Health Insurance Increases
Steep Increases in 2026 Health Insurance Premiums
It is that time of year for health insurance renewals and you should be aware of the dramatic premium increases being projected for 2026. The increases will be felt across the board by those buying coverage on the ACA marketplace, those covered by Medicare with nearly 12% inflation increase in the Part B premium and most relevant to your practice, those covered by employer provided plans. With employer plan premiums increasing by 18% on average, studies find that the expected employer portion of health coverage will increase by 9%, resulting in costs of over $17,000 per employee.
The reasons for the dramatic increase include:
Rising healthcare costs primarily related to hospital care and specialty physician services.
Expensive new specialty drugs like the GLP-1 class that are expensive and commonly used.
Labor costs in the broader economy has increased health care costs as well as administrative costs for the insurance companies
Tariffs (and the uncertainty over tariffs) have driven up medical supplies and drug costs.
The aging population forces Medicare to charge the growing beneficiary population a larger percentage, as the working population and related Medicare taxes do not cover the total costs.
Between 2013 and 2020, health care insurance premiums increased faster than inflation, but only 3% per year, and employers generally considered the increases a standard cost of business. According to recent studies, 2026 will be different as 51% of employers (large and small) will likely shift more of the health care costs to their employees. Here are some ideas for keeping your employee health insurance costs under control:
Cut health insurance benefits and give employees an equivalent raise. Especially in a small office, you may only have one or two employees not covered by a spouse or parent (you can stay on your parent’s plan until age 27). While marketplace plans are increasing as well, they may be able to find a better plan for themselves directly.
Cut the percentage of premium that your practice is paying. Most insurance companies require employers to cover at least 50% of the total premium. So if you are contributing more, think about shifting that percentage down.
Find a less expensive base plan. You can offer multiple plan options to your employees, but you should set your employer portion to the least expensive plan. This locks in your employer contribution at the same amount regardless of the plan the employee selects. Rather than just elect the same plan as last year with the significant cost increases, you should look at a plan with a slightly higher deductible or higher drug co-pay that could keep your costs (and your employee’s portion) from spiking.
Offer a High-Deductible Health Plan (HDHP) and add an employer Health Savings Account (HSA) contribution. Most people overpay for health insurance as they want to avoid or have small co-pays. But with a HDHP and HSA, a relatively healthy individual can save money in the long run by paying smaller premiums and larger co-pays. Feel free to share our blog post on the benefits of the HSA with your team.