Why you may pay more for health coverage next year

The question to start with is simple. If your paycheck deduction and doctor visit costs both rise next year, what breaks in your plan first. For most professionals, it is not the investment mix or the headline premium. It is monthly cash flow, the timing of big one-off bills, and the quiet erosion of savings rates when health costs drift higher for several years in a row.

The backdrop for 2026 is not guesswork. Mercer’s latest employer survey points to premium increases of about 6% to 7% on average for employees, with total plan costs for employers projected to rise 6.5% even after benefit redesigns. That would mark the steepest benefit cost jump in roughly 15 years, and it comes with a second lever that affects you directly. When companies try to blunt premium hikes, they often raise deductibles and copays, which shifts more of the bill to you at the point of care.

Other forecasting lenses say the same thing in a different way. The Business Group on Health’s 2026 strategy survey shows a median cost trend of 9% before design changes, easing to 7.6% when plan tweaks are included. That is the third straight year of elevated growth on a higher base, which is why this cycle feels heavier in the wallet than a single headline percentage suggests.

Insurers see it too. PwC’s annual “Behind the Numbers” projects an 8.5% medical cost trend for the group market in 2026, the same elevated pace as 2025. Trend here refers to expected claim costs if plan design stays the same, which means employers that do not change benefits would see pressure of that magnitude flow through.

A few structural drivers explain the squeeze. Cancer remains the top cost driver for large employers. Utilization of mental health services continues to rise after several years of expanded access. And popular GLP-1 medicines are now entrenched in diabetes care, with broader obesity coverage growing, often under conditions like prior authorization and enrollment in weight management programs. Think of this as a cost mix shift rather than a one-off spike, with pharmacy trend outpacing medical trend.

There is also a macro layer that may show up indirectly in premiums and network pricing. Several carriers and policy analysts have flagged tariff uncertainty and supply relocation as cost pressures within the broader healthcare ecosystem, which adds another headwind to pricing for 2026. You do not need to model the geopolitics. You only need to plan for the fact that these pressures can feed through to rates and unit costs.

So what does this mean for your household plan. The goal is not to beat medical inflation with market timing. The goal is to preserve your savings rate and protect against an outsized bill while getting the care you actually value. Use a simple frame that treats health spending like a three-part budget rather than a single premium number. Part one is fixed cost, which is your paycheck deduction. Part two is variable routine cost, the copays and coinsurance you will reliably incur. Part three is risk buffer, the money you would need quickly if you hit your deductible and approach the out-of-pocket maximum. When costs rise across all three parts, the fix is usually sequencing, not austerity. You adjust contributions and coverage now so that a surprise bill does not derail next year’s saving and investing.

Open enrollment is where you can make those adjustments. Start by comparing the worst-case math across your options. The most important number is the out-of-pocket maximum, because that is the stop loss for a bad year. Some plans hide that number behind coinsurance percentages and tiered networks. Pull the summary of benefits and look for the medical and pharmacy out-of-pocket maximums. Then ask yourself whether you can fund that exposure. If you choose a high deductible plan with a health savings account, the HSA contribution strategy becomes the backbone of your protection. A fully funded HSA balance plus a modest cash cushion can turn a scary deductible into a manageable bill schedule.

Next, evaluate network design rather than relying on labels. Many employers are offering broader networks with tiered cost sharing inside the network, which means your cost changes depending on which clinicians you choose. This can be a good trade if you take the time to identify high-value in-network providers and centers of excellence for complex care. For families who expect planned procedures, a tiered network with clear preferred options often beats a skinnier network with lower premiums but fewer choices. If you have a trusted primary care physician or a specialist already, verify their tier rather than just their inclusion.

Pharmacy benefits deserve their own review in 2026. If you or a dependent uses a specialty medication, especially a GLP-1 or an oncology therapy, check the formulary, prior authorization rules, and any step therapy requirements. Many employers will continue to cover GLP-1s for diabetes, and a growing share will cover them for obesity, but with conditions like participation in a weight management program or prescriber restrictions. If you do not meet those conditions, plan for out-of-pocket exposure or seek alternatives discussed with your clinician. Mail order, 90-day fills, and manufacturer programs can still reduce friction, but policies vary widely by plan and by drug.

Preventive care is quietly expanding in ways that can save money and improve outcomes if you use it. Employers are widening access to cancer screenings, which can include breast imaging options beyond mammography and alternatives to colonoscopies when clinically appropriate. If your family history suggests heightened risk, ask your plan about coverage for earlier or more frequent screening protocols. A screening done on the plan’s preventive schedule often carries no out-of-pocket cost, while the same test coded as diagnostic may hit your deductible. That coding distinction is administrative, not clinical, which is why asking in advance matters.

Mental health access has improved since 2020, and utilization is still rising. Virtual care has reduced friction for many people, which is good for well-being but also shows up in cost trend. If therapy is a priority, compare visit limits, telehealth coverage, and whether your preferred provider is in network at the specialist tier or a primary care tier. Some plans now embed mental health coaching or digital programs that are fully covered, which may be a useful addition for teens or for adults who want lighter-touch support between sessions. The budget angle is simple. If you expect weekly sessions for several months, a higher premium plan with lower copays may be cheaper in total than a lower premium design that exposes you to coinsurance after a small number of covered visits.

Your cash flow plan should anticipate the shape of your year. If you expect a delivery, a surgery, or a major diagnostic workup, front-load HSA or FSA contributions so that the money is ready when the bill arrives. If you carry an HSA from prior years, consider keeping one year of your plan’s individual out-of-pocket maximum invested conservatively within the HSA, with any balance beyond that invested for growth. If you do not have an HSA option, an FSA still provides tax savings, but it is use-it-or-lose-it. Estimate realistically to avoid forfeiting funds. For couples with two plans available, a coordination check often pays for itself. One partner’s plan may carry a spousal surcharge, or it may exclude spousal enrollment if that spouse has access to their own employer plan. The right answer is the one that minimizes total family cost at your expected utilization, not only the premium on one paycheck.

Retirement savings deserve protection through this cycle. Rising premiums and point-of-care costs tempt people to lower 401(k) or SRS contributions for breathing room. If you can avoid that, do. The compounding loss is larger than it looks after several high-trend years. A better lever is to reframe your health budget for one to two years. Treat the premium increase and a portion of expected out-of-pocket costs as a temporary inflation shock that you spread across discretionary categories rather than cutting long-term savings. If you must cut, set a date for automatic restoration. Many plans allow you to schedule a contribution increase for a future pay cycle. Use that to reverse a defensive move once the short-term pressure eases.

For expats and cross-border families, there are two extra checks. If you are on a U.S. plan but living part of the year in Singapore or Hong Kong, confirm emergency coverage abroad and the claims process for out-of-network care. If you are temporarily U.K. based on a U.S. contract, understand how your private plan coordinates with NHS access and whether routine care abroad is covered. When cost trend rises at home, some employers narrow international benefits to contain expenses. A quick check with HR can prevent surprises.

There is also a separate protection layer that is easy to overlook when medical costs dominate the conversation. Disability insurance is the benefit that covers income if illness keeps you from work. If your employer offers only a basic short-term plan, ask about long-term disability and whether you can add buy-up coverage during open enrollment without medical underwriting. A single year of elevated healthcare costs is difficult, but it is the loss of earnings during illness that does lasting damage to a long-term plan. A well-built safety net includes income protection, not only medical coverage.

If you need to choose between a high deductible health plan with an HSA and a richer PPO, do not let the deductible number scare you in isolation. Compare the total cost at your expected usage and at a bad-year scenario. A high deductible plan paired with employer HSA contributions and disciplined funding can be more efficient for a healthy household, particularly when preventive benefits are used and the network includes your clinicians. A PPO with higher premiums may be better if you expect ongoing specialty care, have complex prescriptions, or value lower cost at the point of service for behavioral health. The correct choice is the one that aligns the payment pattern with the way your family uses care and the way you save.

Pharmacy strategy deserves a practical close. Review the formulary for generics and biosimilars you can switch to with your clinician’s approval. Ask your plan about site-of-care rules for infusions, since moving treatment from a hospital outpatient setting to an approved infusion center can materially lower your cost. Enroll in any mandatory specialty pharmacy program early if you rely on a high-cost medication. If you are considering a GLP-1 for weight management, confirm clinical criteria and any program requirements before you start, and ask what happens if you switch plans mid-year. These rules are tightening as employers seek to manage cost while maintaining access, which means the friction is budget relevant even when coverage exists.

Finally, keep the tone of your planning calm. The combination of a higher premium, a few larger bills, and more pharmacy friction can feel like a system that is moving against you. It is not personal. It is the interaction of trend, utilization, and plan design. Your response does not need to be dramatic to be effective. Confirm your worst-case exposure. Decide whether an HSA can shoulder it. Align your plan choice with how your family actually uses care. Protect retirement savings as the default. Use preventive and mental health benefits while they remain generously covered. And ask HR the unglamorous questions about networks, prior authorization, and spousal rules now, rather than at the pharmacy counter in February.

The story behind the numbers will continue to evolve. Employers expect cost pressure to persist. Insurers project elevated trend. Policy shifts and trade costs may keep the ecosystem unsettled. That is a lot of noise for a single household to absorb. You do not need to solve the system. You only need a plan that still funds your future, even as 2026 employer health insurance costs rise.