Your health insurance is about to go up

Multiple drivers fueling cost surge

Employer responses: more cost-shifting

Your open enrollment this season

Nick Lichtenberg is Fortune Intelligence editor and was formerly Fortune's executive editor of global news.

Health insurance prices in the U.S. have been spiraling for four consecutive years, and employers are now bracing for the highest spike yet in 2025—the biggest increase in 15 years, according to a wide-ranging survey of more than 1,700 employers. The National Survey of Employer-Sponsored Health Plans

Sunit Patel, Mercer’s US Chief Actuary for Health and Benefits, said two factors are combining to send costs higher. “Health benefit cost trend has two primary components — healthcare price and utilization. Right now, both are rising.”

The survey projects that total health benefit costs per employee will increase

Some of the increases are due to advances in medical science. Advanced diagnostics and cutting-edge therapeutics, such as new cancer treatments and weight-loss medications, are transforming people’s lives and bodies but come at steep costs compared to previous therapies. Provider consolidation into large health systems has strengthened bargaining power to set higher reimbursement rates with insurers.

Patel said more people have been using various health services over the past two years, likely because of the lingering effect of delayed or missed care due to the pandemic and an easing in healthcare labor constraints. “The rise of virtual healthcare — and growing consumer acceptance of it, particularly in behavioral health — is also affecting utilization patterns,” Patel said, “because it removes geographic barriers to care and can be a more convenient option for patients.”

Inflation has also played a significant role, with increased wages across the healthcare sector feeding further cost increases. The pandemic accelerated virtual healthcare adoption, making it easier for people to seek care; paradoxically, this easy access has contributed to higher overall utilization, driving up aggregate claims.

Facing these mounting pressures, employers are taking aggressive action. The survey found 59% of companies plan to make cost-cutting changes to health plans in 2026, up sharply from 48% in 2025 and 44% in 2024. The predominant strategy involves raising deductibles and cost-sharing provisions, resulting in higher out-of-pocket costs for employees when they access care. Yet, many employers are also seeking ways to curb costs without simply passing the burden onto workers. For example, there is increased emphasis on managing high-cost claims and measuring program performance to guarantee value.

At the same time, enhancing mental-health benefits remains a priority post-pandemic, with about two-thirds of large employers planning to make behavioral healthcare more accessible in the next few years. Mercer’s US Health and Benefits Leader, Ed Lehman, notes, “Employers recognize it’s essential for employee well-being and overall business performance.”

For workers, the bottom line is the expense: Paycheck deductions for health coverage are expected to climb 6% to 7% on average in 2026. This stems from the fact that employee premium shares typically rise in proportion to overall plan costs. In addition to higher premiums, increased deductibles and copays may further boost out-of-pocket expenses, forcing some employees to shoulder even greater financial strain.

Mercer said employees should “carefully weigh premium cost and cost-sharing provisions” during open enrollment, balancing premium costs with cost-sharing features to select the most appropriate plan for their needs. Mercer notes that more than a third of large employers will offer non-traditional, high-performance network plans in 2026—these options can help mitigate out-of-pocket costs

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.