Rising healthcare costs are making it difficult to balance budgets while maintaining competitive and affordable benefits. According to the Business Group on Health, median healthcare costs for employers are expected to increase 9% in 2026. This marks the largest annual increase since the data started being tracked in 2010. And it comes on top of an 8% increase in 2025.
The industry news sources BenefitsPRO and HR Morning note that a combination of factors is increasing healthcare expenses, including:
- Specialty drugs such as GLP-1 weight loss medications
- High-cost medical treatments
- Mental health challenges
- Chronic physical health conditions
- Medical inflation
- An aging population.
Containing healthcare costs is crucial to your bottom line. But so is offering benefits that attract and retain employees.
This balancing act requires solutions that address financial constraints without sacrificing employee health and engagement. Professional services firm Marsh McLennan reports that 70% of employees would switch organizations for better benefits.
Managing costs and maintaining benefits requires strategic planning. The following solutions can help you proactively address rising healthcare expenses while meeting workforce needs.
- Prioritize preventive care.
- Evaluate coverage of high-cost medications.
- Incorporate care management programs.
- Provide wellness resources.
- Promote mental health benefits.
- Embrace technology.
Prioritize preventive care
Preventive care is one of the most effective long-term solutions for improving health outcomes and reducing plan costs. Marsh McLennan notes that identifying health challenges earlier reduces their risk of developing into higher-cost, chronic conditions.
Health screenings can be a valuable tool for catching physical and mental health challenges before they escalate. Organizations are taking note. According to BenefitsPRO, 43% of employers will cover all breast cancer screenings in 2026. That’s up from 25% in 2025.
Investments in education and communication about preventive care can pay off with healthier employees and fewer high-cost health claims. Many preventive care services are free to employees. Educate your workers on the importance of health assessments and screenings. Compiling a list of preventive care services and providers can increase participation.
Evaluate coverage of high-cost medications
Specialty drugs contribute significantly to increasing healthcare expenses. In particular, the massive demand for GLP-1 weight loss drugs like Ozempic and Wegovy has many employers scrambling to contain costs.
You can address this challenge by evaluating your health plan’s approach to weight loss medications and treatments. Human resources association SHRM recommends exploring solutions such as:
- Contracted pricing directly from manufacturers
- Coupons for plan members to reduce prices
- Prior authorization to ensure appropriate use.
In addition, it’s worth examining alternative treatments for obesity and related conditions. Lifestyle modification programs, personalized nutrition plans, and individual coaching offer high-quality, lower-cost strategies.
Incorporate care management programs
Early intervention and consistent care are critical in reducing costs and improving health outcomes.
SHRM notes that nurse advice lines and disease management programs empower employees to navigate treatment and follow protocols. These resources help employees address chronic conditions, understand and manage side effects, and follow through on recommended care plans.
Enabling employees to find guidance and support before, during, and after treatment can produce cost savings. Care management programs reduce unnecessary medical visits, avoid complications, and improve overall health.
Provide wellness resources
Wellness initiatives can proactively address the underlying factors of high-cost health issues. Stress, sedentary lifestyles, and poor nutrition can all lead to chronic health conditions.
Offering resources that encourage healthier choices creates long-term value by improving individual health and reducing plan expenses. Solutions may include wellness apps, fitness programs, meditation classes, and more nutritious food options in the office.
Your wellness efforts can also include directing employees to appropriate healthcare settings. HR Morning recommends communicating when and where to seek care. For example, highlight when to seek care from a primary care physician, urgent care, or emergency room. List in-network healthcare professionals and compare the costs to out-of-network care. A worksheet could guide employees to generics and biosimilars to reduce drug costs.
Communicating about wellness and healthcare offerings can reduce individual out-of-pocket costs and help in managing overall claims.
Promote mental health benefits
As employees continue to struggle with mental health challenges, the costs associated with these conditions are also rising. Mental health benefits can improve employee wellness and reduce the risk of more costly interventions.
Examples include:
- Free counseling sessions through an employee assistance program
- Online cognitive behavioral therapy courses
- Mental health education
- Well-being apps
- Stress management programs
- Resilience training.
Industry news source Employee Benefit News highlights the effectiveness of telehealth options to expand access to mental health care. Virtual offerings can boost accessibility and affordability, reduce waiting times, and deliver support where and when employees need it.
Embrace technology
Technology solutions increasingly offer tools to enhance and manage healthcare offerings.
Virtual care has expanded to include options for physical therapy, mental health, and home screenings for cardiovascular health. These services can address costly health challenges involving musculoskeletal issues, chronic health conditions, and mental health concerns. Identifying and addressing these challenges can significantly impact plan costs.
In addition, data analytics tools can help you monitor utilization patterns to identify specific causes of healthcare cost increases. These insights allow you to tailor benefits offerings to your workforce’s most pressing issues and your plan’s highest claims.
HR Morning recommends regularly monitoring vendor relationships for healthcare cost and quality. This step can identify opportunities to reallocate investments to programs that provide the most value.
Finding solutions that work
Navigating rising healthcare costs is an increasingly difficult challenge, but you don’t have to face it alone. For more information on containing healthcare costs, talk to a benefits consultant.
They can help you assess your current health plan and identify high-cost drivers. These insights can lead to tailored strategies that help your organization manage costs while maintaining competitive and sustainable benefits offerings.