Health insurance premiums in the United States are poised for a steep rise by 2026, affecting both employer-based coverage and plans available through the Affordable Care Act (ACA) marketplace. With enhanced federal subsidies set to expire and medical costs continuing to climb, millions may face substantial increases in their monthly payments.
The spike in health insurance costs comes amid broader concerns about the affordability of care in the country. While some individuals are exploring the possibility of forgoing insurance altogether and paying for treatment out-of-pocket, experts warn that doing so could expose them to major financial risks.
Employers Face Highest Cost Increases in 15 Years
Health benefits for workers are becoming more expensive at a rate not seen since the 2008 financial crisis. According to data from Mercer, the total cost of employer-sponsored health plans is projected to rise at the fastest pace in 15 years. This follows a 6% increase in 2024 that brought the average annual family premium for such plans to nearly $27,000, as reported by the Kaiser Family Foundation (KFF).
Employees are already shouldering a significant portion of that cost. In 2024, workers paid an average of $6,850 annually for their share of family premiums. Many employers may attempt to absorb the upcoming rise in expenses, but according to Sara Collins, senior scholar at the Commonwealth Fund, cost-sharing adjustments such as higher co-pays and deductibles are likely.
A key driver behind the increase is the surge in medical expenses. These include price hikes for services, greater usage of healthcare, and expensive claims related to chronic conditions or catastrophic events. Additionally, growing demand for weight-loss medications and specialty drugs is placing further strain on employer health budgets.
ACA Subsidies Under Threat, Millions May Pay More
For those enrolled in the ACA marketplace, the situation could become even more challenging. According to the Urban Institute, the enhanced premium tax credits introduced under the Biden administration are set to expire unless renewed by Congress. Without them, many families will face a sharp rise in their annual premiums.
KFF estimates that a household of four earning $110,000 could see its annual premium jump by more than $3,000 if these subsidies are not extended. Notices informing marketplace enrollees of higher net premiums are already being sent out ahead of the November 1 open enrolment period.
While some are considering dropping insurance in favour of paying cash for services, healthcare professionals advise caution. According to Vanderbilt University’s Stacie Dusetzina, paying out-of-pocket may seem cheaper for basic procedures, but without negotiated insurer rates or out-of-pocket caps, patients could be left financially vulnerable in the event of an emergency.
As healthcare premiums edge upward, both employers and individuals are bracing for the financial impact. Whether Congress intervenes to extend support or not, navigating the landscape of medical costs in the coming year will require careful planning and informed decision-making.
