Employee healthcare costs expected to rise nearly 10% in 2027, employers face dual pressure of benefits and finances
According to the latest Aon research, the average healthcare cost per employee for U.S. employers in 2027 is expected to exceed $19,000, up 9.5% year-over-year, marking the fourth consecutive year of near-double-digit increases. Employee out-of-pocket costs have also risen significantly, reaching an average of $5,297 per person in 2026. The cost surge is driven by the high prevalence of chronic diseases, the adoption of specialty drugs and GLP-1 therapies, and AI-assisted clinical coding inflating bills. Employers face a dilemma between benefit budgets and salary growth.
Key Takeaways
- Aon research shows that by 2027, the average medical cost per employee is projected to exceed $19,000, up 9.5% year-over-year.
- Although employers cover more than 80% of medical plan costs, employees are still affected. In 2026, average out-of-pocket costs per employee are projected to reach $5,297, up 7.9% from 2025, with payroll deductions rising 6.4% year-over-year to $3,130 and out-of-pocket expenses increasing 10.2% to $2,167.
- The study attributes the rise in out-of-pocket costs to "increased use of medical services, as well as the selection of leaner insurance plans." Additionally, some increases in medical bills are linked to the use of technologies such as artificial intelligence, which "support more detailed clinical documentation and coding."
Deep Dive
The study notes that this marks the fourth consecutive year of near-double-digit growth in medical costs, a trend that extends "one of the most sustained periods of medical inflation employers have faced in decades."
The reasons for rising medical spending are varied, including an increase in the prevalence of chronic diseases, leading to more high-cost claims. At the same time, prescription drugs are also a significant factor—more people are relying on specialty medications and adopting GLP-1 therapies, forcing employers to balance healthcare access, affordability, and long-term sustainability.
"At this level, rising healthcare costs are far more than a budget challenge; they affect organizational decisions from benefits strategy and employee affordability to broader workforce and financial planning priorities," said Mike Pasterick, head of Aon's North American Health Solutions, in a statement. "Leaders are under pressure to maintain affordable benefits while continuing to invest in attracting, supporting, and retaining talent."
Employer medical cost increases have more than doubled over the past few years, rising from 3.7% in 2022 to 8.8% in 2026.
"Organizations that can proactively identify emerging risks and take targeted action before costs escalate will be best positioned for the future," said Debbie Ashford, chief actuary of Aon's North American Health Solutions, in a statement.
As healthcare costs rise, nearly half of U.S. employers with 500 or more employees say they will adjust their 2027 plans to shift more costs to employees, according to a recent Mercer report.
Meanwhile, 83% of employers say rising healthcare costs will force them to make trade-offs with wage and salary increases, according to a survey conducted by the National Alliance of Healthcare Purchaser Coalitions.