Rising healthcare costs are cutting into paychecks: 5 ways HR can fight back

Employees are facing a pay cut they can’t see, and it doesn’t show up in their salary. It’s in their healthcare costs.

Every year, premiums, deductibles, and out-of-pocket expenses climb higher, eating into take-home pay and financial well-being. For many workers, it’s like getting a smaller paycheck without ever seeing a change in their wage.

If you’re in HR, this isn’t just a benefits problem. It’s a workforce problem, a wellness problem, and a retention problem. Let’s look at what’s driving these costs and how HR leaders can take back control.

Why employee healthcare costs are rising, and what’s fueling it?

Employees aren’t just paying more; they’re paying more in every direction. Premium contributions are climbing, out-of-pocket costs are hitting record highs, and even routine care is becoming more expensive. Together, these increases have outpaced wage growth for more than a decade, effectively turning healthcare inflation into one of the largest hidden pay cuts in the American workforce. Here’s what’s driving the increase:

1. Premium contributions are rising

According to Forbes, total employee healthcare costs, including premiums and out-of-pocket expenses, are expected to surpass $5,000 per employee in 2026, with overall healthcare costs projected to rise by nearly 10% next year.

2. Out-of-pocket costs keep climbing

Deductibles, copays, and coinsurance are all trending up. Many employers, facing tight budgets, are increasing cost-sharing, but that often means shifting the financial burden directly to employees.

3. Prescription drug costs are surging

Specialty drugs are now one of the biggest drivers of rising plan costs. An IFEBP survey found that high-cost prescriptions are among the top reasons employers report for benefit cost increases.

4. Inflation is hitting medical services

From hospital staffing to operational expenses, inflation is making it more expensive to provide care. Forbes cites the broader economic environment as a key pressure point behind higher healthcare prices.

5. Family coverage is becoming unaffordable

According to Axios, the annual cost of employer-sponsored family coverage has surpassed $35,000 in many cases. For working families, healthcare affordability has reached a breaking point.

What it feels like for employees

These numbers aren’t just statistics; they translate into real hardship. Employees delay care because they can’t afford it, and when routine checkups or early treatments are postponed, small issues often become serious conditions that cost far more to treat later. They take on medical debt and call HR in frustration over bills they don’t understand. What starts as a financial problem quickly becomes a wellness and productivity problem that affects the entire workforce.

Healthcare, the thing that’s supposed to provide security, is becoming a source of anxiety. And when benefits feel broken, trust in the employer starts to break, too.

What HR can do: reclaim the strategy

Here’s the good news: you are not powerless. More HR leaders are moving away from the idea that rising healthcare costs are inevitable and instead taking an active role in reshaping their benefits strategy.

You can design a plan that puts value back in employees’ hands while still protecting your organization’s bottom line. Here are several ways to do it:

• Reevaluate plan design to balance cost and care. Review your health plan structures each year to ensure deductibles, copays, and coverage tiers are aligned with both company budgets and employee needs. Consider options like level-funded or reference-based pricing plans, which can help you manage costs more transparently.
• Give employees personalized guidance before they choose a plan. Offer digital decision-support tools or live enrollment help so employees understand their options and can pick plans that truly match their healthcare usage. When employees make informed choices, they’re less likely to overspend or underinsure.
• Provide year-round navigation and advocacy support. Benefits questions do not end after open enrollment. Give employees access to care navigation tools, live chat support, or a dedicated advocate who can help with billing issues, provider searches, and claims. Ongoing help reduces confusion and unnecessary costs.
• Invest in prevention and early intervention. Encourage employees to use preventive care and wellness programs by removing barriers and communicating clearly about what is covered at no cost. Every preventive visit completed early can help avoid a larger claim later.
• Use data to make smarter renewal decisions. Track utilization trends and employee feedback to understand where costs are rising most. Model scenarios before renewal so you can negotiate from a position of knowledge, not urgency.

The goal is not only to control costs but to rebuild confidence in the benefits experience. When employees see that their employer is committed to both affordability and access, trust grows, and that trust translates into higher satisfaction, loyalty, and overall well-being.

Help your team understand what’s behind rising healthcare costs

We created this letter template to help you communicate with your employees about rising healthcare costs in a clear, compassionate way. It’s designed to make it easier to explain what’s driving the increases, what your organization is doing to help, and how employees can make the most of their benefits. Use it as-is or customize it to reflect your company’s voice and current benefit updates.

Subject line:

Why your healthcare costs are going up, and what we’re doing about it.

Body copy:

Hi [Employee Name or Team],

We know you’ve probably noticed your healthcare costs going up, and we want to be open about what’s behind those changes and what we’re doing to help manage them.

Across the country, the cost of providing healthcare is going up for a few key reasons:

• Higher medical and hospital costs. Many healthcare providers are raising prices to keep up with inflation, staffing shortages, and higher operational costs. The ripple effects of those increases are passed through to insurance carriers and ultimately to employer health plans.
• Prescription drug price growth. The cost of many medications especially specialty drugs and new treatments has increased significantly. These drugs often make up a small portion of prescriptions but account for a large share of total healthcare spending.
• Increased demand for care. After several years of delayed or skipped care, more people are returning to the doctor catching up on preventive visits and addressing chronic conditions. That higher utilization drives overall plan costs up.
• Broader economic inflation. Just like groceries and housing healthcare is affected by general inflation. Rising wages for healthcare workers, supply costs, and facility expenses all contribute to higher prices across the system.

We know these challenges are bigger than any one company or health plan, but that doesn’t make them any less real for you. That’s why we’re focused on doing what we can to keep coverage affordable and to help you make the most of your benefits.

Here’s what we’re doing to support you:

• Reviewing our plan options and vendor partnerships to make sure we’re negotiating the best possible value for employees
• Offering clear, simple guidance during open enrollment so you can confidently choose the plan that fits your needs
• Providing year-round support for benefits and care questions
• Making it easier to access your plan tools from digital ID cards to cost estimators so you can make informed care decisions

Our goal is simple: to make your healthcare more affordable, more understandable, and less stressful. Benefits should support your life, not complicate it.

If you have any questions or need help understanding your benefits, please reach out to [HR contact name or email]. We’re here to help.

Thank you,

[Your Name]

[Your Title]

[Company Name]

Where Nava fits in

At Nava, we exist to help HR leaders fix what’s broken in healthcare. We’re a full-service benefits brokerage combining expert consulting with powerful technology to deliver better outcomes for your team.

With Nava, you can:

• Model renewals in real time with Nava HQ, our benefits command center
• Offer 24/7 support so employees can navigate care confidently and avoid costly missteps
• Launch best-in-class programs in mental health, fertility, and more, without adding admin burden
• Build a long-term cost strategy that protects both your company and your people

We believe no employee should have to skip care because of confusion or cost. And no HR leader should feel stuck fighting this battle alone.