Hub International has released its 2026 Benefits Cost Trends Report, providing employers with data and analysis to help manage rising benefits costs.
The report projects national trends for combined medical and prescription drug coverage at 8% to 10% for 2026. Prescription drug trends alone are expected to range from 10% to 12%, while medical-only trends are projected at 7% to 9%. Dental trends are forecasted at 4% to 5%, and vision trends at 2% to 3%.
Broader industry data supports these findings, with Aon projecting that US employer healthcare costs will rise 9.5% in 2026. This would mark the third consecutive year of near double-digit increases, and average costs are expected to exceed $17,000 per employee. The trend is attributed to ongoing medical inflation and the continued absorption of cost increases by employers.
Healthcare costs are accelerating, with the report identifying specialty pharmaceuticals as a primary factor behind the 10% to 12% prescription drug trend. The East and Pacific regions are expected to experience trends one to two percentage points above national averages.
The analysis points to several converging cost drivers, including provider consolidation, workforce shortages, increased utilization of mental health and substance abuse services, a rise in chronic conditions, and the introduction of advanced treatments such as gene and cell therapies.
“This report is designed to equip organizations with the knowledge they need to make informed decisions about their benefits strategy and properly apply trend to their budget rate setting process,” said Kirsten Bot, Hub’s national director, actuarial and financial consulting. Bot noted that “the market points to sustained upward pressure on benefit costs, with pharmacy emerging as the most critical driver of cost increases.”
Growth in chronic conditions, including musculoskeletal and cardiovascular diseases, as well as high-cost conditions like cancer, are also contributing to the escalation in medical costs. These factors, combined with higher prescription drug spending and increased demand for therapies such as GLP-1 medications for diabetes and obesity, are driving the upward trend in employer health care spending.
Pharmacy costs remain a significant challenge, with specialty medications now accounting for more than 50% of pharmacy spending. GLP-1 medications for diabetes and obesity are highlighted as major cost drivers, prompting the need for management strategies such as step therapy, biosimilar adoption, and restrictive coverage criteria.
In response to these pressures, many employers are exploring self-funded strategies to gain more control over spending. While these approaches can help manage costs, they may also expose organizations to greater financial risk if high-cost claims occur. Stop loss coverage is increasingly being used to address this risk and manage volatility in employer health plans.
Michael Booth, president of Hub’s US employee benefits practice, commented on the future direction for employers.
“The future of employee benefits lies in personalization so employers can optimize programs and focus their spend on the benefits that matter most,” Booth said. He noted that organizations integrating persona-driven insights into their strategy will be better positioned to meet workforce expectations and build sustainable benefits for both the organization and its employees.
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