Why Health Care Costs Keep Rising in 2026 (And What To Do About It)

For most organizations, that level of growth isn’t something you can simply absorb. It requires a closer look at funding strategies, plan structure, and how changes are communicated to employees.

Here are several key factors that are driving these increases:

Pharmacy and specialty drugs - High-cost medications, including GLP-1 treatments, continue to push spending higher.

Why this matters: These costs directly impact premiums and employee out-of-pocket expenses.

Cancer and complex care - Advancements in diagnostics and treatment are improving outcomes, but they come with higher price tags.

Why this matters: Increased utilization drives long-term claims growth and greater plan volatility.

Chronic and mental health conditions - More employees are seeking care, particularly for behavioral and mental health services.

Why this matters: Expanded access is a positive step, but it also creates short-term cost pressure.

Provider consolidation and inflation - Rising labor costs and health system consolidation continue nationwide.

Why this matters: Even well-managed plans feel the impact of broader market forces.

At this level of increase, employers are often forced to consider plan design changes, cost-sharing adjustments, or alternative funding models, not just budget increases.

That’s why communication becomes just as critical as cost control. When employees understand what’s changing and why, they’re better equipped to navigate rising costs with confidence.

The Real Risk: Confusion, Not Just Cost

When costs rise without context, employees feel it personally.

That leads to:

- More HR questions

- Enrollment delays

- Frustration with leadership

- Reduced trust in benefits programs

Employees don’t just want cheaper plans, they want clarity, fairness, and confidence in the decisions being made.

That’s where communication becomes a strategic tool, not an administrative task.

A Framework for Communicating Rising Costs

At Brand’s Payroll, we see successful benefits communication follow a simple, repeatable structure:

1. Keep it clear and human

Employees want plain language, not insurance jargon. Explain what’s changing, why it’s happening, and what it means for them. Highlight improvements where possible, such as expanded coverage or wellness programs.

2. Explain the “why,” not just the “what”

Help employees understand cost drivers and how plans work. Show them how smart plan use, preventive care, and cost comparison tools help control spending.

Employees who understand their benefits become better consumers, and feel more confident in their choices.

3. Communicate early and often

No surprises. Share updates before changes take effect. Transparency reduces anxiety and builds credibility, even when news isn’t ideal.

4. Show what leadership is doing

Employees want to know you’re actively managing costs.

Highlight negotiations, vendor reviews, telehealth options, and wellness investments.

This reinforces that leadership isn’t passing costs blindly, they’re protecting value.

5. Make it relatable

Use real-world examples.

Show how a medication trend affects premiums, or how mental health access improves outcomes but increases utilization.

Stories turn benefits into something employees can actually understand.

6. Meet employees where they are

Use multiple channels, meetings, digital tools, emails, and guides, to reach on-site, hybrid, and remote workers alike.

Good communication isn’t one message. It’s a system.

The Bottom Line

Rising health care costs are unavoidable, but confusion isn’t.

This is a moment for leadership. Employers who communicate early, clearly, and empathetically protect employee trust while managing financial pressure.

Brand’s Payroll helps organizations design benefits strategies that balance cost control with employee confidence, so enrollment becomes smoother, not harder.

Let’s plan for clarity, not just compliance.