jumps in 15 years, combined with pressure from specialty drug prices and shifting usage patterns, are forcing employers and carriers to rethink strategies. The smart ones will not only manage costs but also emphasize member value and well being as part of a sustainable path forward.