U.S. employers are heading into another year of near-double-digit health care cost growth, with employer-sponsored health care costs projected to rise 9.5% in 2027 and average spending expected to exceed $19,000 per employee, according to Aon.
The projection marks the fourth consecutive year of elevated health care cost increases and comes as employers face higher medical utilization, more chronic conditions, a growing number of high-cost claims and continued spending on expensive prescription drugs.
The rising costs are being driven by greater use of health care services, the growing prevalence of chronic conditions, high-cost medical claims, and increasing prescription drug spending. Specialty medications and the continued adoption of GLP-1 treatments are also adding pressure to employer health plans.
Key Facts About U.S. Employer Health Care Costs
| Measure | 2026 | 2027 |
|---|---|---|
| Average total health care cost per employee | $17,562 | Projected above $19,000 |
| Annual increase | 8.3% | 9.5% projected |
| Employer share of plan cost | 82.2% | — |
| Average employee health care cost | $5,297 | — |
The 2027 projection is based on Aon’s analysis of employer health care costs and reflects expected medical spending before employers take additional mitigation measures.
Employer Health Insurance Costs: What You Pay, What Your Employer Pays, and How to Compare Plans
Employer Health Care Costs Have Continued to Rise
Aon said the 2027 projection represents the fourth consecutive year of elevated health care cost increases approaching double digits.
Employer health care costs have risen sharply compared with earlier years. The increase in employer costs more than doubled between 2022 and 2026, rising from 3.7% in 2022 to 8.8% in 2026.
Employers are absorbing most of the cost increase rather than passing the full amount on to workers. In 2026, employers covered an average of 82.2% of total plan costs.
Employer and Employee Health Plan Costs
| Cost Category | 2025 | 2026 | Change |
|---|---|---|---|
| Employer cost | $13,269 | $14,432 | 8.8% |
| Employee premiums from paycheck | $2,943 | $3,130 | 6.4% |
| Total plan cost | $16,212 | $17,562 | 8.3% |
| Employer subsidy | 81.8% | 82.2% | 0.4 percentage points |
The average does not tell the entire story. Among the middle 50% of employers, health care cost increases in 2026 ranged from 5.5% to 11.5%, showing how differently organizations are experiencing medical cost pressure.
Employees Are Paying More for Health Care
Although employers continue to pay most of the cost of health plans, employees are also facing higher expenses.
In 2026, the average employee is expected to spend $5,297 on health care. This includes both the portion deducted from their paycheck for premiums and their out-of-pocket medical expenses.
Employee Health Care Costs
| Employee Cost | 2025 | 2026 | Change |
|---|---|---|---|
| Premiums from paycheck | $2,943 | $3,130 | 6.4% |
| Out-of-pocket costs | $1,966 | $2,167 | 10.2% |
| Total employee costs | $4,909 | $5,297 | 7.9% |
The increase in out-of-pocket spending is linked to greater use of health care services and enrollment in leaner health plan options.
For workers, this means the financial impact of rising health care costs is not limited to monthly or payroll premiums. Higher deductibles, coinsurance and other out-of-pocket expenses can also increase the amount employees pay when they use medical services.
What Is Driving Health Care Costs Higher?
Aon identified several factors contributing to the continued increase in employer health care spending.
Higher Use of Health Care Services
Medical spending is increasing as employees use more health care services. Greater utilization is contributing to higher overall spending across employer-sponsored plans.
Chronic Conditions
The growing prevalence of chronic health conditions is another source of pressure. Employees with ongoing medical conditions can require more frequent care, treatment and prescription medications.
High-Cost Claims
The number of high-cost medical claims is also contributing to rising employer expenses. A relatively small number of very expensive claims can have a significant effect on an employer’s overall health plan costs.
Prescription Drug Spending
Prescription drugs remain a major contributor to health care cost growth, particularly specialty medications.
Aon also pointed to the continued adoption of GLP-1 therapies. These medications are increasingly being used across different clinical areas, including cardiovascular disease, sleep apnea and chronic kidney disease.
The development of new oral formulations could also expand access and treatment options, potentially increasing demand and adding further pressure to employer-sponsored plans.
Health Care Technology and AI
Another emerging source of cost pressure is the use of technologies such as artificial intelligence.
Aon said providers are increasingly using technology to support more detailed clinical documentation and coding. In some cases, this can contribute to higher billed charges.
Health Care Costs Are Rising Across Industries
The increase in health care spending is not limited to one type of employer. Aon found that all industries experienced increases in plan costs between 2025 and 2026.
Average employer cost increases ranged from 6.5% to 9.8%, while total plan costs increased across every industry included in the analysis.
Employer Health Care Cost Changes by Industry
| Industry | Employer Cost Increase | Employee Contribution Increase | Total Plan Cost Increase |
|---|---|---|---|
| Manufacturing | 7.5% | 5.3% | 7.1% |
| Professional Services | 8.7% | 3.5% | 7.5% |
| Finance and Insurance | 9.8% | 4.7% | 8.8% |
| Health Care | 6.5% | 5.3% | 6.3% |
| Retail and Wholesale Trade | 7.7% | 6.6% | 7.5% |
| Public Sector | 8.8% | 7.7% | 8.6% |
| Technology and Communications | 9.1% | 6.4% | 8.6% |
The Finance and Insurance sector recorded the highest employer cost increase at 9.8%, while the health care industry had the lowest at 6.5%.
Technology and communications companies also faced significant pressure, with employer costs rising 9.1% and total plan costs increasing 8.6%.
Across industries, employee contribution increases remained below overall employer and total plan cost increases. This indicates that many organizations continue to absorb a significant share of rising health care expenses.
Employers Are Trying to Limit the Impact
The 9.5% projection for 2027 represents expected health care cost growth before mitigation efforts.
Employers commonly make changes to plan design and introduce cost-management strategies to reduce the effect of rising medical expenses on their organizations and employees.
These efforts can include changes to health plan structures, networks and other benefit strategies designed to manage spending while maintaining access to care.
Aon said employers are increasingly focused on strategies that improve health outcomes, enhance the employee experience and address the underlying causes of rising health care spending.
Rising Health Costs Are Affecting Business Decisions
The continuing increase in health care expenses is becoming more than a budgeting issue for employers.
According to Aon, rising costs are increasingly influencing decisions involving:
- Employee benefit strategies
- Workforce planning
- Employee affordability
- Talent attraction and retention
- Long-term financial planning
- Health care investment decisions
Employers are under pressure to maintain competitive health benefits while keeping coverage affordable for workers.
Employers Are Turning to Data and Analytics
As health care costs become more difficult to manage, employers are increasingly using data and analytics to understand where spending is increasing.
These tools can provide greater visibility into:
- Health plan network performance
- Health care utilization
- Medical cost drivers
- Potential areas for savings
- Long-term affordability
Aon said solutions such as its Network Analyzer can help organizations evaluate health care networks and potential strategies to improve value and make more informed decisions about future health care spending.
What the 2027 Projection Means for Workers and Employers
The projected 9.5% increase in 2027 does not necessarily mean that every employee’s health insurance premium will increase by exactly 9.5%.
Employer-sponsored health plans can be changed through plan design, employer contributions, and other cost-management measures. As a result, the amount an individual employee ultimately pays can differ significantly from the overall increase in health care costs.
However, the projection shows that the underlying cost of providing employer-sponsored health care continues to rise.
For employers, that can mean higher benefit expenses and more pressure to find ways to control spending. For employees, it could mean continued pressure from premiums and out-of-pocket medical costs.
Aon Health Care Cost Data
Aon’s projections come from its Health Value Initiative database, which contains health care cost and benefit information from more than 1,100 U.S. employers.
The database represents:
| Aon Health Value Initiative | Data |
|---|---|
| U.S. employers | More than 1,100 |
| Employees represented | 7.9 million |
| 2026 health care spending represented | $135 billion |
Aon said its projections account for plan design changes as well as demographic and geographic population adjustments.
The Bottom Line
U.S. employer health care costs are projected to rise 9.5% in 2027, pushing the average cost above $19,000 per employee. The projection extends a four-year period of near double-digit increases and highlights continued pressure from medical utilization, chronic conditions, high-cost claims and prescription drug spending.
Employers are still covering most of the cost, with an average 82.2% share of plan expenses in 2026, but employees are also paying more. The average employee’s total health care cost reached $5,297 in 2026, including payroll premiums and out-of-pocket expenses.
With costs expected to remain elevated, employers are increasingly looking to health plan changes, data and cost-management strategies to maintain affordable coverage while managing long-term health care spending.
FAQ
1. How much are U.S. employer health care costs expected to increase in 2027?
Aon projects employer health care costs to increase by 9.5% in 2027.
2. How much could employer health care cost per employee in 2027?
Average employer health care costs are projected to exceed $19,000 per employee in 2027.
3. How much did employer health care costs increase in 2026?
Employer health care costs increased 8.8% in 2026, reaching an average of $14,432 per employee.
4. How much did employees spend on health care in 2026?
Employees were expected to spend an average of $5,297 in 2026, including $3,130 in payroll premiums and $2,167 in out-of-pocket costs.
5. Why are employer health care costs rising?
Aon points to higher use of medical services, chronic conditions, high-cost claims, specialty drugs, GLP-1 therapies, and other factors contributing to rising costs.
6. What share of health plan costs do employers pay?
Employers covered an average of 82.2% of total health plan costs in 2026, according to Aon.
