# Employee benefits trends for 2027. What the data says, and what to do before renewal.

Source: https://ethosbenefits.com/insights/employee-benefits-trends
Type: Insight
Topic: Benefits strategy and administration
Author: Donovan Ryckis, Founder and CEO
Reviewed by: Patrick Ansara, Partner and Director of Client Operations
Publisher: Ethos Benefits
Published: 2026-03-25
Last updated: 2026-11-03
Cite as: "Employee benefits trends for 2027," Ethos Benefits, https://ethosbenefits.com/insights/employee-benefits-trends, updated 2026-11-03.

**Summary:** The employee benefits trends that will shape 2027 health plan decisions, from premium growth and GLP-1 costs to PBM reform, parity and price transparency.

## Key takeaways

- Employer premiums rose 6% for family coverage and 5% for single coverage in 2025, faster than wages (4%) and inflation (2.7%), according to KFF.
- CMS projects national health spending to grow 5.4% a year through 2034, faster than the economy, with retail prescription drugs the fastest-growing category.
- The ACA affordability percentage rises from 9.96% for 2026 plan years to 10.22% for 2027 plan years, under IRS Rev. Proc. 2026-26.
- GLP-1 coverage for weight loss is spreading among the largest employers, and most of them report higher than expected use and a significant hit to drug spending.
- PBM reform, fiduciary lawsuits, mental health parity and new price transparency rules all point the same way, toward a documented, data-driven process for running the plan.

*This page is refreshed every year, and in between when a major rule changes. Figures are the latest published as of the update date.*

Employers heading into 2027 renewals face the same pressure as last year, only more of it. Health costs are still growing faster than wages, drug spending is climbing, and federal rules on PBMs, parity and price transparency are asking plan sponsors to know more about what their plans pay. Below are the trends we can tie to a dated, citable source, and what each one means for your plan.

## How fast are employer health premiums rising?

Employer health premiums rose 5% for single coverage and 6% for family coverage in 2025, faster than pay. KFF's 2025 Employer Health Benefits Survey, released October 22, 2025, found:

| Measure (2025) | Single coverage | Family coverage |
| --- | --- | --- |
| Average annual premium | $9,325 | $26,993 |
| Increase from 2024 | 5% | 6% |
| Average worker contribution | $1,440 | $6,850 |

Over the same year, workers' wages rose 4% and inflation was 2.7%. The average deductible for single coverage, among workers with a general annual deductible, was $1,886, similar to 2024. KFF also notes that premium growth in 2025 was similar to the two years before it, so this is a sustained pattern, not a one-year spike.

What it means: cost shifting has limits. When premiums grow faster than wages, raising employee contributions or deductibles every year eventually makes coverage unaffordable for lower-paid staff, and it runs into the ACA affordability test below. The longer-term levers sit in what the plan pays for care and drugs, not only in who pays the premium.

## How fast will national health spending grow?

National health spending is projected to grow 5.4% a year through 2034, faster than the economy. The CMS Office of the Actuary's National Health Expenditure projections for 2025 to 2034, released in June 2026, estimate:

- National health spending grew 7.3% in 2025, reaching $5.7 trillion.
- Growth slows to 6.3% in 2026, then averages 4.9% a year in 2027 and 2028.
- Over 2025 to 2034, spending grows 5.4% a year on average, against 4.1% for GDP, raising health care's share of the economy from 18.0% in 2024 to 20.6% in 2034.
- Private health insurance spending grows 5.0% a year on average.
- Retail prescription drugs are the fastest-growing major category, at 5.7% a year, ahead of physician and clinical services (5.5%) and hospital care (5.2%).

What it means: budget for health cost growth above general inflation for the foreseeable future, and give pharmacy its own line in the forecast. A plan that tracks medical and pharmacy trend separately, quarter by quarter, sees problems early enough to act.

## How does the affordability bar change in 2027?

The ACA affordability percentage is 9.96% for plan years beginning in 2026 (Rev. Proc. 2025-25) and 10.22% for plan years beginning in 2027 (Rev. Proc. 2026-26). Applicable large employers use it to test whether self-only coverage under their lowest-cost option is affordable for each full-time employee. If it is not, and the employee gets a premium tax credit on the Marketplace, the employer can owe a penalty under Internal Revenue Code section 4980H.

The percentage applies by plan year, not calendar year. A plan year that begins November 1, 2026 uses 9.96% for the whole plan year, and 10.22% applies from the plan year beginning November 1, 2027.

A higher percentage gives employers slightly more room on employee contributions. It does not make a plan affordable on its own. Because most employers test affordability with a safe harbor based on W-2 wages, rate of pay or the federal poverty line, the result depends on your lowest-paid full-time employees. For how each safe harbor works, see [ACA affordability safe harbors](https://ethosbenefits.com/benefits-101/aca-affordability-safe-harbor).

## How are GLP-1 drugs changing pharmacy spend?

GLP-1 drugs for weight loss are the clearest example of how fast pharmacy cost can move. KFF's 2025 survey found, among firms with 200 or more workers that offer health benefits:

| Firm size | Cover GLP-1s for weight loss | Use higher than expected | "Significant" impact on drug spending |
| --- | --- | --- | --- |
| 200 to 999 workers | 16% | Not reported | Not reported |
| 1,000 to 4,999 workers | 30% | 44% | 43% |
| 5,000 or more workers | 43% (up from 28% in 2024) | 59% | 66% |

The use and spending figures are among firms that cover these drugs for weight loss.

What it means: the GLP-1 decision is a plan design and budget decision, and it deserves a documented one. Whether you cover these drugs for weight loss or not, write down the options you weighed, the projected cost, any coverage criteria such as prior authorization, and how you will measure results. Then check that your PBM contract lets you see what the plan pays for them.

## What does PBM reform mean for employers?

Federal PBM reform passed in the Consolidated Appropriations Act, 2026 (Public Law 119-75), signed February 3, 2026. For employer plans, it requires PBMs to report to the plan at least every six months, with drug-level detail for larger employers, and it requires ERISA plans to receive 100% of rebates and fees, with a yearly audit right. Most requirements apply to plan years beginning on or after August 3, 2028, which is January 1, 2029 for a calendar-year plan.

What it means: the PBM contracts you sign or renew between now and 2028 matter. Avoid locking in a multi-year term without the new data and audit terms. For the full rundown, see [PBM reform is now law](https://ethosbenefits.com/insights/pbm-reform), and for how to evaluate a PBM, see [how to choose a PBM](https://ethosbenefits.com/benefits-101/how-to-choose-a-pbm).

## Why are employers being sued over plan costs?

Employees are suing employers under ERISA over what their health plans pay, including prescription drug prices, PBM contracts, tobacco surcharges and broker commissions on voluntary benefits. ERISA section 404 requires plan fiduciaries to act solely in participants' interest and with the care of a prudent expert, and employee contributions are plan assets.

Results so far are mixed. The best-known PBM cases were dismissed for lack of standing and are on appeal, while other cases have survived early motions and tobacco surcharge suits have produced settlements. The [ERISA health plan litigation tracker](https://ethosbenefits.com/insights/erisa-health-plan-litigation) follows each case and where it stands.

What it means: in every category, the best defense is the same. A plan committee, a charter, regular meetings with minutes, a reviewed PBM contract and a record of how each decision was made.

## What does mental health parity still require?

Since February 10, 2021, group health plans that cover mental health or substance use disorder benefits must keep a written comparative analysis of each nonquantitative treatment limitation (NQTL), such as prior authorization or network admission standards, and produce it on request. That requirement comes from the statute, as amended by the Consolidated Appropriations Act, 2021.

On May 15, 2025, the Departments of Labor, Health and Human Services and the Treasury said they would not enforce the new parts of the September 2024 parity rule while they reconsider it. The statutory requirements, including the comparative analysis, still apply, and DOL continues to investigate NQTLs. For what to document and where the rule stands, see [NQTLs and mental health parity](https://ethosbenefits.com/benefits-101/mental-health-parity-nqtl).

What it means: a paused rule is not a paused obligation. If your plan does not have a current NQTL comparative analysis from your TPA or carrier, ask for it before renewal.

## What changed in the price transparency rules?

The Departments finalized updated Transparency in Coverage rules on October 5, 2026. According to the CMS fact sheet, the changes include:

- In-network rate and out-of-network allowed amount files move from monthly to quarterly posting, and in-network rate files are posted per provider network.
- New taxonomy and utilization files, a plain text file pointing to every machine-readable file, and a "Price Transparency" or "Transparency in Coverage" link in the website footer.
- An attestation of accuracy and a named senior official responsible for the files.
- Cost-sharing information available through the online tool must also be available by phone on request, for plan years beginning on or after January 1, 2027.

Most of the file changes take effect five to eleven months after the rule's publication. Self-funded plans usually rely on their TPA or carrier to post these files, but the legal obligation stays with the plan. Confirm in writing who is doing the work and when.

What it means: transparency data is only useful if someone uses it. The same files that regulators require can help you compare what your network actually pays against other networks in your market.

## What should employers do before the next renewal?

Employers should run the health plan like any other large line item, with data, a calendar and a record. Regulators, courts and costs are all pushing in that direction. Five steps cover most of it:

1. **Forecast medical and pharmacy trend separately**, and review actual cost against budget every quarter.
2. **Test affordability with 2027's 10.22%** using the safe harbor you rely on, before you set employee contributions.
3. **Make a written GLP-1 decision**, with the cost projection and coverage criteria on file.
4. **Read your PBM contract against the new law**, especially term length, data access, rebate definitions and audit rights.
5. **Build the fiduciary file**: committee charter, minutes, NQTL comparative analysis, transparency confirmations and the reasoning behind each decision.

The Ethos Benefits [benefits strategy service](https://ethosbenefits.com/services/benefits-strategy) works through these steps with employers each year.

## Frequently asked questions

### What are the biggest employee benefits trends for 2027?

The biggest trends are continued premium growth, rising prescription drug spending led by GLP-1 drugs, a higher ACA affordability percentage of 10.22%, federal PBM reform, ERISA lawsuits over health plan costs, mental health parity enforcement and new price transparency rules. Each one raises the value of a documented, data-driven process for running the plan.

### How much are employer health insurance premiums rising?

KFF's 2025 Employer Health Benefits Survey found average premiums of $26,993 for family coverage and $9,325 for single coverage, up 6% and 5% from 2024. Over the same year, workers' wages rose 4% and inflation was 2.7%. KFF notes that 2025 premium growth was similar to the two years before it, so the pattern is sustained.

### Will health care costs keep rising in 2027?

Yes. The CMS Office of the Actuary projects national health spending to grow 6.3% in 2026 and an average of 4.9% a year in 2027 and 2028. Over 2025 to 2034, spending grows 5.4% a year against 4.1% for GDP, with retail prescription drugs the fastest-growing major category. Employers should budget for growth above general inflation.

### What is the ACA affordability percentage for 2027?

The affordability percentage is 10.22% for plan years beginning in 2027, up from 9.96% for 2026, under IRS Rev. Proc. 2026-26. Employer coverage is affordable for an employee if the required contribution for the lowest-cost self-only option stays at or below that share of the employee's household income, or of the amount used under a safe harbor.

### Are employers covering GLP-1 drugs for weight loss?

More of the largest employers are. KFF found that 43% of firms with 5,000 or more workers covered GLP-1 drugs for weight loss in 2025, up from 28% in 2024, while coverage was 30% at firms with 1,000 to 4,999 workers and 16% at firms with 200 to 999 workers.

### When do the PBM reform rules take effect for employer plans?

Most requirements of the federal PBM reform in the Consolidated Appropriations Act, 2026 apply to plan years beginning on or after August 3, 2028, which is January 1, 2029 for a calendar-year plan. The law requires PBM reports to the plan at least every six months and requires ERISA plans to receive 100% of rebates and fees, with a yearly audit right.

## Sources

1. [2025 Employer Health Benefits Survey](https://www.kff.org/health-costs/report/2025-employer-health-benefits-survey/), KFF
2. [Employer Health Benefits 2025 Annual Survey, Summary of Findings](https://files.kff.org/attachment/Employer-Health-Benefits-Survey-2025-Annual-Survey-Summary-of-Findings.pdf), KFF
3. [National Health Expenditure Projections 2025-2034, Forecast Summary](https://www.cms.gov/files/document/nhe-projections-forecast-summary.pdf), Centers for Medicare & Medicaid Services
4. [Rev. Proc. 2025-25 (2026 required contribution percentage)](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf), Internal Revenue Service
5. [Rev. Proc. 2026-26 (2027 required contribution percentage)](https://www.irs.gov/pub/irs-drop/rp-26-26.pdf), Internal Revenue Service
6. [Public Law 119-75, Consolidated Appropriations Act, 2026](https://www.govinfo.gov/app/details/PLAW-119publ75), U.S. Government Publishing Office
7. [Statement regarding enforcement of the final rule on requirements related to MHPAEA (May 15, 2025)](https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/mental-health-parity/statement-regarding-enforcement-of-the-final-rule-on-requirements-related-to-mhpaea), U.S. Departments of Labor, Health and Human Services, and the Treasury
8. [Transparency in Coverage Final Rules (CMS-9882-F) fact sheet](https://www.cms.gov/newsroom/fact-sheets/transparency-coverage-final-rules-cms-9882-f), Centers for Medicare & Medicaid Services
9. [29 U.S. Code § 1104, Fiduciary duties (ERISA section 404)](https://www.law.cornell.edu/uscode/text/29/1104), Legal Information Institute, Cornell Law School