Employer Health Costs Projected to Rise 9.5% in 2027
Aon projects employer health costs to increase 9.5% in 2027, reaching over $19,000 per employee. This rise is driven by factors such as increased demand for health services and more chronic disease.
Employers are expected to face another challenging year in terms of health costs, with projected increases of 9.5% in 2027, according to Aon. This would bring the average cost per employee to over $19,000. The main drivers of this increase are rising demand for health services, more chronic disease, and increased use of certain drugs.
Workers are also feeling the pinch, with average health coverage costs expected to be $5,297 this year, up $388 from 2025. The increased use of AI in billing and coding is another factor contributing to higher costs. Since 2022, employer health care cost increases have more than doubled, from 3.7% to 8.8% in 2026.
Companies are exploring ways to manage these costs, including changing benefits and using other cost-control strategies. On average, employers cover about 82% of health plan costs, and they are looking for ways to offset the increases without causing backlash from workers.
Go Deeper
What is driving the increase in employer health costs?
The main drivers are rising demand for health services, more chronic disease, and increased use of certain drugs, as well as the increased use of AI in billing and coding.
How much are workers expected to pay for health coverage this year?
Workers are expected to pay an average of $5,297 for health coverage this year, which is $388 more than in 2025.
What percentage of health plan costs do employers typically cover?
Employers cover about 82% of health plan costs on average.
How have employer health care cost increases changed since 2022?
Employer health care cost increases have more than doubled since 2022, rising from 3.7% to 8.8% in 2026.
What strategies are employers considering to manage health costs?
Employers are exploring ways to manage costs, including changing benefits and using other cost-control strategies, such as removing high-cost providers from their network.
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