Forty-eight percent of large US employers plan to raise employee out-of-pocket healthcare costs through higher deductibles or co-pays in 2027, according to Mercer research published this week. The broader trend: overall health benefit costs are projected to increase 6.7 percent, averaging over $18,500 per employee. The cost pressure is reshaping which benefits organizations are willing to maintain and which they are restructuring.
GLP-1 medication coverage is contracting: six percent of employers dropped coverage in 2026 and another five percent plan to do so in 2027, with 27 percent tightening utilization controls on specialty drugs. The cost of GLP-1 coverage, which can run several thousand dollars per covered employee per year, has made it an early casualty of benefit optimization reviews. Prescription drug costs overall are projected to rise nine percent in 2026, compounding the pressure on plan design. At the same time, employers are expanding in areas with clearer retention value: 50 percent now offer IVF coverage, 46 percent provide adoption financial assistance, 58 percent offer eldercare benefits, and 51 percent provide childcare resources.
The signal for HR technology leaders is that the benefits management layer is under more structural pressure than it has been in years, and the data infrastructure needed to manage it has not kept pace. Benefit cost modeling, utilization analytics, and vendor performance measurement require platforms that can aggregate and compare claims data, plan design variables, and workforce demographic signals in real time. The organizations raising out-of-pocket costs without that visibility risk shifting burden to the employees they most need to retain, compounding rather than resolving the cost problem. HCM platform competition between Rippling and Workday increasingly includes benefits administration as a differentiating layer; the cost pressure Mercer documents will accelerate that competition.
Source: HR Executive
