What You’re Doing about Your Health Increase
Last week we asked how much of your 2027 health increase you’re planning to pass along to employees, and the most popular answer was none of it. Nearly a third of you (32%) plan to cover the whole increase, while 27% are splitting it with employees and 16% are passing all of it along. The remaining quarter (25%) are still waiting on a number.
They’re doing so in an expensive year. According to Marsh’s survey of more than 1,800 U.S. employers, health benefit costs are expected to rise 8.2% per employee in 2027, the highest increase since 2003, even after planned cost-cutting. A separate Marsh survey earlier this year found that about two-thirds of large employers (those with 500 or more employees) expect to raise their employees’ share of premiums. Small business owners have answered differently. When Gusto asked them in August how they’d handle a premium increase, the most common response (52.7%) was to absorb the cost, which was also the top answer among HRinsidr readers.
Our survey doesn’t tell us why you split this way, but a few factors are likely in play.
The Formula May Be Doing the Deciding
For starters, the answer may depend on how a company’s contribution is set up. A company that pays a set percentage of the premium shares any increase with employees automatically, and one that contributes a flat dollar amount leaves employees to pick up the whole thing. Unless the company already pays the full premium, covering the increase means changing what it pays.
Premiums Are Only Part of the Bill
Of course, the premium is only one place an increase can land. A company can hold paycheck deductions steady and still raise deductibles or move to a leaner plan, and Marsh found that 59% of employers plan cost-cutting changes to their health benefits in 2027.
The Money Comes from Somewhere
Then there’s the question of what covering it costs elsewhere. In our last survey, 26% of you reported a merit budget under 3% and another 16% had frozen merit increases altogether. Gusto’s economists raise the same possibility, noting that premium costs that don’t show up as dropped coverage have to surface somewhere else in the business, potentially as slower wage growth.
A Quarter of You Are Still Waiting
As for the 25% without a number, open enrollment for January plan years is approaching, which means planning employee communications without knowing the cost. If that’s you, it’s worth asking your broker when to expect it and drafting your messaging for more than one outcome.
Editor’s Note: These are HRinsidr readers who chose to answer, so treat the results as a read of the room and not a national benchmark.
Compensation and BenefitsLast week we asked how much of your 2027 health increase you're planning to pass along to employees, and the most popular answer was none of it. Here's why we think you answered that way.
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