Employers are challenged to keep healthcare affordable as costs soar: Survey results
Impact of rising costs on employees
In nearly all employer-sponsored health plans, cost is shared with employees through both premium contributions deducted from their paychecks and plan design features that shift some financial responsibility to plan members when they access care. Since employees’ share of the cost of health coverage typically rises at about the same rate as overall cost, increases of this magnitude are heightening concerns about healthcare affordability. A year ago, a Mercer survey of over 2,000 US workers reported that 28% of those with household incomes at or below the median were not confident they could afford necessary healthcare.
Employers want to minimize increases in paycheck deductions while ensuring employees across all pay levels can afford the care they need, when they need it – a tough balancing act. Still, the survey found employers pursuing a number of strategies with the goal of making healthcare more affordable for employees. These included offering employees more medical plan options, guiding them to high-performing providers and providing specialized health programs. In each case, however, for the initiative to succeed, employees need to understand how they can take advantage of the opportunity to save.
Offering employees more plan options — and new plan options
A good starting point for addressing affordability is offering an array of plans designed to meet different health needs and financial situations — and helping employees understand the implications of their enrollment decisions.
Traditional medical plans offer members a trade-off between the premium cost and the level of coverage provided. The differences in the plans offered can be meaningful. In PPO plans offered by large employers, the average monthly premium contribution paid by employees is $191 for individual coverage, and the average deductible is $1,064. In contrast, in a high-deductible Health Savings Account (HSA) plan, on average employees pay only $109 monthly for coverage, but the deductible is higher, at $2,481. An employee who usually does not hit their PPO deductible could save hundreds of dollars by moving to an HSA plan — and even more by contributing tax-free funds to their HSA.
That said, high-deductible HSA plans may not be the best choice for employees with significant healthcare needs, a lack of savings, or both. The survey found that enrollment in HSA plans has been essentially flat over the past four years (now standing at 37% of covered employees), even though these plans are offered as a choice by the majority of employers.
In recent years, new, non-traditional medical plan models have been introduced that manage cost and address affordability in new ways, generally by using smaller networks of providers selected on the basis of cost and quality. These high-performance network plans typically incentivize enrollment by offering employees lower contributions, lower cost-sharing, or both. Mercer’s Survey on Health and Benefit Strategies for 2026 found that 35% of large employers now offer at least one plan that directs employees to smaller networks of higher-performing providers. This includes variable copay plans, in which copayments for the same healthcare service vary by individual provider and are disclosed to members up front. Lower copayments provide an incentive for members to choose higher quality, cost-efficient providers.
Exclusive Provider Organization plans, which may or may not use a high-performance network, save money by limiting coverage to in-network providers. EPO plan prevalence is growing fastest among the largest employers. In 2025, 36% of employers with 20,000 or more employees offered an EPO option, up from 29% in 2024.
The survey found that the number of medical plan choices offered to employers is increasing. In 2025, 67% of large organizations offered three or more medical plans at their largest worksite, up from 60% in 2023. We expect this trend will continue, as these newer plans tend to cost less and make care more affordable for plan members. Employees have diverse needs, and choosing the right plan can be a way to unlock substantial savings.
Specialized programs for managing health issues
Of course, the best way to reduce spending on healthcare, for both employers and employees, is by reducing health risks in the covered population. A notable portion of employers provide specialized, stand-alone programs designed to help employees with specific health conditions. These programs are typically low-cost or free to members and are often delivered virtually. In 2025, 32% of large employers offer a stand-alone specialized diabetes program, 28% offer a musculoskeletal program, and 23% offer a fertility program.
The best of these programs help members better manage their health conditions, which creates opportunities for both employees and employers to reduce healthcare spending over time. But results are not a given. The key is having the right metrics to monitor program performance.
The survey found that a top priority for employers over the next three to five years is measuring the performance of their health programs to ensure they are delivering value. Over three-quarters of large employers (77%) said this would be an important priority during that timeframe.
One cost management strategy getting considerable attention in the news recently is the Individual Coverage Health Reimbursement Arrangement (ICHRA), where employees use funds contributed by their employer to shop for their own coverage in the individual market. While some employers are at least exploring the feasibility of this defined contribution approach, in a Mercer survey conducted earlier this year, only 3% of large employers (500 or more employees) thought it likely that they would replace their medical plan with an ICHRA within five years. Even among the smallest employers surveyed (fewer than 200 employees), that figure rose only to 6%. Despite the very real challenges of sponsoring a comprehensive health plan during a time of rapid cost growth, employers remain committed to providing this highly valued benefit.
Mercer’s National Survey of Employer-Sponsored Health Plans, one of the nation’s largest annual surveys on health benefits, provides comprehensive data on medical plan offerings, cost, plan design and cost management strategies, based on employer size, industry and location as well as on the national level. Now in its 40th year, the 2025 survey was conducted June-August and 2,010 employers participated. The survey uses a stratified probability sample of private and public employers and a convenience sample of current and prospective clients; a weighting scheme includes statistical calibration to minimize potential bias from the non-probability-based sample. Results are representative of all employer health plan sponsors in the US with 50 or more employees. The final, written report will be published in March 2026.
