Cost Sharing in 2027: Key Decisions for Employers

Mercer projects health benefit costs will rise 6.7% in 2027, the largest increase in 15 years, bringing average costs above $18,500 per employee. As budgets tighten, employers are reviewing employee cost sharing through deductibles, copayments, coinsurance and out-of-pocket maximums (OOPMs), not just premiums.

What Cost Sharing Covers

Cost sharing is what employees pay for covered care through deductibles, copayments and coinsurance, separate from premiums. For nongrandfathered plans, the Affordable Care Act (ACA) sets an annual out-of-pocket limit for essential health benefits. Once reached, the plan pays the full cost of those benefits for the rest of the year. This applies to self-insured, level-funded and fully insured plans of any size but exclude services outside essential health benefit categories.

The Trend Toward Shifting Costs to Employees

Employers have historically absorbed most premium increases, paying 80% of single-coverage premiums in private industry as of March 2025, while employees covered the remaining 20%, according to the Bureau of Labor Statistics (BLS). Premium split stability is becoming harder to maintain.

Mercer’s 2026 survey found that 66% of employers with more than 500 employees are likely to raise premiums, and about half plan to increase other cost sharing. The Kaiser Family Foundation reports that the average single-coverage deductible among workers with an annual deductible reached $1,886 in 2025, up 17% over five years. Employees at small firms face higher average deductibles: $2,631 compared with $1,670 at larger firms. Nearly three-quarters of covered workers have OOPMs above $3,000, and one-quarter exceeds $6,000.

2027 Cost-sharing Limits for Health Plans

For 2027, ACA out-of-pocket limits rise to $12,000 for self-only coverage and $24,000 for family coverage. Health Savings Account (HSA) compatible high-deductible health plans have lower limits of $8,700 and $17,400, respectively. These ceilings are not targets for plan design. As employers prepare for open enrollment, weigh cost-sharing changes carefully and clearly explain the reasons to employees.

Common Cost-sharing Options

Consider these options, each with different implications for employees and administration:

• Premium contribution percentage - Higher employee premiums affect every paycheck, making the change noticeable even when employees don’t use their coverage.
• Deductible increases – Higher deductibles can lower employer claims costs but increase employees’ upfront expenses, potentially delaying care.
• Coinsurance adjustments – Adjusting coinsurance spreads employees’ costs across claims after the deductible, rather than concentrating them upfront.
• OOPM increases – Higher out-of-pocket maximums place more financial burden on employees and families with serious or multiple health conditions.
• Tiered or narrow network design – Some employers preserve lower employee cost sharing by offering smaller, lower-cost provider networks instead of raising costs for everyone.
• HSA and flexible spending account support – Employer HSA contributions can cushion higher employee cost sharing without fully offsetting the increase.

Employers should evaluate workforce demographics before increasing cost sharing, as lower-wage employees may be disproportionately affected. Plan designs should also be compared with BLS and KFF benchmarks before changes are implemented.

Weighing the Trade-offs

Higher employee cost sharing can reduce employer spending and claims risk while helping preserve coverage for preventive and high-value care. But higher deductibles and out-of-pocket limits may lead employees to delay care, affecting productivity, retention and employee relations. Weigh potential savings against the heavier burden on lower-wage employees, families with dependents and those managing chronic conditions.

Employer Considerations for a Successful Shift During Open Enrollment

Phase in cost-sharing increases gradually and pair them with support, such as HSA contributions or expanded preventive coverage. Preserve coverage before the deductible for preventive care and chronic disease management and explain the cost pressures behind changes during open enrollment.

Summary

As more healthcare costs are shifted to employees, employers must decide how much to share and how to protect those least able to absorb increases. Thoughtful plan design can help manage costs while preserving the value employees place on their benefits. Download the bulletin for more details.