Employers are bracing for an expected 8.2% increase in per-employee benefit cost in 2027, even after factoring in planned cost-control measures. This not only would be the fifth-consecutive year of elevated cost growth but also would be the largest annual increase since 2003, according to the 2026 National Survey of Employer-Sponsored Health Plans from Marsh.
“Few organizations can absorb health cost increases that outpace inflation without making difficult financial decisions,” said Simon Camaj, U.S. health and benefits leader for the professional services firm.
Several factors are contributing to the spike in costs:
- Although innovative diagnostics and therapeutics are leading to better outcomes, they often are more expensive than the treatments they replace.
- Reduced funding and reimbursements in public health care, along with health system consolidation, is leading to higher charges for care in employer plans.
- GLP-1 weight-loss medications account for an estimated 1% of overall cost growth for 2027.
- AI-enabled billing software has resulted in more – and higher — claims being filed for reimbursement.
- Payments awarded to out-of-network providers through the Independent Dispute Resolution process in No Surprises Act have been both more numerous and larger than expected.
Employers are considering various options to hold the line on costs, such as offering lower-cost, quality-focused plan options. More than one-third of large employers plan to offer some type of non-traditional medical plan in 2027, such as a variable copay or high-performance network plan.
The top five strategies that large employers consider to be either important or very important over the next 3 to 5 years are focusing on managing high-cost claims (89%); measuring the performance of health programs to ensure they provide value (72%); steering members to high-quality care through high-performance networks and centers of excellence (58%); making behavioral health care more accessible (56%); and focusing on reducing health and welfare plan fiduciary risks (47%).
Nevertheless, around two-thirds of businesses with 500 or more workers expect to increase employees’ share of premium costs next year. As a result, many employees will see their paycheck deductions for health coverage rise by more than the overall average cost increase of 8.2%.
“Because employees are likely to see both higher premium contributions and higher cost-sharing requirements in 2027, during open enrollment they should take the time to explore other available medical plan options to see if a change makes sense,” according to Marsh.