Employers are grappling with benefits costs, which have spiked nearly 8%, the steepest annual increase in more than 10 years when excluding pandemic-era fluctuations, according to Milliman’s 2026 Medical Index. The average American with an employer-sponsored health plan is projected to spend $8,460 on healthcare in 2026, up from $7,838 last year.
Prescription drugs and outpatient services are the main drivers of this cost growth. Pharmacy costs are ballooning amid GLP-1 pressures. Hospital acquisitions of physician practices, shifts from inpatient to outpatient care and specialty drug use in outpatient facilities are also contributing to the change.
Now, benefits teams are developing strategies to better understand and meet healthcare needs, and data points to a few areas where they are looking to do so.
Individual coverage health reimbursement arrangements have not only gained traction but are going mainstream, according to ICHRA administrator SureCo’s “The State of ICHRA 2026,” conducted in partnership with independent research firm Censuswide and sponsored by Oscar Health. Fifty-six percent of brokers are recommending or moving forward with the model.
Based on large-employer survey data, 79% were surprised by rate increases, and 94% have experimented with alternative cost-containment approaches. Brokers have said average savings for clients that switch to ICHRAs are 15.5%, but the cost savings may not be the only argument.
Nearly 9 in 10 employees said they preferred an ICHRA over their previous plan. In a sample of 20,000 SureCo members, almost 85% actively researched plan options, signaling strong engagement. One-third used the platform’s plan comparison tool, nearly doubling from the previous year.
But the ICHRA transition is not always smooth. Employer concerns about employees being overwhelmed and the additional workload for human resources were often well-founded.
AI use on benefits teams could alleviate these growing pains. Risk-management services provider WTW’s “2026 AI Use in Health and Benefits Survey” indicated slow AI adoption among benefits programs, with only 20% actively implementing these resources. However, employers plan to accelerate deployment: Nearly three-quarters of employers are aiming to embed AI in benefits within the next two years.
Of the more than 300 employers surveyed, most saw communication, data analytics and personalized support as the strongest AI use cases for benefits teams. This could be valuable for education around ICHRAs or just as a way for employers to weigh costs and tailor offerings beyond these arrangements.
One of the first steps employers need to take is building out AI governance frameworks for their benefits teams specifically. Currently, only 1% have such frameworks, but 56% are either working toward or considering them.
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