Why Group Health Premiums Are Rising Again in 2026 (And What Employers Can Actually Do)
If your 2026 renewal came in higher than last year’s — again — you’re not imagining a trend. Multiple independent sources are pointing to one of the largest group health cost increases in over a decade.
The Numbers
- Mercer projects employer health costs will rise about 6.5% in 2026
- Aon estimates closer to 9.5%
- KFF’s analysis of insurer rate filings shows a median 14% increase requested for the small group market
- Some state filings show average requested increases as high as 13.6%
Analysts describing this cycle have called it the largest surge in over 15 years. Whichever estimate ends up matching your actual renewal, the takeaway is consistent: this isn’t a normal, modest annual bump.
What’s Actually Driving It
Rising medical and pharmacy costs. Hospital costs, specialty drug prices (particularly GLP-1 medications and other high-cost specialty drugs), and provider consolidation are pushing underlying claims costs up faster than general inflation.
Utilization rebound. Deferred care from prior years is being used now, and chronic condition management has become more expensive per-member.
Smaller risk pools feeling it more. Small group plans have less claims experience to smooth out a bad year — one high-cost claim in a 20-person group moves the average a lot more than it would in a 500-person group. That’s part of why small group increases are outpacing large group increases in many of these estimates.
What Employers Can Actually Do About It
1. Shop the renewal, don’t just accept it. A surprising number of employers renew passively — the broker sends an illustration, it gets signed. Ask your broker directly what alternative carriers and plan designs were quoted this cycle, not just what the incumbent carrier came back with.
2. Evaluate level-funded or self-funded plans. For groups of roughly 10–200 employees with reasonably healthy claims experience, level-funded plans can meaningfully reduce costs versus fully insured coverage, with the added benefit of a potential year-end refund if claims come in under projection.
3. Consider ICHRA for cost certainty. Instead of absorbing whatever the group market does each year, an ICHRA lets you set a fixed employer contribution and let employees choose their own individual plan. It shifts plan-shopping to employees but caps your cost exposure.
4. Revisit plan design, not just carrier. A higher deductible, a narrower but adequate network, or an HSA-qualified high-deductible plan paired with employer HSA contributions can lower premium without gutting the benefit.
5. Get a second opinion from a specialist broker. Not every broker actively markets renewals or has deep experience with level-funded and ICHRA alternatives. If your current broker’s answer to rising costs is “that’s just the market,” it may be time to talk to someone else.
The Real Risk of Doing Nothing
Compounding a 10%+ increase year over year adds up fast. On a $500,000 annual group health spend, a 10% increase is $50,000 — money that could go toward wages, hiring, or other benefits. Employers who treat renewal as an annual negotiation, rather than a formality, are the ones protecting their budget through this cycle.
Find a Broker Who Will Actually Shop Your Renewal
On GroupHealthMatch, you can search for brokers by specialty — level-funded plans, ICHRA, self-funded strategies — and compare verified profiles before reaching out. A broker who specializes in controlling cost growth, not just placing the same plan every year, is worth the conversation.
Facing a steep renewal number this year? Find a group health broker near you who actively shops the market instead of defaulting to last year’s carrier.