Most employers say healthcare is their responsibility, yet 60% passed this year's cost increases to workers, often without a clear picture of what employees can afford.
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Affordability is dominating the national conversation. It defined the recent midterm elections, is a growing concern for business leaders, and is a daily stress for Americans trying to make ends meet. In early November, 57% of consumers told University of Michigan researchers, unprompted, that high prices had eroded their living standards, up from 46% in February. One cost pressure that employers and employees share? The rising cost of healthcare.
Ask U.S. adults which bills worry them most, and healthcare sits at the top of the list. According to KFF polling:
Employer health costs are projected to rise 8.2% per employee in 2027, the largest increase since 2003, and 59% of employers plan cost-cutting changes such as higher deductibles. These changes will add to costs already hitting workers. Employees paid an average of $7,471 toward family coverage this year, up 9% from 2025. At smaller firms, the average was $9,687.
Says HAA’s Chief Strategy Officer, Lori Hoffman, “Unlike most household expenses, healthcare is one that employers have the direct power to influence. But as costs rise, employers face a difficult choice: how much of that burden can they absorb, and how much will they pass along to employees?”
In October, HAA surveyed 35 HR, benefits, and corporate wellness leaders in our Research Panel about the cost pressures their employees face and how their organizations are responding.
Making informed decisions about benefits and affordability requires understanding the financial pressures employees actually face. Our panel suggests many employers may not have a complete picture.
When we asked panelists which cost pressures weigh most on their employees, they pointed to housing (74%), groceries (54%), and transportation (43%). Healthcare ranks fourth, with 31% citing out-of-pocket medical costs and 26% naming prescription costs.
That differs from national polling of U.S. adults. In KFF's polling, healthcare ties gas as the top worry, while housing, HR's top pick for perceived employee pressures, ranks last among the costs adults are "very worried" about (19%).
This gap between employers' perceptions and what adults report may partly reflect how employers gather information. For most panelists, perceptions are based on informal information:
Informal conversations may not reveal the full extent of employees' financial challenges, particularly when people are reluctant to discuss money at work. In a Stanford study of about 225 U.S. employers, more than a third never sought employee feedback on their health plans, and employers tracked plan costs more closely than employee experience.
Even when employers do ask about cost challenges, employees may hold back. In a Visier survey of 1,000 U.S. employees, 37% said they don't believe workplace surveys are truly anonymous, 27% doubted their employer would act on feedback, and compensation and benefits ranked among the hardest topics to be honest about. This means the employees most strained by costs may be the least likely to say so in a hallway conversation.
Employers can close this gap by building a feedback loop that employees trust:
As employers prepare for another year of rising costs, the question isn't simply which benefits they can afford to offer. It's whether they're making those decisions with a clear understanding of what their employees can afford. Before cutting programs, shifting costs, or introducing new benefits, employers should ask employees what they need, examine where financial pressures are affecting their health, and make sure existing resources are reaching the people who need them most.
More than half of panelists (54%) said employers have "a great deal" of responsibility for healthcare and prescription costs, compared with fewer than 10% for housing, food, childcare, transportation, or utilities. And every panelist said their organization remains committed to maintaining employer-sponsored coverage. "It's difficult for employees to find affordable healthcare in the market, and it's falling more on employers to make sure that this is available to our employees," one panelist said.
Yet the cost employers most clearly own is the one many are passing along:
But a few panelists reasoned that shifting costs has consequences. "Increasing medical cost-sharing or reducing pharmacy coverage may save money in the short term, but it can also cause employees to postpone treatment or stop taking needed medications," one panelist said. When conditions go untreated, they can become more complicated and costly over time, with these costs falling back on the employers.
Panelists say benefits to retention and recruiting (54%) and productivity and attendance (40%) make the strongest case internally for supporting affordability challenges impacting their workforce. But nearly three-quarters (74%) of panelists say they’re simultaneously facing their own budget challenges that limit the types of support they can offer.
Employers can consider several low-cost steps that can help employees manage healthcare costs as more expenses shift. Only 37% of panelists' organizations teach employees how to read a medical bill, and 14% teach them how to appeal a denied claim, skills that matter more as deductibles rise.
Before the next round of plan changes, weigh employees' total out-of-pocket exposure, not just premium cost. And ask employees how changes land, both before and after they take effect.
The consequences of financial strain are already visible in the workplace. Nearly all panelists (86%) have seen at least one sign that cost pressures are affecting their workforce. The most common were reduced retirement or HSA contributions (51%), increased mental health needs (49%), turnover (40%), and delayed or skipped care (37%).
"We have lower-waged employees who may need time to take off work for medical appointments but cannot afford to take the time off," one panelist told us. Leaders from trade and labor industries, where more of the workforce is paid hourly, reported delayed or skipped care more often than those in professional services.
Financial strains also follow people to work: According to Telus Health, 15% of U.S. workers say money stress hurt their productivity in the past three months.
Many employers are responding with mental health support. Expanding the EAP was the most common benefit addition panelists described this year, including one employer that more than tripled the counseling sessions available to employees.
Employers should treat financial strain as a health risk, and prioritize support for hourly and frontline workers. Approach paid time off as an affordability support: "Extra PTO can help if someone needs to take care of a sick child or ailing parent or spouse," another panelist said.
With benefits costs rising, employers are making difficult decisions about which programs to protect and which to reduce.
We asked panelists to imagine a hypothetical 10% cut to their benefits budget, and justify their priorities. Panelists said, if faced with this situation, they would protect medical coverage (83%) and pharmacy coverage (66%) as a top priority. Tuition assistance (77%), wellness programs (63%), and financial support programs (51%) topped the hypothetical chopping block. Compared to other supplemental benefits, mental health and EAP benefits held up: 37% would protect them, and only one panelist would cut them.
When asked to explain their decisions, panelists most often pointed to how many employees use a benefit. Utilization was cited in 15 of 33 responses. "Least amount of adoption for those programs, so least amount of impact," one panelist explained.
It can reflect how a program is designed, whether employees know it exists, or whether they're comfortable using it.
For example, half of panelists (51%) say they would cut financial support programs first. Six of the eight panelists whose organizations actually offer one rate its use as low.
According to PwC, 30% of employees have less than $1,000 in emergency savings, and 39% have used payday loans or pay advances. One panelist's HRA now requires employees to pay the first $1,000 of their deductible, an amount nearly one in three employees doesn't have saved.
Participants revealed a lot of conflict in how priorities shaped decisions. For example, when it came to retirement matching, one panelist said, "I would cut the 401(k) match because employees can still contribute and grow their retirement without a match.” Another chose it "because a lot of people can't even contribute to a retirement account right now." Half of panelists (51%) have already seen employees reduce retirement or HSA contributions in response to financial pressures.
When rising costs lead employees to save less, the match looks underused, which makes it easier to cut. Employees then lose help saving at the moment they can least afford to save on their own.
Panelists also considered whether or not benefits are widely applied across their workforce, or only to a smaller group. One panelist weighed "which benefit programs are accessible to all employees versus the programs utilized by a smaller segment of the workforce." Another added: "With retirement, anyone can choose to participate. Not everyone can use a childcare benefit."
But benefits that reach smaller groups may provide essential support to employees facing the greatest financial strain. A childcare benefit or hardship fund may serve fewer people than medical or retirement benefits, but eliminating it can disproportionately affect those least able to absorb additional costs.
Before cutting an underused program, ask whether employees know it exists, whether applying requires them to disclose more than they're comfortable sharing, and who would lose the most if it went away. Treat drops in benefits like retirement matching or HSA participation as a possible sign of financial strain, not a reason to cut the match.
Healthcare is not the only rising expense affecting workers, and some significant cost pressures remain outside traditional benefits packages.
Nearly nine in 10 panelists (89%) offer no weather or disaster benefits, even as home insurance premiums rose 72% from 2019 to 2025.
Dependent care is another growing expense. More than half of panelists (54%) are doing nothing specific to help with dependent care costs, and only 9% offer a childcare subsidy or backup care. Childcare alone averaged $13,184 in 2025, about a third of median income for single parents.
Employers cannot address every household expense, but these pressures can affect employees' financial stability, health, and ability to work. As employers prepare for 2027, it's worth looking at where employees' costs are rising fastest, not only at where benefits already exist.
HAA's October 2026 Insights were collected Oct. 5 to 11, 2026, from 35 leaders in HR, benefits, and corporate wellness who participate in HAA's Research Panel. They represented a mix of small (37%), medium (37%), and large (26%) U.S. employers. Collectively, their organizations reach more than 370,000 workers. Findings are directional and reflect panelists' experiences, not all U.S. employers.
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