Group Health Insurance Costs Are Projected to Rise 8.5% in 2026. Here’s What’s Behind It.

Estimated reading time: 4 minutes

PwC projects that group health insurance costs will rise by approximately 8.5% in 2026, increasing cost pressure across employer-sponsored plans. For CFOs and benefits managers, the annual renewal cycle has become predictable in the worst way: higher premiums, reduced benefits, and employees asked to absorb more of the cost.

At that pace, employer-sponsored health premiums could double within a decade. For employers, rising health insurance premiums in 2026 accelerate this long-term cost pressure. With many organizations already stretched thin, this trend demands a more strategic approach than simply absorbing rate increases or passing them along to employees.

What’s driving rising group health insurance costs in 2026?

Several factors are converging to push costs higher:

•  Reduced federal healthcare spending: Proposed cuts to Medicaid funding and Affordable Care Act subsidies would increase the number of uninsured patients. When hospitals see more uncompensated care, they seek higher reimbursement rates from employer-sponsored plans to make up the difference.

•  Import tariffs on medical goods: New tariffs on pharmaceuticals and medical devices could flow directly into claims costs.

•  Gene and cell therapies are entering mainstream use: Treatments like Lyfgenia for sickle cell disease ($3.1 million per infusion) and Elevidys for muscular dystrophy ($3.2 million) remain rare today, but clinical adoption is expected to accelerate as outcomes data matures.

•  GLP-1 medications for weight loss: Drugs like Ozempic and Wegovy are seeing explosive demand, adding substantial pressure to pharmacy budgets.

•  State-specific mandates: In New York, for example, managed care organization requirements continue to push premiums above the national trend.

The limits of traditional approaches to group health insurance costs

Most organizations manage benefits costs through an annual ritual: meet with the broker, review the renewal, negotiate where possible, and absorb whatever increase comes through. When premiums rise faster than budgets allow, the gap gets shifted to employees through higher deductibles, increased cost-sharing, or reduced coverage.

This approach is wearing thin. Employees feel the squeeze, which affects morale and retention. And the underlying cost drivers (hospital pricing, high-cost claims, pharmacy trends) remain unaddressed year after year.

Questions worth asking

Before the next renewal cycle, financial leaders might consider a few questions:

•  If premiums double over the next decade, what does that mean for our total compensation strategy?

•  What alternatives to fully-insured arrangements might give us more control over costs?

•  How much visibility do we actually have into what drives our claims spend?

•  Are we addressing root causes, or just managing symptoms?

A different approach to employee benefits

Marshall+Sterling’s Tactical Risk Solutions for Employee Benefits focuses on lasting results, not just short-term savings. Rather than accepting the annual renewal as the only point of intervention, we work with organizations to identify and address the factors that actually drive costs: pharmacy spend concentration, stop-loss exposure, plan design inefficiencies, and lack of transparency in provider contracts.

The goal isn’t a one-year fix. Addressing rising health insurance costs in 2026 requires more than annual renewal negotiations, it demands a year-round strategy. It’s building a benefits program that gives employers predictability, control, and the ability to reinvest savings into better outcomes for their workforce.

Learn more about what Marshall+Sterling offers

Planning for your 2026 health benefits strategy? Start a conversation with our team.

• Large-Group Benefits Strategies
• Compliance and Legal Support for Benefits Plans
• What’s Your Cost of Risk Management?
• NYS Managed Care Organization Tax