Employers Are Facing the Biggest Health Cost Increases in 15 Years - Here's How Predictability is Making a Comeback
- Fundamental Care
- 7 minutes ago
- 5 min read
Across the country, employers and brokers are preparing for one of the most challenging renewal seasons in over a decade. According to Mercer, employers are bracing for the largest increase in health insurance premiums in 15 years - the fourth consecutive year of elevated spikes. Nearly half of employers (49%) are projected to face 10–15% premium increases in 2026, continuing a trend that’s hitting small- to mid-size employers’ budgets hard.
Employers in industries like construction, home healthcare, hospitality, light manufacturing, and other sectors with hourly workforces - already operating on thin margins - are feeling it first.
Rising Costs, Shrinking Margins
For small and mid-size businesses, benefits are no longer just a line item - they’re a major operational cost driver.
The U.S. Bureau of Labor Statistics (BLS) reports that employers’ costs for employee compensation in private industry now average $45.65 per hour worked, of which $13.58 is spent on benefits - slightly less than 30% of total compensation. In manufacturing, total employer compensation costs average $46.30 per hour, with $15.36, or 33% of total compensation, attributed to benefits.
According to a Small Business Majority survey, 78% of small businesses say health premiums are a top financial pressure. More than half have increased employee contributions, and nearly 47% have reduced benefit scope just to contain costs.
The JPMorgan Chase Institute found that among the smallest employers (revenues below $600,000), health benefits consume roughly 12% of total payroll - an unsustainable burden for industries like hospitality or manufacturing, where labor costs already make up 40–50% of total expenses.
The Market Is Pivoting - Fast
Faced with record increases, employers are looking for cost-saving measures while maintaining predictability without sacrificing coverage. That’s why level-funded health plans are gaining ground at a historic rate.
The Kaiser Family Foundation reports that more than 55% of small and mid-sized firms now offer some form of level-funded coverage, up from just 7% a few years ago.
The concept blends the stability of a fully insured plan with the flexibility and potential savings of a self-funded model. Employers pay fixed monthly costs that include claims funding, administration, and stop-loss protection. If claims run below projections, they may receive a surplus refund. If claims run above projections, stop-loss is there to protect the employer for the added claims cost.
It’s a structure that delivers budget certainty, data transparency, and upside opportunity something employers desperately need as premiums continue to climb.
Where the Fundamental Care Limited Day Health Plan Fits In
At Coterie Advisory Group, we built the Fundamental Care Limited Day Health Plan (FCLDHP) to meet the unique needs of blue and grey collar employers with hourly or high-turnover workforces - the same groups hit hardest by rising costs and falling participation rates.
Hourly employees earning $15–$30 per hour often skip care entirely because they can’t afford to meet a $2,000–$4,000 deductible. According to PlanSponsor/Alight research, among workers earning under $40,000, employer medical enrollment is just 56%, compared to 84% for higher-income cohorts — a clear signal that affordability is driving benefit decline. The disparity is even greater in small companies (under 50 workers), where only about 33% of employees participate in medical benefits even though 56% have access to them.
The FCLDHP solves that problem with a no-deductible, first-dollar benefit structure designed for accessibility and engagement.
Employer advantages:
Premiums lower than traditional HDHP plans by 30–40%
Fixed monthly funding for predictable costs
Stop-loss protection for catastrophic claims
ACA compliance — MVP meets 60%+ bronze-level actuarial value
Refund potential when claims run favorably
Employee advantages:
No deductibles or coinsurance
Low copays for everyday medical needs
$0 virtual primary care, urgent care, and behavioral health
Innovative day-limits offer a balance of essential coverage with affordable premiums
White-glove concierge and advocacy support
“Employers are seeking ways to protect their budgets without taking on unpredictable risk. Level-funded structures like Fundamental Care give them steady monthly costs and the chance to share in savings when claims perform well.” - Mike Lambert, Partner, Coterie Advisory Group
The Results
Employers offering the FCLDHP typically see 30–40% savings compared to fully insured high-deductible health plans, along with the potential to receive refunds when claims perform well. FCLDHP returns 100% of the claims surplus to the employer when available. One-third of our groups received a refund due to excess claims surplus, and we were able to return an average of $384 surplus per participant per year - roughly 25% higher than a national level-funded carrier.
“When traditional renewals are producing double-digit increases, FCLDHP offers a way to stabilize - not just for one year, but across renewal cycles.” - Aaron Cook, President, Coterie Advisory Group
Why This Matters
In industries where hourly and shift-based workforces dominate, the balance between affordability and participation has never been more critical. Rising premium costs, increasing deductibles, and shrinking participation have been combining to create a perfect storm for several years now.
Level-funded models like FCLDHP provide employers with:
Predictable monthly costs
Protection against high claims
Data transparency
Surplus potential
And most importantly - a plan employees can actually use
“Coverage doesn’t matter if employees can’t afford to use it. FCLDHP was designed to make healthcare accessible and practical for the real-world workforce.” - Ben Rozum, Co-Founder, Coterie Advisory Group
A More Sustainable Path Forward
Every renewal season seems to bring new uncertainty. The goal isn’t to outguess the market - it’s to design benefit strategies that withstand it.
Coterie’s Fundamental Care Limited Day Health Plan is doing exactly that — helping employers control their expenses, empower employees, and regain predictability in a volatile benefits environment.
“Affordability and predictability can coexist when you offer a plan that meets the needs of unique workforces. Offering a plan to a population that cannot afford to use it is a lazy way to handle your benefit plans.” - Mike Lambert, Partner and Head of Sales, Coterie Advisory Group
Learn More
Discover how the Fundamental Care Limited Day Health Plan can help your clients or company stabilize renewals, improve participation, and lower costvolatility: www.FundamentalCare.com/Limited-Day-Health-Plan
Follow Coterie Advisory Group, Aaron Cook, Ben Rozum, and Mike Lambert on LinkedIn for insights, industry updates, and case studies from employers across the country.
Sources
Mercer — Employers Prepare for the Highest Health Benefit Cost Increase in 15 Years (2025)
KFF — Employer Health Benefits Survey, Section 10: Plan Funding (2024)
CPA Practice Advisor — Employer Health Insurance Cost Increases Spur Businesses Into Action (2025)
U.S. Bureau of Labor Statistics — Employer Costs for Employee Compensation, June 2025
Small Business Majority — Poll: Small Businesses Struggling with Healthcare Costs (2024)
JPMorgan Chase Institute — Small Business Health Cost Study (2024)
PlanSponsor — Lower-Paid Workers Are Declining Employer Health Insurance, Workplace Benefits (2023)