The Rising Cost of Healthcare

Health care costs are climbing at their steepest pace in over a decade, with real implications for how you budget for your people and structure benefits. Here is the data, along with practical steps and broker conversations worth having now.

What the Data Shows

Mercer’s 2025 National Survey of Employer-Sponsored Health Plans, based on responses from more than 1,700 U.S. employers, projects total health benefit cost per employee will rise 6.5% on average in 2026, the highest increase since 2010, even after employers make plan design changes to soften the blow. Without any changes, employers estimate the increase would be closer to 9%.

The average cost to insure each employee is now expected to exceed $18,500 in 2026, up from $17,496 in 2025, and 59% of employers say they are making cost-cutting plan changes in 2026, up from 48% a year earlier. Rising utilization of GLP-1 weight-loss medications, cancer treatment, and mental health services are among the leading cost drivers behind these increases.

For a community bank on tighter margins than a larger corporation, an increase like this is hard to absorb without shifting cost onto employees. Employers nationally are responding with a more deliberate strategy rather than simply raising premiums, and there is real opportunity in following their lead.

Worth Keeping in Perspective

It is worth noting, briefly, that health insurance costs have been growing faster than wages nationally. Indeed Hiring Lab’s analysis of the Employment Cost Index found employer health insurance costs grew 5.7% year over year in the first quarter of 2026, compared to just 3.4% for wages, the fifth consecutive quarter in which insurance has outpaced pay. That is useful context for your overall compensation and benefits planning, but the more immediate opportunity is getting a real handle on the health care cost itself, which starts with a more detailed conversation with your broker.

This is also a good moment to make sure employees see the full picture. A total compensation statement, laying out salary alongside the bank’s contribution to health insurance, retirement, and other benefits, helps employees see those benefits as a real, growing value add, especially in a year when premiums are rising. Many banks only issue these statements once a year; timing one to coincide with open enrollment, when premium changes are top of mind, can meaningfully shift how employees view their overall compensation, not just their paycheck.

Questions Worth Bringing to Your Broker

Before your next renewal conversation, it is worth pushing your broker past the standard renewal quote and into a more detailed discussion of your options. A few questions worth putting on the table:

• What would shifting a larger share of your population toward a high-deductible health plan paired with a Health Savings Account do to your overall spend, including both premium cost and the total cost employees see between premiums and out-of-pocket expenses?

• What alternative funding models, such as level-funded or self-insured arrangements, could apply to a bank your size, and what would your broker actually recommend based on your specific experience rating and claims history? A smaller institution’s risk profile can change which option makes the most financial sense.

• If you were to consider a network change, does the proposed network use a narrow or tiered provider structure to control costs, and what would that trade-off look like for your employees in terms of provider access in your specific footprint?

These are the kinds of questions that move a renewal conversation from “here is what it will cost” to “here is what we can do about it,” and a broker who can answer them in detail is one worth having in your corner.

Communicating Any Changes

Employees managing chronic conditions, caring for aging parents, or raising young families feel plan design changes most acutely, and are often your most tenured, highest-context employees. Communicating changes early, explaining the “why” behind them, and offering a knowledgeable benefits contact during open enrollment tends to preserve goodwill even through a difficult renewal year.

What Community Banks Can Do:

• Review plan design early; comparing PPO and high-deductible HSA-eligible options can meaningfully change your renewal number before you consider shifting cost to employees.

• Evaluate current GLP-1 and specialty drug coverage terms, and invest in preventive and mental health resources now; utilization-driven costs respond better to prevention than to cost-shifting alone.

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  Bring your broker a specific list of questions, rather than waiting for the standard renewal presentation, so the conversation covers funding models and network design, not just this year’s premium.

Health care costs are unlikely to stabilize without intentional planning. Banks that begin preparing for their 2026 renewal now will be better positioned to manage the impact.

by Andrea Carter, SVP Human Resources