Some Employers Dropping Group Health Insurance

Health plan expenses forecast by Mercer reached $18,500 per employee this year, a 6.7% increase over 2025. Such increased costs are causing some employers to consider other options, such as Health Reimbursement Arrangements (HRA).  Under this model, employers provide a stipend to purchase health insurance on the Affordable Care Act Marketplace or another exchange.  Before 2020, only small companies could use HRAs to reimburse employees for individual health plans, but that has now changed due to subsequent legislation.  Bloomberg reports that the median employee received a monthly allowance of $459 in 2026 and paid a premium of $567, and the plans available to workers vary widely by geographic location.  Those plans generally have higher deductibles and are accepted by smaller networks of doctors and hospitals.  HRAs  require workers to put more effort into selecting the best plan for an Individual Coverage Health Reimbursement Arrangement (ICHRA).  Only a small portion of American workers are currently covered by ICHRAs, but there has been a 53% increase in companies entering such arrangements from last year according to the HRA Council.  

Americans with workplace coverage are expected to spend an average of $5,297 in 2026 on healthcare, according to the benefits consulting firm Aon.  The spending represents a combination of payroll deductions for premiums and out-of-pocket charges like deductibles and co-pays.  This year’s increases are expected to be the steepest increase in 20 years.  Some of the major causes for rising costs are cancer treatments and the popular diabetes and weight-loss drugs.

This article is part of our October 2026 Newsletter. 

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