Why Your Health Insurance Bill Jumped 8% — and What Smart Employers Are Doing About It

If you’re an employer watching your health insurance renewal come back higher every year — and this year it jumped nearly 8% — you’re not imagining things. That’s the steepest increase in over a decade, and it’s hitting small and midsize businesses the hardest.

But there’s a shift happening in the benefits world, and it’s gaining serious momentum: the Individual Coverage Health Reimbursement Arrangement, or ICHRA. Once a niche tool, ICHRA adoption has gone mainstream — fast.

What’s Driving the 8% Spike?

The numbers are hard to ignore. The 2026 Milliman Medical Index projects individual medical costs rising nearly 8% this year. A separate PwC survey puts projected group plan cost increases at 8.5% for 2026, holding steady with the steep climb from 2025.

For employers, this isn’t just a number on a spreadsheet. It’s the difference between hiring another team member and hitting pause. It’s the difference between keeping your current benefits package and gutting it to stay solvent.

The root causes are familiar: inflation in healthcare services, rising prescription drug costs, an aging workforce, and the post-pandemic catch-up in delayed care that’s now hitting claims data all at once. Employers are absorbing these costs — but they don’t have to absorb all of them.

Enter the ICHRA: A Better Way to Fund Benefits

An ICHRA lets employers set a fixed, tax-free monthly contribution toward each employee’s individual health plan. Instead of buying a one-size-fits-all group plan and hoping it fits, employees choose their own plan from the individual market — and the employer reimburses them.

Here’s what makes ICHRAs different from traditional group health:

• Defined budget. You set the contribution amount. No surprise renewal increases. You know exactly what you’re spending per employee, per month.
• Employee choice. Employees pick the plan that fits their life — their doctor, their prescriptions, their preferred network. A 28-year-old single employee and a 55-year-old with a family don’t need the same plan.
• No minimum participation rules. Unlike group plans, ICHRAs don’t require a certain percentage of employees to enroll.
• Works with any size team. Whether you have 5 employees or 500, an ICHRA can be structured to fit.
• Employees own the coverage. The plan stays with the employee, not the employer. If someone leaves, they keep their health insurance.

The Numbers That Are Moving Employers to ICHRA

This isn’t theory. The data from 2025 and early 2026 tells a clear story:

• 56% of brokers are now actively recommending or implementing ICHRAs — a tipping point from niche to mainstream.
• Employers using ICHRAs are seeing average savings of 15.5% compared to traditional group plans.
• 91% of employers who switched to an ICHRA said it was the right move for their company.
• 92% of brokers who moved clients to an ICHRA saw their own compensation increase — meaning the model works for everyone involved.
• Employees aren’t just tolerating the switch — 88% feel confident selecting their own health plan when given proper support.

The days of “here’s your group plan, take it or leave it” are numbered. Employees want control over their healthcare decisions, and employers want predictable costs. ICHRA delivers both.

What This Means for Your Business

If you’re a business owner watching your health benefits costs climb year after year, here’s what to consider:

The cost pressure isn’t going away. Healthcare inflation has outpaced general inflation for decades. An 8% jump this year could easily be a 7-10% jump next year. Locking in a predictable budget now protects your bottom line.

Your employees may actually prefer the alternative. The data shows employees overwhelmingly prefer choosing their own plan over being handed a group option. When people have agency over their healthcare, satisfaction goes up — and that’s a retention win.

The transition doesn’t have to be complicated. Setting up an ICHRA involves choosing an ICHRA administration platform, determining your contribution amounts by employee class, and communicating the change to your team. A benefits advisor can walk you through the full process — from compliance requirements to employee enrollment support.

How Trek Helps

At Trek Insurance Solutions, we work with employers navigating this exact decision. We’ll walk you through whether an ICHRA makes sense for your business, help you structure contribution amounts that are competitive and sustainable, and support your employees through the plan selection process.

We serve businesses across multiple states — and we take an educational approach, not a sales pitch. Our job is to make sure you understand your options so you can make the right call for your team.

888-960-0442 · trekis.net

If your health benefits renewal came back with sticker shock, it might be time to explore what an ICHRA could do for your business. Call us or visit trekis.net to start the conversation.

Trek Insurance Solutions is a licensed insurance agency serving multiple states. Insurance products and availability vary by state. Contact us or visit trekis.net for details on products and services available in your area.