Employers Project 10% Rise in Healthcare Costs for 2026

U.S. employers project a median healthcare cost increase of 10% for 2026, according to new survey results from the International Foundation of Employee Benefit Plans. The survey was done from July 30, 2025, to Aug. 7, 2025, with 150 respondents; 83% were self-funded. The survey was conducted via email/online.

In the survey, employers said the top four factors influencing rising costs include:

• Catastrophic claims: last year, 20% indicated this was the reason for increased costs. This year, it's 31%.
• Specialty/costly prescription drugs: This year, 23% of respondents said this was the reason for increasing costs, up from 20% last year.
• Utilization due to chronic health conditions: This year 15% of respondents indicated this is why costs are up, which is down from 16% last year.
• Medical provider costs, which is down from 18% last year. This year, 11% of respondents indicated this was the reason for cost increases.

Among the 23% of respondents who said specialty/costly prescription drugs were a key driver, 59% said GLP-1 drugs, 50% said cancer drugs and 21% said cell and gene therapy (up from 19% last year) were the top drugs that were predominantly responsible for the increase.

“The 10% projected increase is attributed to a variety of factors impacting organizations’ medical plan costs, with catastrophic claims and specialty/costly prescription drugs topping the list,” Julie Stich, vice president of content at the International Foundation, said in a news release. “Employers have indicated that cost-sharing, plan design, and purchasing/provider initiatives will be the most impactful techniques to manage costs.”

Survey respondents said they plan to address these higher costs with several strategies, including:

• Cost-sharing initiatives: e.g., deductibles, coinsurance, copays, premium contributions: 27% in this year’s survey indicated they would made consider this option compared with 21% last year.
• Plan design initiatives, e.g., dependent eligibility audits, high-deductible health plans, spousal surcharges/carve-outs, and formulary changes: 17% of respondents said this, which is up from 15% last year.
• Purchasing/provider initiatives: e.g., telemedicine, price transparency tools, centers of excellence, health care navigators/advocates, coalitions, quality initiatives; 17% this year, which is up from 9% last year.

Interestingly, just 12% of respondents said they consider utilization control initiatives such as prior authorization, case management, disease management, and nurse advice lines, which is down from 27% last year.

Related: More Employers Plan to Shift Health Costs to Workers in 2026 as Benefits Grow More Expensive

The findings from this survey are similar to other recent analyses. Mercer’s 2026 Survey on Health and Benefit Strategies, which was released in July 2025, found that employers expect the average cost of health benefits to increase by 5.8% in 2025.

In this survey 51% of more than 700 large employers — those with 500 or more employees — said are likely or very likely to make plan design changes next year that would raise deductibles or out-of-pocket maximums. That’s an increase from 45% in last year’s survey.

Additionally, 61% of employers in this survey are also looking for new PBM approaches that include fiduciary responsibility and transparency.

Also in July, PwC released its survey of health plan actuaries, which found that healthcare costs are expected to remain high through 2026, with spending to rise by 8.5% for those in the group market and 7.5% for those in the individual market.

Managing GLP-1 drugs also topped the Mercer and PwC surveys as a priority. In the Mercer study, 77% of respondents said this was extremely or very important. In the PwC survey, actuaries anticipate that the GLP-1 drugs alone could account for up to 1% of the cost trend in 2026.