Employers anticipating 6.7% jump in health benefits costs, finds Mercer

Employers expect that health benefits costs will reach an average of $18,500 per employee, for a 6.7% increase in costs in 2026.

That’s according to the latest survey from Mercer, which released its 2025 National Survey of Employer-Sponsored Health Plans. 

It found that the average cost of employer-sponsored health insurance reached $17,496 per employee in 2025, a 6% increase well above the rate of inflation and wage growth. Contributing to the increase was sharp growth in prescription drug spending, which rose 9.4% on average among large employers, or those employing more than 500 people.

Health benefits costs are expected to rise again next year, which will push the average cost above $18,500 per employee.

In nearly all employer-sponsored health plans, cost is shared with employees through both premium contributions deducted from their paychecks, and plan design features that shift some financial responsibility to plan members when they access care. 

Since employees’ share of the cost of health coverage typically rises at about the same rate as overall cost, increases of this magnitude are heightening concerns about healthcare affordability, said Mercer analysts. 

A year ago, a Mercer survey of more than 2,000 U.S. workers reported that 28% of those with household incomes at or below the median were not confident they could afford necessary healthcare.

WHAT’S THE IMPACT 

A good starting point for addressing affordability, said Mercer, is offering an array of plans designed to meet different health needs and financial situations – and helping employees understand the implications of their enrollment decisions.

In recent years, new, non-traditional medical plan models have been introduced that manage cost and address affordability in new ways, generally by using smaller networks of providers selected on the basis of cost and quality.

These plans typically incentivize enrollment by offering employees lower contributions, lower cost-sharing, or both, and can be an option to consider, said Mercer.

Its Survey on Health and Benefit Strategies for 2026 found that 35% of large employers now offer at least one plan that directs employees to smaller networks of higher-performing providers. 

The survey also revealed that the number of medical plan choices offered to employers is increasing. In 2025, 67% of large organizations offered three or more medical plans at their largest worksite, up from 60% in 2023. 

“We expect this trend will continue, as these newer plans tend to cost less and offer more affordable benefits to the plan member,” said Tracy Watts, Mercer’s U.S. Leader for Healthcare Policy. “Employers have workforces with diverse needs. When employees choose the right plan for themselves, they can unlock savings.”

THE LARGER TREND 

The findings are in line with Business Group on Health’s 2026 Employer Health Care Strategy Survey, in which employers predicted that healthcare cost trend increases for 2026 will come in at a median of 9%.

An earlier Mercer survey, published in August, determined that employers will likely reduce benefits in 2026 to control benefit costs. More than half of large employers say they are likely or very likely to make plan design changes in 2026, such as offering plans with narrow networks, or raising deductibles or out-of-pocket maximums. That’s up from 45% in last year’s survey.

Some employers will pursue nontraditional strategies. Thirty-five percent of large employers say they will offer a medical plan option in 2026, such as a variable copay plan. These plans offer no or low deductibles and set copayments for services based on individual providers’ fees. These copays are fixed and communicated upfront, giving members the opportunity to select lower-cost providers, Mercer said.

The survey found that among the 6% of large employers currently offering a variable copay plan, 28% of their employees chose to enroll.