Health insurance costs continue to climb. Unfortunately, it looks like the trend will continue in 2026. According to the Kaiser Family Foundation (KFF), small business premiums are projected to rise 11%, driven largely by higher health care and prescription costs, increased utilization, labor expenses, and inflation.

If you’re wondering how to manage these rising costs, here are five strategies that can help.

How Employers Can Manage Rising Group Health Insurance Cost

1: Partner with a broker to explore more plan options. If you’re only offering PPOs, consider expanding your lineup with an HMO or High-Deductible Health Plan (HDHP). Access to HDHPs continues to grow from 38% of private-industry workers in 2015 to 50% in 2024. That still leaves millions without the opportunity to lower their monthly premiums.

Pairing an HDHP with a Health Savings Account (HSA) adds even more value. HSAs offer triple tax benefits:

• Pre-tax contributions
• Tax-free growth
• Tax-free withdrawals for qualified medical expenses

2026 HSA Contribution Limits:

• $4,400 for self-only coverage
• $8,750 for family coverage
• +$1,000 catch-up contribution for those age 55+ (each spouse can contribute if eligible)

For more information, review IRS Publication 969.

2: Reevaluate employee contributions. Many employers have tried to avoid shifting more costs to employees in recent years. But with premiums up, adjustments may now be necessary.

Key benchmarks:

• According to the U.S. Bureau of Labor Statistics, employers in 2025 covered 80% of single-coverage premiums in private industry (87% in state/local government).
• The average family premium for 2025 is $26,993, while single coverage averages $9,325. That’s according to KFF’s 2025 Employer Health Benefits Survey.
• Workers contribute an average of $6,850 toward family coverage.

Premiums vary by region and tend to be lower for HDHP plans.

3: Focus on cost management. Employers are increasingly targeting specialty drugs and high-cost claims to keep budgets under control.

A few ways to reduce costs:

• Encourage the use of generic drugs — they fill 90% of prescriptions and cost far less.
• Review coverage for costly GLP-1 medications (Ozempic, Wegovy, Mounjaro). Some employers are limiting or removing coverage.
• Consider cash-pay alternatives:
  • Eli Lilly and Novo Nordisk have announced lower out-of-pocket prices for select medications.
  • Costco, Walmart, and other retailers are offering discounted prices for GLP-1 drugs.

Buying certain drugs outside of insurance may reduce claims for your business and lower costs for employees.

4: Replace underperforming vendors. Small and mid-sized employers may not be able to negotiate like large corporations, but they can work with partners who help them manage costs.

Evaluate your current vendors and ask:

• Are they helping you identify savings?
• Do they offer tools, data, or programs to manage claims?
• How are they using AI or technology to reduce waste and improve efficiency?

If they’re not driving value, it may be time to explore alternatives.

5: Educate employees on ways they can save on health care. Employee education is one of the easiest, and most effective, cost-control strategies.

Encourage employees to:

• Use preventive care, including routine checkups and screenings
• Choose in-network providers
• Visit urgent care instead of the ER when appropriate
• Use telemedicine, which is often cheaper than in-person care and may be included in their health plans

Helping your employees understand how to navigate the health system can lead to healthier outcomes and lower costs for everyone. (Read our related blog, Advantages of Telemedicine and Virtual Care: A Growing Trend in Group Health Insurance.)

Talk With Your Broker

Your employee benefits broker can help you find a group health plan that fits your budget and offers choice to your employees. If you don’t already have a broker, we make it easy for you to find one on our website.