What Health Benefits Cost in 2026, and What 2027 Will Bring

Every fall, two things tell employers where health benefits are headed: KFF's annual survey of what coverage actually cost this year, and the big benefits consulting firms' projections for next year. Both are out, and they point the same way. Costs rose again in 2026, and 2027 is shaping up to be the steepest increase in more than two decades.

Here's what the numbers say and what small and mid-size employers can do about it.

Part 1: What benefits cost in 2026

The 2026 KFF Employer Health Benefits Survey (1,937 employers, released October 22) found:

• Family coverage: $28,303 a year, up 5% from 2025.
• Single coverage: $9,804 a year, also up 5%.
• Over five years, family premiums are up 28%. Wages rose 3.7% this year and inflation 2.7%, so benefits keep outpacing the budgets that pay for them.

Smaller employers feel it more

For firms with 10 to 199 workers:

• Employees pay $9,687 a year toward family coverage, versus $6,840 at larger firms. That's 42% more.
• Smaller-firm workers pay 37% of the family premium, versus 25% at larger firms.
• 31% of covered workers at smaller firms pay $12,000 or more a year for family coverage.
• The average single deductible is $2,624, versus $1,772 at larger firms, and 55% of smaller-firm workers have a deductible of $2,000 or more.
• 38% of covered workers at smaller firms are in level-funded plans. KFF notes these plans may price based on a group's health and aren't required to cover every essential health benefit, so a careful review matters.

Part 2: What experts predict for 2027

The major benefits consulting firms survey employers and insurers every year about next year's costs. Their 2027 projections, released between August and October 2026:

• Marsh (formerly Mercer): +8.2%. Total health benefit cost per employee is expected to rise 8.2% in 2027, the highest increase since 2003, even after employers' planned cost-cutting. Without changes, employers expect their current plans to cost 11% more.
• Aon: +9.5%, pushing average employer health care costs above $19,000 per employee. It's the fourth straight year of near double-digit increases.
• WTW: +11.1% before plan changes, the steepest projected single-year increase in nearly two decades.
• Segal: medical trend of 9.9%, a 15-year high, with prescription drug trend at 11.5%, above medical for the second year in a row. Segal also reports stop-loss premiums up nearly 13%, which matters for self-funded and level-funded plans.

What's driving it

• Prescription drugs, especially specialty medications and GLP-1 drugs for diabetes and weight loss, keep rising faster than medical costs.
• More high-cost claims, from cancer treatment to complex chronic conditions.
• Higher hospital and provider prices as contracts are renegotiated.
• Rising stop-loss costs for self-funded and level-funded groups.

What employers plan to do

• 59% of employers plan cost-cutting changes for 2027 (Marsh), such as higher deductibles or copays.
• That means many employees will see their paycheck deductions rise by more than the 8.2% average.
• Employers are also steering people to higher-quality, lower-cost care, revisiting drug coverage, and looking harder at funding options.

Part 3: Five things to do before your 2027 renewal

1. Make sure your bill is right. When costs climb 8-11% a year, paying for a former employee or the wrong coverage tier compounds fast. Compare your invoice to your current employee list every month.
2. Start your renewal review early. For January 1 renewals, the real decision window is 90 to 120 days out. Waiting until December leaves you signing whatever arrives.
3. Check participation requirements. Rising employee costs can push enrollment below your carrier's minimum without anyone noticing.
4. Revisit your contribution strategy. With small-firm employees already paying 42% more for family coverage, how you split the increase affects hiring and retention as much as your budget.
5. Compare funding options carefully. Fully insured, level-funded and other structures each have trade-offs, and rising stop-loss costs change the math. The right answer depends on your group.

Start with a free benefits bill audit

The fastest, lowest-risk place to start is the bill you're already paying. Send us a recent invoice and your enrollment list, and within five business days we'll tell you in writing whether you're paying for anyone who has left, whether you're meeting your carrier's participation requirement, and whether the rates on your bill match what you were quoted.

It's free, there's no obligation, and we don't need to quote you anything. If everything checks out, you'll have that in writing too.

Request your free audit →

Not ready to talk? Download our 5-point benefits bill checklist and check it yourself in about 20 minutes.

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