2026 Benefit Outlook

Looking Back at 2025

Before we look ahead to the 2026 benefits outlook, it’s worth revisiting what we projected for 2025 - and how those predictions are playing out.

• Medical Trend: Projected at 6% or more. Status: Early indicators suggest 2025 medical trend is landing squarely within this range.
  

• Stop-Loss Trend: Expected increases of 12% or more. Status: Increases are proving to be right on target.
  

• Prescription Drug Trend: Forecasted 8–10% growth. Status: Drug spend is tracking at these levels.
  

• Specialty Drug Trend: Projected at 13% or higher. Status: In many cases, actual increases are exceeding expectations.
  

We also identified several key cost drivers:

• Medical Costs: Driven by rising healthcare expenses, consolidation of carrier- and private-equity-owned physician groups, an increasingly imbalanced payer mix for health systems, and escalating reinsurance costs.

  
  

• Prescription Drugs: Specialty medications and GLP-1s were expected to significantly increase drug spend, compounded by a steady influx of new drugs and rising utilization.

  
  

• Stop-Loss Costs: Anticipated pressure from network outlier claims and an increase in catastrophic claims exceeding $1 million.

  
  

• Other Structural Drivers: The continued decline of independent physicians—now a minority in the U.S. - and aggressive pricing increases from new ownership groups.

  
  

Simply put: these projections have proven accurate.

What We Expect in 2026

Looking ahead, 2026 will be another challenging year for employee benefits. While self-funded plans will continue to grow in adoption, the overall cost of healthcare coverage will keep rising. Total U.S. healthcare spending is expected to surpass $5 trillion, inching closer to 20% of GDP.

Key 2026 Trends

• Medical Trends Medical costs will continue to inflate in 2026. Traditional drivers - such as rising labor wages and supply costs - will persist, but additional pressure will come from changes in payer mix at health systems. Expansion of the Medicaid population will further strain provider margins, increasing upward pricing pressure.
  

• ACA Market Dynamics With COVID-era ACA subsidies now sunsetted, ACA premiums have skyrocketed - often increasing threefold or more. Many individuals will be unable to afford coverage, and even those who remain insured may delay or avoid care due to the combined burden of higher premiums and rising coinsurance. As a result, the uninsured population is expected to grow in 2026. Fewer covered patients means less provider revenue, which may ultimately lead to additional price increases across the system.
  

• Prescription Drugs The industry is finally addressing what has long been healthcare’s Achilles’ heel. PBMs are facing increased legislative scrutiny aimed at curbing predatory practices. Medicare has begun negotiating drug prices, and federal efforts are pushing toward equal-nation pricing standards. Transparency continues to improve as spread pricing and rebate retention practices evolve. Expect increased discipline in this segment, along with expanded drug importation and ongoing regulatory reform.
  

• Stop-Loss Stop-loss markets will remain under pressure as large claims continue to rise. Network outlier provisions are driving significant claim volatility, and providers are increasingly relying on high-dollar claims to offset low-margin payer mixes. This dynamic will contribute to another difficult renewal season heading into 2026/2027.

• Innovation Despite these challenges, innovation will accelerate in 2026. Expect continued advancements in plan design, analytics, transparency, CAA compliance, and creative cost-containment solutions. While these innovations won’t eliminate rising trends, they will play a meaningful role in helping employers better manage and mitigate cost increases.

2026 will demand a more proactive approach to employee benefits - one rooted in transparency, accountability, and innovation. The organizations that lean into change, embrace new tools, and challenge the status quo will be best positioned to manage rising trends while still delivering meaningful benefits to their employees. The opportunity isn’t just to react to rising costs, but to rethink how healthcare works and create a more sustainable path forward.