Lowering Employer Benefit Costs in 2026: Key Insights

Amber Audrain
Sep 24
3 min read

Rising benefits costs are hitting small businesses and nonprofits hard, and many leaders are feeling like they’re stuck watching the numbers climb without a straightforward way to intervene. In our recent LinkedIn Live session, Take Control of Your Benefits Budget, Sonja Peters and I dug into why benefits renewals are spiking and, more importantly, what organizations can do right now to get ahead of 2026 renewals.

Health benefit costs are projected to rise sharply again in 2026, with Mercer forecasting an average 6.5% increase per employee even after plan design changes, and nearly 9% without intervention. PwC estimates medical cost trends of 8.5% for group health plans and 7.5% for individual plans. Employee contributions are also expected to rise 6–7% on average, compounding the impact on both budgets and workforce morale.

With insurance benefits coming in as the 2nd highest cost for small businesses and nonprofits, practical, actionable tools are critical to leaders, so your benefits budgets don’t feel like a runaway train.

Why Are Employer Medical Insurance Costs Going Up in 2026?

We started by breaking down the four big drivers of benefit cost increases:

Provider Inflation: Higher wages, supply costs, and consolidation have given hospitals more pricing power than ever.
Prescription Drugs: Specialty and new therapeutics, like GLP-1s, are driving up pharmacy costs dramatically.
Utilization Trends: Post-pandemic demand for behavioral health and chronic care management continues to rise.
General Inflation: From staffing to overhead, everyday costs are feeding into higher premiums.

While you can’t control the macroeconomic forces, you can position your business for savings with the right tools.

How to Lower Employer Benefits Costs in 2026

We walked through the practical levers available to find savings, including:

Benchmarking Costs and Benefits: Requesting new quotes signals interest in a strategic view of your benefits, and can result in brokers sharpening their pencils to find savings in existing plans. Then, compare not just premiums, but total costs across multiple options.
Risk Pooling Options: Exploring Professional Employer Organizations (PEOs) and level-funded plans to stabilize costs and gain access to better rates.
Plan Design Analysis: Evaluating whether current plan structures truly meet employee needs or if small tweaks could unlock big savings.

The critical goal here is to not only find savings, but to protect your employee benefits to protect well-being, retention, and competitiveness. At the end of the day, data-driven decision making about your renewal positions you to make the best decisions for your small business.

Why Early Planning is Critical

One of the biggest tactical takeaways from our LinkedIn Live is that timing matters.

Waiting until the renewal deadline leaves little room to compare options or negotiate effectively. Leaders who start early can:

Build a multi-year benefits strategy.
Layer in competitive benchmarking data.
Move to controlled, proactive planning.

How Audrain Advising Can Help

At Audrain Advising, we specialize in operational excellence for small businesses and nonprofits. We know benefits renewals for 2026 will be among the highest in years, which is why we’re offering:

No-risk benefits assessments for organizations facing renewal increases of 8% or more
A clear roadmap of strategic savings opportunities
Data-driven support so you can protect benefits, retention, and budgets

If we don’t identify savings opportunities, you pay nothing.