The United States employer-sponsored health benefits landscape is rapidly evolving. 51% of large employers are likely (or very likely) to implement record-breaking cost-shifting plan design changes in 2026, with health plan cost increases also set to exceed 6% for a second year running.
This study will look at the details behind this health benefit evolution. We’ll cover rising prescription drug and other associated costs, and some key health benefit-related financial issues.
We’ll also consider what needs to be done to protect employee health in the coming years, with health premium costs increasingly subject to worrying rises.
Employer Health Benefits, 2024 to 2025
The average family health premium in 2024 was $25,572. Yet during 2025, the average premium rose by over 7% – outpacing wage growth (4.5%) and inflation (3.2%) – and is estimated to ultimately cost $27,362.
In 2024, worker contributions to a family health premium were $6,296, which steadily rose during 2025, increasing the employee burden. And while the average single coverage deductible burden was $1,787 in 2024, that sum was also subject to an increase during 2025 (and is up 47% over the last decade).
But what’s driving the rises? One significant issue is rising prescription drug costs.
Prescription Drug Cost Rises
Prescription drug costs (the fastest-growing element of employer health spend) rose 8% during 2024, with a further 5.8-6% rise expected by the end of 2025, which will mark the third successive year of rises above 5%.
Chief among the drugs driving this cost surge are GLP-1 medications, such as Ozempic, Wegovy, Mounjaro, and Zepbound, all of which are used to treat diabetes and facilitate weight loss. Their cost has dramatically soared (often rising beyond $1,000 per patient per month, with rises anticipated to continue through 2026).
Other drugs subject to rising costs include specialty oncology and autoimmune drugs and biosimilar competitors to arthritis-relieving drug Humira, which account for over half of all Rx (prescription drug) spending. While biosimilars are usually cheaper than brand-leading drugs, their uptake remains incremental.
Gene and cell therapy drugs remain prohibitively expensive, with single-administration treatments for rare cancers costing $1–3 million. Such vast outlay represents potentially catastrophic risk for employers, particularly self-insured sponsors.
PSG data indicates that over 70% of benefit executives expect gene therapy drugs to become a major financial challenge by 2027, suggesting less eventual coverage, as employers begin to shift the cost burden to employees.
Cost-shifting and Evolving Health Plan Design
Although in recent years employers have been reluctant to shift costs to employees due to a tight labor market and competition for employees, the job landscape has changed.
For 2025–2026, cost-sharing (which means higher deductibles, copays, and out-of-pocket maximums) is returning as the main employer means of offsetting cost increases.
Mercer reports that 51% of large employers will redesign their employee health plans to offset health costs in 2026 – a figure notably up from 45% during 2025.
And while simple cost-shifting is one way of spreading the burden between employers and employees, health benefit packages are also set to undergo significant changes in order to both save money and provide essential services.
Telemedicine, High-Performance Networks, and Evolving Benefit Models
In 2025 and beyond, health benefit packages will significantly evolve, and there are many component parts to consider, including remote health coverage, or telehealth.
Telehealth is now a fundamental expectation when it comes to employer health benefit packages. With the passing of the ‘One Big Beautiful Bill Act’, employers can now provide permanent first-dollar remote telemedicine coverage in high-deductible health plans.
Telehealth facilitates cost-effective and accessible care options, particularly for small and mid-sized employers, who might previously have been unable to afford attractive health plans. By adopting telehealth arrangements, subscription wellness programs, and virtual care as cost-effective alternatives or supplements to traditional coverage, employers can also serve traditionally unprotected hourly and part-time staff.
In terms of U.S. take-up, reliance on telehealth options increased by 2.3% (partly driven by remote workers, a significant phenomenon accelerated by COVID necessity) between January and June 2024, with 68% of telehealth claims regarding mental health issues.
Hospitals anticipate a rapid growth of telehealth resources and expect to deliver over 20% of care virtually by the end of 2025, up from 9% in 2023. By mid-2025, all U.S. hospitals and health systems either offered or planned to offer telehealth; 41% believe they can deliver over 20% of care virtually, while 55% of organizations with over five years’ virtual care experience have already exceeded that threshold.
20% of employers (with more than 50 employees) included high-performance or tiered telehealth networks in their 2024 health plans, with adoption set to rise in 2026 as employers emphasize cost-effective provider choices and narrow networks.
High-performance networks, like those pioneered by Blue Cross Blue Shield, Medica, and regional hospitals, carry narrow provider choice but offer significant cost savings (11–20% of total care costs) without sacrificing clinical quality or results.
Other options include copay-based plans (offering no or very low deductibles, with fixed copays); variable copay plans tied to provider pricing; level-funded self-insured plans (that combine consistent premiums with flexibility and stop-loss protection); and expanded voluntary supplemental benefits (featuring accident, critical illness, and hospital indemnity coverage).
Such a broad suite of options allows an employer to provide health benefits that satisfy a varied workforce across income, lifestyle, location, and health risk differentials while optimizing value and costs.
This flexibility will become increasingly important in the coming years. Study data tells us that personalized, flexible, DEIB-integrated health benefits are in huge employee demand as they navigate a rapidly changing healthcare landscape.
And, with mental health options and associated resources increasingly limited, employees also highly prize new approaches, including centralized navigation, data-driven personalization, and better manager education.
There’s currently a wide gap in the U.S. between mental health needs and available resources. 22.8% of U.S. adults (57.8 million people) experience mental health difficulties each year, but as many as 36% struggle to access existing mental health benefits, citing provider shortages and complex resource access.
Over 75% of employers of large organizations suggest they will offer digital stress management or resiliency programs in 2026, while half will provide in-person or online stress management options.
Yet, 30% of employers say engagement with mental health programs is low, while only about 40% of large-company employers train managers to spot staff mental health issues.
To compound the issue, 2026 is likely to bring severe federal mental health and behavioral health funding cuts, with a proposed $1.3 billion grant shortfall and significant Medicaid reductions limiting access and program continuity for community providers.
In fact, personalized health benefit program availability strongly correlates with employee retention, with almost 3 in 4 polled employees suggesting they would stay in a role if said benefits more closely met their personal needs. As things stand, most employer programs are limited in this regard.
Further Key Health Benefit Evolution
Another key evolving factor involves closer congressional scrutiny of pharmacy benefit managers (PBMs) and incipient regulatory reform.
Federal executive orders and state-level regulations set to be imposed across 2025 and 2026 mean PBMs must pass all manufacturer rebates directly to employer plans and also disclose all fees and compensation.
A pharmacy benefit manager (PBM) acts as a third-party administrator for prescription drug benefits, serving as an intermediary between health insurers, employers, and drug manufacturers.
Ultimately, PBMs are meant to help reduce pharmacy drug prices; yet policymakers are now looking more closely at their role in order to maximize cost savings as U.S. benefit offerings are stretched.
Health Benefits: The Future
And that’s a crucial aspect of getting health costs down, with the guaranteed rise in costs of highly-popular drugs, especially GLP-1 agonists (with diabetes type two and obesity cases forecast to rise), plus other specialty drug and gene therapy options, which employers plan to shift to employees as we move beyond 2027.
The role – and the marshalling of – PBMs will continue to be of the utmost importance in making sure money is optimized, and that drugs don’t become too prohibitively expensive, especially for low-paid, gig employees.
For 2025–2026, cost–sharing (which means higher deductibles, copays, and out–of–pocket maximums) is returning as the main employer means of offsetting cost increases.
As employee health benefits diminish and evolve, the alternatives we’ve already considered will rise in prominence. Over half of large employers will increase plan cost-sharing or reduce benefits in 2026—with higher deductibles, tighter networks, and more limited access all entirely feasible.
Alternatives to traditional benefits will proliferate, as employers increasingly deploy variable copay, level-funded, or HPN plans to balance cost pressure with workforce needs, especially among small and mid-sized firms.
The rise of cost-effective telehealth options is also inevitable, with things like universal telemedicine access, online mental health resources, and flexible virtual care no longer acting as benefit differentiators but as key elements of competitive benefit packages.
As mental health resources shrink, the importance of telehealth mental health options will exponentially grow – particularly as benefit personalization becomes an increasingly important factor, with employees so far missing opportunities to augment a much more eclectic, user-friendly health benefits system.
In order to move with the times, employers must fully grasp the changing health benefits landscape, not only by providing competitive health packages, but by looking at pre-emptive means of avoiding health issues.
It’s an opportunity for forward-thinking companies to consolidate their relationship with their workforce and provide a basis for attracting future staff members during a time when talented employees are increasingly scarce.
And on the flipside, innovative companies can set themselves apart as an attractive health benefit proposition for employees.
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