As benefit costs surge, employers face tough decisions for 2026 

July 17, 2025

More employers will likely reduce benefits in 2026 as they try to control fast-growing health benefit costs, according to Mercer’s Survey on Health and Benefit Strategies for 2026. In recent years, the tight labor market and concerns about healthcare affordability have made employers reluctant to reduce the value of health benefits by raising deductibles or making other changes that shift more responsibility for healthcare cost to employees. But this year, more employers seem likely to use this tactic to slow health plan cost growth. Half (51%) of large employers (those with 500 or more employees) say they are likely or very likely to make plan design changes in 2026 that would shift more cost to employees, such as raising deductibles or out-of-pocket maximums. That’s up from 45% in last year’s survey.

Employers project average health benefit costs to grow by nearly 6% this year, and 2026 may be even more challenging from a cost perspective. While short-term cost containment actions might be needed to address current budget realities, employers are also using longer-term strategies that emphasize steering employees to high-quality, high-value care as a way to slow cost growth.

According to the survey, 35% of large employers will offer a non-traditional medical plan option in 2026 that seeks to provide employees with higher-quality, more cost-efficient care. Some of these plans — for example, variable copay plans — are specifically designed to make healthcare more affordable for employees. Variable copay plans typically include no or low deductibles and set copayments for services based on individual providers’ fees. These copays are fixed and communicated up front, giving members the opportunity to select lower-cost providers. The survey found that among the 6% of large employers currently offering a variable copay plan, 28% of their covered employees, on average, chose to enroll in them in 2025.

Adding an alternative medical plan option is a way for employers to provide choices to employees with a range of medical and financial needs.

Weight-loss medication cost is a top concern

Sharp growth in the utilization of Glucagon-Like Peptide 1 drugs for the treatment of diabetes and obesity is having a significant impact on prescription drug benefit costs. While employers have long covered GLP-1 drugs for diabetes, fewer than half (44%) of large employers cover the drugs specifically approved to treat obesity. Given the high cost of these drugs (about $1,000 per month per patient, not counting manufacturers’ rebates, which vary), and the large number of plan members that could potentially benefit from them, managing this cost is by far the top priority in pharmacy benefits among survey respondents, with 77% saying it is extremely or very important.

While the trend over the past couple of years has been to add coverage for GLP-1s approved for weight-loss, some employers facing large cost increases in 2026 may feel this coverage is out of reach. Employers are weighing the immediate costs of covering these drugs against the potential for generating savings down the road once their workforce’s health improves.

More broadly, some employers are evaluating new approaches to providing and managing the costs of pharmacy benefits. Well over half of large employers (61%) are now actively exploring some type of alternative to standard pharmacy benefit contracts that would potentially provide greater clarity about the cost of drugs or specific services offered by pharmacy benefit managers.

Well-being and mental health continue to be a priority

Employers remain committed to helping employees manage stress and build coping skills, which may help prevent the onset of more serious mental health issues. More than 75% of large employers will offer digital stress management or resiliency resources in 2026, such as mindfulness and meditation apps, or apps grounded in cognitive behavioral therapy. Half (51%) will offer in-person or live online resources for stress management and resiliency, such as individual or group training sessions or coaching.

Employers are also providing training for managers on how to recognize employees who are struggling with their mental health, offer support and direct them to resources. This type of training is increasingly recognized as a strategy for fostering a healthy workplace. Nearly 40% of all large employers surveyed — and 60% of those with 20,000 or more employees – conduct mental health training for managers. These efforts may be a response to a growing need. According to a Mercer survey of workers, nearly half (45%) of US employees feel stressed most days at work.

Mercer’s Survey on Health and Benefit Strategies for 2026 was conducted in April 2025. 711 organizations of all sizes and industry types participated.