Healthcare costs in the U.S. continue to rise, increasing the burden on both employers and employees. Organizations providing health benefits must navigate rising expenses while maintaining transparency with their workforce. As costs grow, employers are adopting cost-sharing strategies and need to communicate these changes clearly to employees.
2026 Health Care Cost Projections
Managing health care costs while maintaining affordable benefits remains a significant challenge for employers heading into 2026. Recent industry surveys anticipate health care expenses to rise by 8.5% to 10% next year, with many employers projecting a 9% increase, the largest annual jump in over a decade. Even after implementing cost-control strategies such as plan redesign or vendor evaluation, the net increase is still anticipated to be 7.6%.
Reasons Why Health Care Costs Are Rising
Employers anticipate a 12% increase in pharmacy cost trends for 2026, driven by rising costs for specialty drugs, cancer care, and more frequent chronic and complex conditions. In response, many are implementing strategies like expanding preventive care, adjusting coverage for high-cost medications such as GLP-1 agonists, negotiating more aggressively with vendors, and considering nontraditional prescription drug models. There’s also renewed focus on cost containment, including exploring level-funded plans, increasing cost sharing, and investing in employee well-being programs to help manage long-term health risks.
Communicating With Employees
Clear, empathetic communication helps employees understand and manage increasing health care costs. Here are effective strategies to consider:
- Develop clear, concise and simple messaging. Use plain language to explain rising costs and outline the actions your organization is taking to address them. Highlight any positive updates, such as expanded specialty drug coverage or new wellness benefits.
- Educate employees on cost drivers and plan usage. To empower employees to make confident, cost-effective healthcare decisions, employers should share clear guidance on maximizing benefit usage, highlight ways to avoid unnecessary expenses, and provide tools such as cost comparison resources and provider directories.
- Communicate the changes proactively. Clearly communicate benefit changes to employees in advance. Explain the reasons behind each update and its impact on their care options to promote clarity and trust.
- Highlight cost-containment efforts. Demonstrate how you are actively managing costs for employees, such as negotiating with providers, implementing reference-based pricing, expanding telehealth options, or investing in wellness programs to show your commitment to protecting their benefits.
- Use real-world examples. Share your benefits options using real-world examples that resonate with employees. For instance, illustrate how introducing a high-cost medication can affect premiums, or explain how rising mental health support, while beneficial, may influence costs. Relatable stories help employees understand the impact of benefits decisions on themselves and the organization.
- Explain macroeconomic factors. Employees should know that rising benefit costs are a nationwide trend, not unique to your organization. Providing clear resources that explain factors such as inflation, labor expenses, advances in medical care, and provider consolidation can help employees understand the broader reasons behind these increases.
- Use multiple communication channels. To effectively reach all employees, employers should tailor their communication methods based on their workforce and work arrangements. Combining in-person meetings, digital platforms, and printed materials ensures information is delivered clearly and understood by everyone.
Conclusion
To effectively manage rising health care costs, employers need to rethink their benefits strategy and focus on delivering greater value. By taking proactive steps now, you can help employees better understand and manage their benefits, positioning your organization for long-term success. Download the bulletin for more details.
