We all know 2026 was an expensive healthcare renewal year, but the real story was the growing gap between renewal outcomes. While median rate increases remained relatively steady, the distance between the lowest and highest renewals widened sharply, making costs harder for employers to predict.
Employers aren’t responding with a single cost-control strategy. Instead, they’re making smaller adjustments across premiums, plan design, and cost sharing.
For CFOs and CHROs, planning for 2027 requires a closer look at where their organization may fall within a much wider range of outcomes and how those outcomes could affect employee affordability and talent attraction and retention.
Rate Increases Saw Wide Spreads in 2026, Especially for “Cost-Saver” Plans
Across every plan type, 75% of companies saw increases above 5%. High deductible health plans (HDHPs), traditionally viewed as a cost‑control option, saw the widest variation.
In 2025, HDHP renewals were tightly grouped. In 2026, the spread between the 25th and 75th percentile more than tripled, ranging from modest single‑digit increases to double‑digit jumps.
Median increases across plan types hovered in the 9% to 12% range, but those figures mask substantial variation underneath.
For finance and people teams, that variation makes planning harder. When renewal outcomes differ this much, relying on a single projected increase is no longer enough. Employers should model both favorable and unfavorable scenarios, particularly if they absorb most of the premium cost.
The wider spread matters even more for employers approaching off-cycle or mid-year renewals. With decisions approaching, historical benchmarks provide less guidance than they once did. Employers entering renewal discussions should test assumptions early, especially if they have relied on HDHPs or other lower-cost plan designs to support affordability.
HDHPs Show Where Employers Are Managing Costs and Employees Are Feeling the Impact
As renewals became less predictable, many employers avoided highly visible plan changes and adjusted plan design instead.
Deductibles for HDHPs moved noticeably higher in 2026, with more companies adopting plans in the highest deductible tiers. Growth was concentrated among plans with deductibles above $3,250, while mid-range deductible plans declined. The share of plans with deductibles below $1,800 continued to shrink.
This pattern shows that employers raised deductibles rather than reducing cost sharing, delaying when the plan begins to pay. From a cost-management perspective, higher deductibles can reduce utilization and limit employer spending without changing premiums or eliminating coverage options.
For employees, the effect is different. Higher deductibles increase out-of-pocket costs even when payroll deductions remain relatively low. As deductibles climb, employees may delay care, forgo care altogether, or avoid HDHP enrollment despite lower premiums.
This trend may signal a breaking point. HDHPs support affordability only when employees view them as usable. When deductibles become too high, lower premiums alone may not be enough to encourage participation.
The relationship between renewal cost pressure, deductible growth, and employee behavior is one of the clearest affordability signals in 2026. It also highlights a growing challenge. Actions that reduce employer costs don’t always improve affordability for employees.
AI Companies Are Rewriting the Enterprise Benefits Strategy Playbook
One of the most notable developments this year came from the largest employers.
Companies with 1,000 or more employees have historically been less likely to fully cover premiums across all tiers. In 2026, many began moving in the opposite direction.
The primary driver is competition for AI talent. As employers compete for highly skilled technical workers, benefits are becoming a larger part of the hiring and retention strategy. Fully employer-paid coverage is increasingly being used to strengthen total rewards programs, improve retention, and reduce employee friction.
Smaller employers are moving in the opposite direction, showing the sharpest decline in fully employer-paid plans.
For companies competing within the same talent markets, understanding where fully paid coverage is expanding and why will become increasingly important.
Fully Paid Employee-Only Coverage Continues to Decline
Across companies of nearly every size, 2026 marks the third consecutive year of declining availability of plans that fully cover employee-only premiums.
What’s noteworthy is how employers are making these changes.
There’s little evidence of transitional pricing for employees moving from fully employer-funded coverage to partially funded plans.
Employers appear to be simplifying pricing structures, even when that adds costs for employees. While these changes may look modest in aggregate reporting, they create new expenses for workers who previously paid nothing for coverage.
Cost Sharing in 2026: Startups Took a Different Approach Than Larger Employers
One of the biggest surprises in this year’s data is what didn’t happen.
Many expected employers to respond to rising healthcare costs by increasing employee premium contributions across the board. Instead, contribution levels among mid-sized and large employers remained relatively stable.
The most significant changes came from smaller companies.
Organizations with fewer than 50 employees reduced employee-only contributions while increasing contributions for dependent and family coverage. For companies with a workforce concentrated in employee-only plans, the impact may be limited. For employers with higher dependent enrollment, the effect can be far more significant.
Meanwhile, mid-sized and enterprise employers appear to be managing rising costs through other tools, including funding strategy, network design, carrier negotiations, and deductible adjustments.
The contrast highlights an important consideration for 2027 planning. Cost-sharing decisions have different effects depending on workforce demographics and enrollment patterns across coverage tiers.
What This Means for 2027
2026 showed us that the way employers respond to cost pressure is changing. The widening renewal range suggests 2027 will be another year where plan predictability matters as much as plan price.
Deductible growth and changes in employer-paid coverage show how costs are being redistributed between employers and employees. Stable cost-sharing levels among mid-sized and large employers also suggest that many organizations are relying on other approaches to manage spending.
The takeaway: Build flexibility into planning, model a wider range of renewal scenarios, and evaluate affordability from both the employer and employee perspective.
Benchmark Your Benefits Against the Market
See how your healthcare, retirement, leave, and wellbeing programs compare to companies like yours. Schedule a complimentary benchmarking consultation with a Sequoia advisor to review your strategy, validate decisions, and identify opportunities for 2027 planning.
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