Health Insurance in 2026: Why Costs Are Rising — and What Employers and Individuals Can Do About It

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Health insurance premiums are climbing fast, affecting both employers and employees. Rising medical costs aren’t new, but the pace of increase today reflects several powerful forces coming together at once, from high-cost specialty drugs to “nuclear” claims and labor inflation. Understanding why premiums are increasing is the first step to managing them.

One of the biggest drivers is the growing number of extremely high-cost claims – or “nuclear” claims. A small number of cases are reshaping the health insurance landscape. Gene therapies often run $2 million or more per treatment, and other “miracle treatment” technologies come with high price tags. These advances improve outcomes, but their costs flow into premiums.

Prescription drug costs are another major factor. Drug spending continues to grow faster than overall medical inflation. More people are taking medications for more conditions, and specialty drugs, especially cancer therapies, carry steep price tags. GLP-1 drugs, used for diabetes and weight management, are adding additional pressure. They are widely used and carry a high cost, which creates both frequency and cost challenges.

At the same time, people are using more healthcare overall. Rates of obesity, diabetes, cardiovascular disease, and inflammatory conditions are contributing to more doctor visits, more tests, more hospitalizations, and more prescriptions. When utilization climbs, premiums follow.

Healthcare is heavily impacted by labor costs. Hospitals and medical groups face higher wages for nurses, physicians, and technicians. Because provider contracts are typically renegotiated every few years, recent inflation is now reflected in new pricing agreements.

Regulatory changes also play a role. New state and federal mandates, even well-intentioned ones, add cost. California’s requirements for IVF coverage and caps on insulin spending are recent examples. Each mandate contributes to what many call the “regulatory stack,” appearing in the premium cost structure.

Prescription drugs now account for roughly 20% of total medical spending. A small percentage of people drive more than half of all prescription drug costs, largely due to specialty treatments that can run $200,000–$400,000 (or more) annually. GLP-1 utilization continues to expand. Generics and biosimilars provide some relief, but for every drug that comes off patent, a more expensive one often takes its place.

Insurance companies are often blamed for rising costs, but many standard plan elements were originally created by them to control unnecessary spending and protect members from unknown prices and unneeded medical services. Examples include:

    • Prior authorizations and utilization reviews
    • Second surgical opinions
    • Provider networks (PPOs) with negotiated allowable charges
    • Case-rate agreements and billing compliance standards

Out-of-network providers typically avoid these controls, which is why their services cost more.

On the pharmacy side, Pharmacy Benefit Managers (PBMs) use formulary management, generic substitution, step therapy, GLP-1 oversight, and rebates to help contain costs. While not perfect, these strategies are designed to balance access and affordability.

For employers and individuals, the challenge is not just understanding why costs are rising, but how to respond.  Many receive just 3–6 months’ notice of annual premium increases. We know healthcare inflation is unpredictable, so having informed estimates can help prevent scrambling at renewal time.

Cost sensitivity continues to drive decisions. Whether selecting a plan as an employer or choosing coverage as an individual, there is often a focus on keeping premiums low. The key is to balance that with the level of financial risk you are willing to take on. Looking at total cost, not just premiums, can help you make an informed decision.

Guidance matters. Employers benefit from internal expertise or strong broker support, and individuals benefit from taking the time to understand their coverage. Health insurance is one of the largest expenses most people will face, and being informed can make a meaningful difference.

Many employers and employees “overbuy” or misjudge the trade-off between premiums and out-of-pocket exposure. Choosing a lower premium option with higher out-of-pocket exposure, or vice versa, should be done with a clear understanding of how the plan will be used. HSA-compatible plans can be effective, especially when used by participants who understand how to use them and take advantage of preventive care and cost comparison tools.

Guidance helps. Employers benefit from in-house expertise or strong broker support or other external resources. Individuals also benefit when they invest time in understanding their coverage and plan options. Health insurance is one of the largest lifetime expenses for most households, and being informed can make a meaningful difference.

When premiums spike, employers often explore alternative solutions. These options can offer savings in certain situations, but they also come with risk and should be carefully reviewed. ICHRAs (Individual Coverage HRAs) are also gaining attention, but in California they have not consistently proven to be cost-effective at scale.

The healthcare system is complicated, and most people have little training in how to navigate it. Being an informed consumer means understanding how your plan works, knowing where to find value, and making informed decisions.

For employers, health insurance is often the second-largest expense after payroll. For individuals, it is one of the top costs in the household budget. Taking the time to build knowledge or access reliable guidance can have a real impact.

Premium increases reflect a mix of breakthrough treatments, rising chronic disease, regulatory mandates, pharmaceutical inflation, and higher provider costs. While these trends are not likely to slow immediately, employers and individuals have options. Through thoughtful planning, proactive decision-making, and access to knowledgeable guidance, it is possible to manage these costs more effectively.

This article reflects data and trends from CMS, KFF, PwC Health Research Institute, and national pharmacy and actuarial reports.

 

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New for 2026: Alternative Health Plans

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It’s on every headline in the newspaper and on the news – healthcare costs in the U.S. continue to rise sharply. It is affecting the entire country, and there seems to be no end in sight to the continued rise in costs. In 2023, national healthcare spending surged 7.5% to $4.9 trillion, accounting for 17.6% of U.S. GDP[1] [2]. That’s nearly one-fifth of the economy, and it’s projected to rise even higher in the years ahead.[3]

Prescription drug costs alone rose 11.4% in 2023, resulting in drugs now making up 9.2% of total health spending [4]. According to PWC, “Drug spending in the US grew by $50 billion (11.4%) from $437 billion to $487 billion in 2024 at net manufacturer prices, up from $20 billion of growth (4.9%) in 2023. The trend is expected to extend into the coming years, driven by growth in oncology, immunology, cardiovascular, obesity, and diabetes drugs.”

New for 2026: Copay-Only Alternative Health Plans (AHPs)

To help employers manage rising costs and expand plan options, CalCPA Health is introducing a suite of Alternative Health Plans (AHPs) through Anthem Blue Cross, powered by Coupe Health™. These tiered, copay-only PPO designs emphasize clarity, quality, and cost control, with no gatekeeper required. Members can view provider tiers and their out-of-pocket costs before scheduling care, which enables smarter, value-driven decisions that can lead to savings for both employers and employees.

While AHPs are not new, CalCPA Health’s offerings stand out by including Small Group and HSA-compatible options—a rare find in the market. Learn more about these plan offerings and search for in-network healthcare providers.

Benefits for Employees

  • No deductibles* or coinsurance on most plans.
  • Access to California’s largest provider network – Anthem Blue Cross.
  • Cost transparency tools to view provider rankings and exact costs upfront.
  • Tiered provider rankings highlight quality and value.
  • Comprehensive coverage of ACA essential health benefits: including preventive care, hospital/urgent/emergency services, specialty care, pharmacy, maternity, behavioral health, and more.

Benefits for Employers

  • Premium savings potential, thanks to more efficient plan design and guiding members to high-performing providers.
  • Smarter employee healthcare choices—when costs are visible before care, usage aligns with value.
  • Plans that align with expectations—transparency, convenience, and choice.
  • Improved employee retention by offering flexible, cost-effective options.

With healthcare spending and pharmacy costs continuing to rise, firms seek innovative, value-driven approaches rather than traditional plans with higher price tags. CalCPA Health’s AHPs offer CalCPA member firms a compelling alternative: Anthem’s provider network, combined with Coupe Health’s™ cost-transparency capabilities. These plans deliver what today’s market is looking for: affordability, clarity, quality, and flexibility.

*Two AHPs are HSA-compatible HDHPs, which do include a deductible.

 

[1] https://www.pgpf.org/article/healthcare-spending-will-be-one-fifth-of-the-economy-within-a-decade

[2] https://www.reuters.com/business/healthcare-pharmaceuticals/us-healthcare-spending-rises-48-trillion-2023-outpacing-gdp-2024-06-12/

[3] https://www.pgpf.org/article/healthcare-spending-will-be-one-fifth-of-the-economy-within-a-decade

[4] https://www.chcf.org/resource/national-health-spending-almanac

 

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It’s Open Enrollment: What You Need to Know

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Open Enrollment is the annual opportunity to review your health insurance options and make changes for the upcoming year. For most of us —whether employers, solo practitioners, or employees —open enrollment typically occurs in the fourth quarter, and new benefits take effect on January 1st of the new year.

This period is especially important because outside of open enrollment, you can only make changes to your coverage if you experience a qualifying life event (such as marriage, divorce, birth of a child, or loss of other coverage). That means this is your chance to:

  • Reevaluate whether your current plan still meets your needs.
  • Compare costs and coverage options, including PPOs, HSAs, EPOs, HMOs, or Alternative Health Plans (AHPs).
  • Add or adjust coverage for dependents.
  • Research Health Savings Accounts (HSAs) and the tax-advantaged options these plans provide.
  • As an employer, evaluate your current plan offerings and consider what adjustments may be needed, and if new options are available that would improve employee retention and satisfaction.

Why It Matters This Year

Healthcare costs and coverage trends continue to shift, with rising pharmacy and claim expenses, as well as evolving provider networks. More employers are introducing an array of choices, including innovative alternatives that emphasize transparency and cost savings. Employees may be seeking ways to get the most value from their benefits and manage their premium costs – and know the cost before a visit. (Learn about the new Alternative Health Plans – AHPs – that CalCPA Health is offering for 2026!)

Reviewing your options before open enrollment deadlines is key, so you have enough time to research and understand what’s available to you, your family, and your firm. Becoming your best advocate on health insurance can lead to lower out-of-pocket costs, access to preferred providers, and greater financial protection for the year ahead.

Tips for Open Enrollment Readiness

  • Start early. Don’t wait until the final days of enrollment—give yourself time to compare and select the best plan.
  • Review your healthcare usage. Think about your doctor visits, prescriptions, and family needs over the past year – did you use these benefits?
  • Look at the long term. HSAs, for example, may offer both immediate premium savings and future tax advantages, allowing you to save now for future medical expenses.
  • Ask questions. Your HR team, broker, or plan administrator can help explain plan differences and benefits.

NOTE: CalCPA members can reach out to CalCPA Health with their health insurance benefit questions – whether you are enrolled with us or not – by email info@CalCPAHealth.com or call 866-730-3593.

Open enrollment is an opportunity to align your health coverage with your personal, family, and financial needs. By researching and asking questions, you’ll enter the new year with confidence, knowing you made the best choice available to you.

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Know Where to Go: Doctor, Urgent Care, or ER?

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When you’re sick or injured, knowing where to go for care isn’t always easy — especially when you’re in discomfort and distracted. Knowing how to choose where to go for the right care can save you time, money, and stress.

At CalCPA Health, we believe education is one of the best tools you can use to take charge of your health. Here’s a guide to help you decide when to visit your primary care doctor, head to urgent care, or go to the emergency room, as well as what each might cost under most health plans.

Your Doctor (Primary Care Physician)

Best for: Routine care, chronic conditions, preventive visits, and minor issues during business hours.

Your doctor knows your medical history and can treat you more personally than in other care settings. For non-emergency symptoms like a mild rash, cough, cold, or stomach bug, this is often the best first stop if you can get an appointment. Primary Care Physicians are usually available during normal business hours and may also provide medical advice by phone after hours or even email you.

Typical cost with insurance:
Usually, it is a $$ copay, depending on your plan. *

Virtual Care (Telehealth)

Best for: Cold/flu symptoms, rashes, UTIs, minor infections, allergies, or when you need care quickly but it’s not an emergency.

Telehealth is available 24/7 with Anthem’s Sydney Health app (available to CalCPA Health members) or other virtual platforms. You can see a doctor at your convenience without leaving your home. It’s usually faster and lower cost than in-person visits.

Typical cost:
Often $ copay — check your plan summary for details. *

Retail Clinics (Walk-In)

Best for: Sore throats, earaches, pink eye, minor cuts or burns.

Located in places like CVS or Walgreens, these clinics are staffed by nurse practitioners or physician assistants and are great for quick, simple care when your doctor’s office is closed. This option is usually at a lower cost and wait time than urgent care but may have limited scope.

Typical cost:
Around $$ if self-pay, or your copay if using insurance.*

Urgent Care

Best for: Sprains, strains, minor broken bones, infections, moderate flu symptoms, or nausea that’s not life-threatening.

Urgent care is typically open daily, nights, and weekends, with access to lab tests, X-rays, and treatments not usually available at retail clinics. It’s a good choice when you need attention right away, but it’s not a 911-level emergency. Urgent care visits tend to be faster and more affordable than a visit to the ER.

Typical cost with insurance:
The copay is often $$$, depending on plan and services rendered. *

Emergency Room (ER)

Best for: Serious or life-threatening situations such as chest pain, breathing difficulties, heavy bleeding, signs of stroke, or major trauma.

Emergency Room visits should be reserved for true emergencies and will cost significantly more. They also often involve longer waiting times unless your condition is severe.

Typical cost with insurance: $$$$
ER visits can result in copays plus coinsurance (often a percentage of total charges), unless you’re admitted to the hospital for inpatient care, in which case the ER copay may be waived. *

Things to keep in mind
  • Use virtual care because it is fast, affordable, and covered under most CalCPA Health plans as well as under other carriers.
  • If it’s not urgent and it’s during business hours, check in with your doctor.
  • Going to the ER for non-emergencies leads to higher costs and delays, care for those who have true emergencies.
  • Understand your provider’s Summary of Benefits and Coverage to know your exact copays and coverage rules. (Summary of Benefits and Coverage for CalCPA Health medical subscribers)
  • Be prepared and locate the nearest urgent care or 24/7 virtual care option now before you need it, and make sure that you share the information with your family so that they are ready for different medical situations that may arise.
  • Keep your medical card handy, preferably via a mobile app. CalCPA Health medical members should download the Sydney App if they haven’t done so already.
  • Use the “Find Care” tool to locate in-network providers.
CalCPA Health members have access to:
  • The largest PPO provider network in California through Anthem Blue Cross
  • 24/7 virtual care options
  • One point of contact through our customer support team (Banyan Administrators) to help you with benefits, claims, or locating care

If you’re unsure where to go, call the customer support number on your ID card — they can guide you to the right care setting.

* If you are on an HSA-compatible HDHP, you might have to satisfy your Calendar Year Deductible before the Copay amount applies.

 

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You Can’t Use What You Don’t Understand: Get to Know Your Health Plan

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What is the name of your health plan? Who’s your insurance carrier? If you had to look it up right now to check, you’re not alone; many people are not sure. If you don’t know the basics, you won’t be able to take full advantage of your benefits.

Health insurance is a tool—but only if you know how to use it. You don’t want to be like so many people out there who experience a health emergency and must deal with the stress of not understanding their health care coverage in a time of trauma.

Knowing your health plan matters

Surprise Bills

  • You may get a procedure for which you need pre-authorization, and did not know until you received an unexpected bill. This happens more often than you can imagine.
  • If you don’t know whether your provider is in-network or out-of-network, or how your plan covers care, you are more likely to pay out-of-pocket for services that should have been covered.

Miss Out on Preventive Services

  • Many plans offer 100% coverage for preventive services (such as mammograms, colonoscopies, and annual physicals), virtual visits, and wellness programs. But you can’t use benefits you don’t know you have.

You Can’t Advocate for Yourself Without the Basics

  • Here are just a few of the ways understanding your plan helps you:
    • Ask the right questions and go through the proper channels for care; reach out for help by calling your insurance provider
    • Spot billing errors
    • Take advantage of telehealth, HSA options, or mental health coverage (to name a few)

What You Need to Know – Today

At the very least, every health insurance subscriber should know:

  • Your carrier (the company providing your insurance, such as Anthem, Delta Dental, and VSP)
  • Your plan type (Health Maintenance Organization – HMO, Preferred Provider Organization – PPO, Exclusive Provider Organization – EPO, or Health Savings Account – HSA)
  • Whether your plan is individual, employer-sponsored, or part of an association

How to Find These Items Quickly

  • Check your insurance ID card – it typically lists the plan name and carrier
  • Log in to your carrier’s member portal (the website usually is on the ID card) – this is where you will find your plan documents, benefits, and provider network information
    • Download your carrier’s app and create an account so that you have access to your ID card at all times, as well as to your health and benefit information and plan summary (Summary of Benefits and Coverage – SBC)
  • Ask your HR or firm administrator if you’re part of an employer or association plan

Then, take a few minutes to review your SBC, as it outlines the services that are covered, excluded, and the pre-authorization requirements. It also helps you understand what your plan will cover and what you may need to pay out-of-pocket for. Knowing the basics gives you power as a healthcare consumer and enables you to become your own best advocate.

Please don’t wait for an emergency to try and understand your health plan; familiarizing yourself with it now is a smart way to save time, avoid stress, and ensure you get the most from your benefits.

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Created by CalCPA in 1959 as The Group Insurance Trust of the California Society of CPAs, CalCPA Health has remained steadfast in its mission to provide quality “boutique style” health care solutions—from medical, dental and vision to life and long-term disability—with unparalleled convenience and stability. It helps ensure that members can navigate the challenges of health care with confidence and peace of mind. CalCPA Health offers exclusive health and benefit plans to members, and there is a high level of trust knowing that these plans are operated by individuals who understand the unique needs of the profession – CalCPA members.

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Understanding Heart Health: A Guide for Heart Health Awareness Month (Part 1)

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February marks Heart Health Awareness Month, a time dedicated to raising awareness about cardiovascular health and encouraging individuals to take proactive steps toward maintaining a healthy heart. Heart disease remains one of the leading causes of death globally, highlighting the importance of understanding how to care for our hearts. According to the Centers for Disease Control and Prevention (CDC), about 695,000 people died from heart disease in 2021 in the United States which is 1 in every 5 deaths. * This month we will look at some important aspects of heart health, risk factors for heart disease, and tips for maintaining a healthy heart. Read more

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2024 Contribution Limits for Health Savings Accounts (HSA) Announced

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The Internal Revenue Service released the annual maximum 2024 contribution limits for HSAs under high deductible health plans (HDHPs). For 2024, we will see the largest jump in recent years for contribution limits – mainly due to continued high inflation. The annual limit on HSA contributions for an individual will be $4,150 (up from $3,850 in 2023) and $8,300 for family coverage (up from $7,750 in 2023).  HSA “catch-up” contribution for participants 55 and older, can contribute an extra $1,000 to their HSA, which is the current amount in place for 2023.

Effective January 1, 2024 – Contribution Limits for Health Savings Accounts

Tax Year Individual Coverage Limit Family Coverage Limit
2024 $4,150 $8,300
2023 $3,850 $7,750
2022 $3,650 $7,300
At age 55, members are allowed to contribute an additional $1,000 

What is a HSA? It is a tax-advantaged account, paired with a high-deductible health insurance plan (HDHP), that allows you to save pre-tax dollars for future qualified medical expenses. You can invest the funds in the HSA account tax-free and grow your savings. You own the account, it travels with you if you change jobs, change your health plan, or retire.

 

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2023 Health Savings Accounts Limits Are Released By The IRS

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The IRS has released the contribution limits for Health Savings Accounts (HSA) for 2023 and the numbers are significantly higher than in prior years, as you can see from the chart below. Knowing these numbers will help employers prepare for open enrollment and think about their contribution levels as well as help employees understand the benefits of contributing to their HSAs.

Tax Year Individual Coverage Limit Family Coverage Limit
2023 $3,850 $7,750
2022 $3,650 $7,300
2021 $3,600 $7,200
At age 55, members are allowed to contribute and additional $1,000 

What is a HSA? It is a tax-advantaged account, paired with a high-deductible health insurance plan (HDHP), that allows you to save pre-tax dollars for future qualified medical expenses. You can invest the funds in the HSA account tax-free and grow your savings. You own the account, it travels with you if you change jobs, change your health plan, or retire.

 

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HSA Contribution Extension for 2019

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In response to the current conditions surrounding the COVID-19 pandemic, IRS Notice 2020-18 postpones the April 15, 2020 due date for filing federal income tax returns, deferring payments to July 15, 2020. The IRS has added information regarding this notice under “Filing and Payment Deadlines Questions and Answers” which addresses contribution extensions for those in Health Savings Account plans.

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The CARES Act Provides Help for Those with HSAs and FSAs

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The $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) was signed into law on March 27, 2020 with the purpose of helping employees out with benefit-related items during the COVID-19 crisis. The CARES Act repeals the Affordable Care Act’s exclusion of over-the-counter (OTC) medications from the definition of “qualified medical expenses”.  The bill is over 880 pages long, but to review the new rules regarding OTC provisions, see Sec. 3702 of the CARES Act.

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