Key takeaways
- Aon projects employer healthcare costs will rise 9.5% in 2027, pushing average spending above $19,000 per employee. It would be the fourth straight year of near double-digit increases.
- That figure assumes employers change nothing. Aon expects most organizations to take mitigation steps, so the number you actually face is likely lower than the headline.
- The main drivers are higher utilization, more chronic conditions, GLP-1 and specialty drug spending, and a newer factor: AI-assisted clinical documentation producing higher billed charges.
- Mental health spending is growing, but almost entirely because more people are getting treated rather than because treatment got more expensive.
- Cutting mental health coverage is not an available lever. Federal parity law requires mental health benefits to be no more restrictive than medical and surgical benefits.
- Cost shifting to employees is already underway. Employees are projected to spend about $5,297 in 2026, with out-of-pocket costs up 10.2%.
The consulting firm Aon projects that employer healthcare costs will rise 9.5% in 2027, pushing average spending above $19,000 per employee. That follows an 8.8% increase in 2026, which brought employer cost to $14,432 per employee, and it would mark the fourth consecutive year of increases approaching double digits. Aon based the estimate on more than 1,100 U.S. employers covering 7.9 million employees and $135 billion in 2026 healthcare spending.
One qualifier matters before you build a budget around that number. The 9.5% projection assumes employers make no benefit changes and add no care-management programs. Aon expects most organizations to do exactly that, which means the figure is closer to a ceiling than a forecast. What you actually absorb depends on decisions you have not made yet.
For nonprofits already working through a sluggish economy and a federal funding drawdown, even the mitigated version of this is a real hurdle. It makes existing operations more expensive and it limits how confidently you can add staff. Here is what is pushing costs up, and where organizations still have room to move.
GLP-1 and specialty drug costs
One of the biggest shifts in the healthcare landscape is the prevalence of GLP-1 medications, used to lower blood sugar and support weight loss. KFF found that 18% of adults have taken a GLP-1 and 12% are currently using one, including 45% of adults diagnosed with diabetes and 29% of those diagnosed with heart disease. Use is highest among adults ages 50 to 64, at 22%.
The cost is significant for plan sponsors. Brand-name injectables typically run $1,000 to $1,500 a month, and employers may cover 70% to 100% of that. Aon also notes that GLP-1 use is expanding beyond diabetes and obesity into cardiovascular disease, sleep apnea, and chronic kidney disease, while emerging oral formulations are widening eligibility further. Both trends make the category harder to contain.
The open question is value relative to cost. These drugs are effective, but they are new enough that the long-run math is unsettled. If the conditions that follow from obesity, including high blood pressure, high cholesterol, and heart disease, prove more expensive to treat than the medication that helps prevent them, funding GLP-1 coverage could turn out to be the cheaper path for employers. That answer is unlikely to arrive soon, which leaves most organizations managing the category on criteria rather than certainty.
Mental health utilization
Another driver is the growing use of mental health care. As depression, anxiety, and addiction have become less stigmatized, more people have been willing to ask for help, whether from a licensed therapist, a group program, or another provider. This is a good outcome. It lets people get treatment and live fuller lives, and there is evidence it helps employers through better performance and retention, enough that some organizations now offer therapy as a standalone benefit. It also costs money. Mental health and substance use treatment reached 5.5% of medical services spending in 2021, growing faster than medical services overall.
The mechanism behind that growth is worth understanding, because it changes what you can do about it. Researchers found that 87% of the spending increase came from more people receiving treatment, and only 13% from higher cost per case. This is a volume story, not a price story. Spending went up because the number of treated cases grew 253% over two decades.
That volume has room to grow. As of December 2025, roughly 137 million Americans, about 40% of the population, lived in a federally designated Mental Health Professional Shortage Area, up 15 million in a single year. An area generally qualifies when the population-to-psychiatrist ratio reaches 30,000 to 1. A large share of the people who would use this care still cannot reach it. If access improves, utilization and cost rise with it.
One thing this is not is a coverage decision. The Mental Health Parity and Addiction Equity Act has been federal law since 2008, and it requires group health plans to apply financial requirements and treatment limitations to mental health and substance use benefits that are no more restrictive than those applied to medical and surgical benefits. Trimming behavioral health to manage trend is not a lever employers have. The 2024 final rules added comparative analysis requirements, though the agencies issued a non-enforcement statement in May 2025, leaving the 2013 rules as the controlling standard for now. Either way, the obligation itself is settled.
AI-assisted coding and billing
This one is newer and is getting less attention than it deserves. Aon reports that providers adopting technologies including AI to support more detailed clinical documentation and coding are contributing to higher billed charges in some cases. The care delivered does not change. The way it is documented does, and the bill follows the documentation.
There is no clean employer response to this yet. It is worth knowing about because it will show up in claims data as cost growth that looks like utilization but is not, and because it argues for paying closer attention to claims review than most organizations currently do.
Pressure on the plans themselves
Rising costs are also squeezing carriers, which creates a second-order risk for plan sponsors. Healthscape reports that the share of health plans operating at a loss rose from 54% in 2023 to 74% in 2026, citing increased utilization, high medical costs, and reductions in federal funding under the One Big Beautiful Bill Act, with some plans posting losses for three consecutive years or more.
Plans under that kind of pressure respond by reassessing performance and cutting costs and services they judge non-essential to a given outcome. For plans without the resources to make careful adjustments, that can mean blunt reductions in offerings. This is not a driver of your costs so much as a reason to look harder at the financial position of the carrier you are renewing with.
Where employers still have room
The headline number is not a fixed obligation, and a few moves are available to most organizations regardless of size.
- Ask for the mitigated projection. Your broker or carrier can model your renewal with plan design changes and care-management programs factored in. That number, not the 9.5% industry figure, is what belongs in your budget.
- Manage GLP-1 spend with criteria rather than exclusions. Clinical eligibility requirements, step therapy, and required lifestyle program participation are how most employers are containing this category without removing coverage outright.
- Run a parity comparative analysis. Most employers have never documented whether their behavioral health benefits meet parity standards, including prior authorization practices and network adequacy. It is a compliance exposure and it is also a useful picture of where your plan actually creates friction.
- Look at where cost shifting has already landed. Employees are projected to spend about $5,297 on healthcare in 2026, with out-of-pocket costs up 10.2%, even though employers still absorb roughly 82% of plan costs. Before raising deductibles or copays again, it is worth knowing how much your staff is already carrying.
- Check your carrier’s financial footing at renewal. Given how many plans are operating at a loss, the stability of the plan behind your coverage is a legitimate question to ask during renewal rather than after a service reduction.
None of this makes 2027 cheap. It does mean the difference between the projected increase and the one you absorb is partly yours to determine, and that the organizations doing that work now will be making better choices in the fall than the ones reacting to a renewal letter in December.
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For more than 40 years, 501(c) Services has been a leader in offering solutions for unemployment costs, claims management, and HR support to nonprofit organizations. Two of our most popular programs are the 501(c) Agencies Trust and 501(c) HR Services. We understand the importance of compliance and accuracy and are committed to providing our clients with customized plans that fit their needs.
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The information contained in this article is not a substitute for legal advice or counsel and has been pulled from multiple sources.
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