Employer health costs are projected to rise about 9% in 2026 — roughly 7.6% after the plan changes most employers are making — the highest sustained trend in more than a decade. The three biggest drivers are GLP-1 medications, mental health utilization, and specialty drugs. Below is what is behind the numbers and the concrete steps employers are using to prepare.
Why costs are rising in 2026
National benefits surveys from Mercer, Aon, and the Business Group on Health all point to the same story: 2026 will bring the steepest health cost increases employers have seen in over ten years, with underlying medical trend now compounding year over year. Three forces stand out.
- GLP-1 drugs. A majority of large employers report GLP-1 medications like Ozempic, Wegovy, and Zepbound have materially increased pharmacy spend, and demand continues to climb.
- Mental health. For the first time, behavioral health has become a top-cited cost driver as utilization rises across the workforce.
- Specialty and cancer care. High-cost specialty medications and earlier cancer diagnoses are producing more large claims than ever.
How employers are preparing
The employers containing their 2026 increase are not simply passing costs to employees. They are changing how their benefits are funded and managed:
- Moving to level-funded plans or ICHRA to capture savings and stabilize monthly costs.
- Tightening prescription and GLP-1 management with clinical eligibility criteria rather than blanket exclusions.
- Benchmarking renewals against the market instead of accepting the incumbent carrier's first offer.
- Exploring captive and self-funded structures for groups with favorable claims history.
The Nyala Health approach
As an independent advisor licensed in all 50 states, Nyala Health is not tied to any carrier. We benchmark your current plan against the market, model alternative funding options against your actual claims risk, and show you the math before anything changes. If your renewal has not been shopped, you are almost certainly leaving money on the table heading into 2026.