US group health costs to hit $18,500 per employee, steepest rise in 15 years

Group health plan costs in the United States are expected to reach $18,500 per employee this year, according to the consultancy Mercer.

That is a rise of 6.7% on last year, and Mercer's figures make it the steepest increase in 15 years.

Employers are responding by getting out of the business of choosing plans altogether.

More than 20,000 companies switched to health reimbursement arrangements in 2026, a 53% increase on the previous year, according to a report from the HRA Council cited by Bloomberg.

An HRA works differently from a group plan. The employer gives the employee a defined sum of money, and the employee buys their own cover on the ACA marketplace.

The comparison being drawn is with retirement provision: employers once ran defined pensions, then moved to 401(k) accounts and left the choices to staff.

For a founder, the arithmetic is what matters. A group plan is an open-ended cost that reprices every year, and this year it repriced by 6.7% on Mercer's numbers.

An HRA contribution is a number the employer sets. The risk of premium increases moves onto the employee, who is the one shopping the marketplace.

That is the trade, and it is not free. Staff on an HRA pick their own plan, which means they also absorb the difference when the plan they want costs more than the allowance.

The scale of the shift is now hard to dismiss as a fringe arrangement. Twenty thousand employers in a single year is a market signal, not an experiment.

Two things are worth checking before a small team follows them. The first is what the HRA allowance would have to be to buy comparable cover in the states where staff actually live.

The second is renewal timing. A group plan quote arriving with a 6.7%-scale increase is the moment the comparison is cheapest to run, because the alternative number is already on the table.