As we enter the fourth quarter, the outlook for 2026 health plans is becoming clearer, and there is a lot to consider. Rising costs are not new, but 2026 premium increases are projected to be the largest in years. This challenge is compounded by the expiration of broadened ACA subsidies.

Enhanced health insurance subsidies introduced during COVID were always intended to be temporary. They are set to expire at the end of 2025 unless extended again, which appears unlikely. Starting in 2026, many individuals who previously qualified for subsidies will face higher costs—or lose eligibility altogether if their household income is above 400% of the federal poverty level. In North Carolina, insurers have already submitted preliminary rate hikes averaging about 28%. That translates to many consumers seeing their costs rise by several hundred dollars.

For employers, this matters because employees who previously waived employer coverage for less expensive health insurance through the Marketplace may return to the employer-sponsored plan, increasing participation and costs. Another concern arises if employees opt out of coverage entirely, as hospitals and providers bear the cost of uncompensated care—eventually driving systemwide prices even higher.

With these challenges, it is more important than ever for employers to be proactive in understanding their options rather than simply absorbing another renewal increase—which is likely higher than ever. At the same time, employers have opportunities to take a more active role in controlling healthcare costs. The Consolidated Appropriations Act of 2020, reinforced by recent executive orders, clarified that employers not only have the right to access their health plan data but also the fiduciary responsibility to understand how plan dollars are spent.

Small employers can gain this transparency through level funding, available to groups with as few as 12 eligible employees. Level-funded plans combine the predictability of fully insured premiums with the potential for a surplus refund if claims are lower than expected. They also provide access to claims data, helping employers identify cost drivers and plan for the future.

Prescription drugs are a prime example. Pharmacy spend is the No. 1 driver of rising health care costs, yet high-cost medications are often the easiest plan component to manage—if employers have insight into which drugs are driving costs. For larger employers, true self-funding and joining a captive arrangement can provide even greater control and long-term savings.

Technology is also making it easier to explore alternatives. In the past, underwriting required burdensome health questionnaires, but today AI has streamlined the quoting process and enabled more independent administrators to offer competitive, transparent alternatives to traditional carriers.

Policy changes are creating new plan design opportunities as well. The recently passed “One Big Beautiful Bill” expands the ability to pair high-deductible health plans (HDHPs) with direct primary care memberships. It also allows members to use health savings account (HSA) funds to pay for DPC if the employer does not, and it permits virtual care before the deductible—further highlighting the importance of preventive care in lowering long-term costs.

Employers have always been the largest payer in the U.S. healthcare system. Now, with new laws and more transparent plan models, they have the tools to contain costs while improving care. But timing is critical—January renewals are approaching, and preparation is key.

Questions to Ask Before Renewal

• Does our current participation suggest employees are on the Marketplace?

• Have recent increases been sustainable, and how will we budget for a larger increase?

• Can we clearly identify the main drivers of our health plan costs?

• Are employees using preventive care, or are barriers limiting access?
  
  

Steps to Take Now

• Gather employee census data and prior renewals so quotes can be prepared quickly.

• Set aside time for HR and leadership to evaluate plan options.

• Begin preparing employees by letting them know leadership is reviewing the plan to ensure it provides the most value.

Asking these questions early can make the difference between simply reacting to a rate increase and building a benefits strategy that provides better care while protecting employees financially.