Healthcare Costs Are Rising Fast. What That Means for Your Paycheck | 125 Managed Health
If your paycheck already feels tight, rising healthcare costs can make that pressure feel worse. For many employees, the problem is not only the premium they see deducted from their pay. It is the full cost of staying covered, including what they may have to spend before their plan starts helping in a meaningful way.
That pressure is growing in 2026. Mercer reported that employers expect health benefit costs to rise 6.5% on average in 2026, the highest increase since 2010, even after planned cost-reduction measures. Mercer also said employers estimated costs would rise by nearly 9% if they made no changes. When employer health costs rise that fast, companies often look for ways to manage the increase, and workers can end up feeling that through higher deductibles, copays, or other out-of-pocket costs. (Source: Mercer)
Why rising employer costs can affect take-home pay
Mercer’s 2025 employer survey found that many employers are planning changes for 2026 to manage rising plan costs, including changes that increase employee cost sharing. That matters because healthcare costs do not stay hidden on the employer side forever. In a lot of workplaces, they show up in the places employees notice most, such as paycheck deductions and what they owe when they actually use care.
That is why healthcare inflation can feel personal even when someone is not sick. A worker may still be insured, but the amount coming out of each paycheck may rise, and the amount they need to pay before coverage kicks in may stay high or increase. For employers, that creates a real communication problem. Offering coverage is one thing. Making that coverage feel practical and understandable to employees is another. (Source: Mercer)
What employees are already paying before they use care
KFF’s 2025 Employer Health Benefits Survey shows how much employees are already contributing. The average annual premium for employer-sponsored family coverage reached $26,993 in 2025, and workers contributed $6,850 of that amount on average. For single coverage, the average worker contribution was $1,440 per year. Those figures matter because they reflect money employees are already giving up through payroll contributions before they even schedule an appointment or fill a prescription.
Once those payroll deductions are in place, employees may still face additional cost sharing when care is needed. That is where the strain can build. The plan may technically provide coverage, but the total employee burden includes more than one number, and workers notice that quickly when household budgets are already under pressure from everyday expenses. (Source: KFF)
Why deductibles matter more when costs are rising
Deductibles are a big part of that story. KFF found that in 2025, the average general annual deductible for single coverage among covered workers in plans with a deductible was $1,886. KFF also reported that the share of covered workers in plans with a general annual deductible increased from 81% in 2015 to 88% in 2025. On top of that, 34% of covered workers were in plans with a deductible of $2,000 or more for single coverage.
Those numbers help explain why rising healthcare costs can feel bigger than a premium increase alone. Employees may be paying every pay period to stay enrolled, while also knowing they could still face a large upfront cost if they need care. That can shape how people use benefits and how they judge the value of the plan being offered. (Source: KFF)
Why this matters for employers reviewing benefits now
For employers, this is where benefit design becomes more important. If employees are carrying higher premium contributions and facing meaningful deductibles, they may pay closer attention to benefits that are easier to understand and easier to use alongside their existing coverage. That is also why conversations around Section 125 strategies and supplemental benefit design have become more relevant for employers trying to support workers without adding unnecessary complexity. 125 Managed Health speaks directly to that issue through its employer-focused content on take-home pay, Section 125 planning, and supplemental benefits that fit around existing coverage.
As healthcare costs keep climbing, employers have more reason to look closely at whether their benefits package is only being offered or whether it is also being understood and used. That is where 125 Managed Health can be part of a practical next step. For more context, readers can explore the 125 Managed Health Blog Hub, read How Section 125 Increases Take-Home Pay, or review Employer Checklist: Add Supplemental Benefits Without Overlap. If your company is reviewing benefits for 2026, 125 Managed Health also offers a way to book an appointment and discuss options in a more practical, employer-focused way.
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