A growing number of U.S. employers are moving away from traditional group health insurance amid rising health benefit costs, a new report suggests.
More than 20,000 employers offered health reimbursement arrangements, or HRAs, in 2026, according to a report released Tuesday by the HRA Council, a trade group representing companies in the industry. That represents a 53 percent increase from 2025.
Under an HRA, employers contribute a set amount of money that workers can use to cover eligible medical expenses. Depending on the type of arrangement, employees may also use the funds to pay premiums for health insurance they purchase themselves.
Before 2020, employers generally could not use HRAs to reimburse workers for individual health plans of their choice. The introduction of Individual Coverage HRA, or ICHRA, expanded that option to employers of all sizes.
According to the report, large employers were the fastest-growing segment of the ICHRA market, with adoption among those companies more than doubling, on average, from the previous year.
“ICHRA is a compelling choice for employers of all sizes,” said Robin Paoli, executive director of the HRA Council. “Even in a year of challenges for employers and the individual market, the HRA ecosystem is growing and scaling, covering more Americans and strengthening the risk pool for the ACA marketplace.”
Employers Brace for Higher Health Costs
The trend comes as employers face rising insurance and medical costs.
In June, Mercer, a consulting firm owned by Marsh McLennan, found that nearly half of large employers expected to make changes to their medical plans as health benefit expenses climb.
Among 604 U.S.-based organizations surveyed, a majority said they planned to increase employees’ monthly health insurance contributions in 2027.
Nearly half—48 percent—of employers with at least 500 workers said they also expected to pass along some of their rising costs through higher deductibles, copays, or other out-of-pocket expenses.
Mercer expects employers’ health benefit costs to rise 6.7 percent in 2026, pushing the average cost above $18,500 per employee. Prescription drug benefit costs are projected to increase by nearly 9 percent.
More recent insurance filings suggest additional increases could be ahead, particularly for smaller businesses.
In an August analysis, health policy organization KFF examined preliminary rate filings from about 300 insurers offering coverage to businesses, including many serving smaller employers.
On average, insurers sought premium increases of about 14 percent for companies with 50 or fewer employees.
According to KFF, the largest group of insurers requested increases ranging from 15 percent to 20 percent, while the second-largest group sought increases of between 10 percent and 15 percent.
