American workers and families are bracing for a wave of health insurance premium hikes in 2026, as new projections signal the steepest increase in employer-sponsored health benefit costs in 15 years and the possible expiration of key Affordable Care Act (ACA) subsidies. The double whammy threatens to squeeze household budgets already stretched by persistent inflation, with some experts warning of widespread coverage losses and political leaders scrambling for solutions as the clock ticks down.
On September 4, 2025, Mercer unveiled its latest National Survey of Employer-Sponsored Health Plans, revealing that employers expect health benefit costs to rise by an average of 6.5% in 2026. According to Mercer, this marks the fourth straight year of elevated cost growth, following a decade in which annual increases hovered around 3%. Workers can expect to pay an additional 6% to 7% in premiums on average, with many facing higher deductibles and copays as employers look for ways to contain expenses.
“The cost of coverage is going up,” Beth Umland, Mercer’s director of research for health and benefits, told CNN. “That’s a combination of higher prices for health care services and higher utilization.” The survey, which included more than 1,700 employers with at least 50 workers, found that 59% of employers plan to make cost-cutting changes to their health insurance plans for 2026—up from 44% in 2024. These changes often mean employees will pay more out of pocket when they seek care, a trend that’s becoming all too familiar for many Americans.
Open enrollment for 2026 health care coverage typically takes place in the fall, when workers will learn the details of their new plans. Some employers are offering a wider array of plan choices, including options with varying out-of-pocket costs depending on the provider network, said Sunit Patel, Mercer’s US chief actuary for health and benefits. But the bottom line remains: most employees will be paying more, one way or another.
Other industry analyses echo Mercer’s findings. The Business Group on Health, surveying large companies, reported that employers expect a 7.6% jump in costs for 2026. “The story this year is perhaps more daunting and sobering than it ever has been,” Ellen Kelsay, CEO of the Business Group on Health, told reporters last month. Meanwhile, consulting firm PwC says health insurers anticipate medical costs for employers to grow at 8.5% for the third consecutive year—an upward revision from earlier forecasts, reflecting insurers’ real-world experience.
Cancer care remains the leading driver of employer cost increases for the fourth year running, according to the Business Group on Health. The rise is fueled by both a growing prevalence of cancer diagnoses and increasingly expensive treatments. Employers are responding by expanding coverage for preventive screenings, such as breast cancer exams and alternatives to colonoscopies. But these measures, while potentially life-saving, add to the overall cost burden.
Another significant factor is the surging use of GLP-1 drugs, which are popular but pricey medications for diabetes and obesity. Nearly all companies surveyed by the Business Group on Health plan to cover these drugs for diabetes in 2026, and about three-quarters will do so for obesity. Nearly eight in ten employers have observed increased use of these medications, with another 15% anticipating further upticks. To manage expenses, more companies are requiring employees who use these drugs for weight loss to get prior approval, participate in weight management programs, or meet other requirements.
Mental health services are also taking a larger bite out of employer budgets. As more workers seek support for mental health issues—a trend accelerated by the pandemic—companies have expanded access to care and worked to reduce stigma. While these efforts are widely seen as positive, they add to the mounting cost pressures facing employer-sponsored plans.
But it’s not just those with job-based insurance who are feeling the heat. Millions of Americans who rely on ACA marketplace plans could see their premiums surge in 2026 if Congress doesn’t act to extend pandemic-era subsidies set to expire at the end of 2025. According to the Kaiser Family Foundation, the average ACA user could face a staggering 75% premium increase in 2026 without Congressional intervention.
“Healthcare premiums are about to skyrocket,” Rep. Hakeem Jeffries (D-N.Y.) warned, as reported by Nexstar. Sen. Ron Wyden (D-Ore.) echoed the alarm, saying, “Every family is going to feel the burden of Trumpcare in America.” Democrats are urging Republicans to join them in extending the subsidies, which have kept coverage affordable for millions. Some GOP lawmakers, including Sen. Josh Hawley (R-Mo.), appear open to compromise. “I think we’ve got to take whatever steps we can to keep those premiums at some reasonable level,” Hawley said.
Senate Majority Leader John Thune acknowledged concerns within his caucus, telling reporters, “I hope they will come to us with a suggestion, a solution, about how to address it.” Still, the path forward is uncertain. Health and Human Services Secretary Robert F. Kennedy Jr. sidestepped questions about the administration’s stance, noting, “The Democrats had two chances to make it permanent, and they didn’t.”
Health care policy expert Matthew Fiedler of the Brookings Institution explained that if subsidies lapse, insurers may raise premiums even further as healthier individuals drop coverage. “Insurers are looking at this and saying, ‘Well, the people who drop coverage are probably going to be the people who use less care,’” Fiedler told Nexstar. “So they’re actually increasing the premiums they charge, which means that even for people who don’t receive subsidies, they’re likely to face higher premiums next year and in the years to come.”
The non-partisan Congressional Budget Office projects that 4 million Americans could lose health coverage due to the anticipated premium hikes. Democrats are pushing to include an extension of the subsidies in the must-pass budget bill this September, while a small group of House Republicans has introduced a standalone bill to address the issue. House Speaker Mike Johnson has not commented publicly on the proposals.
Employers, meanwhile, are keeping a wary eye on potential tariff-related health care cost spikes and the possible impact of the Trump administration’s domestic agenda, including the so-called “big, beautiful bill,” which could increase the number of uninsured Americans in coming years. Sunit Patel of Mercer cautioned that it’s still too early to predict the full ramifications, given the many unknowns on the policy front.
For now, workers and families face a period of uncertainty and tough choices as they await details of their 2026 health coverage. With costs climbing and political solutions still up in the air, the coming months promise to be a crucial—and anxious—time for millions across the country.
