Open Enrollment 2027

Who pays when health care costs keep climbing? Open Enrollment 2027 arrives, bringing with it the health care cost decision executives can’t defer.

For most organizations, employee benefits rank among the largest expenses on the income statement. Compensation, health insurance, retirement, payroll taxes—together, they represent a significant investment in attracting, retaining, and protecting the workforce.

In 2027, that investment is getting more expensive.

The question for executives isn’t whether health care costs are rising. They are.

The real question: Who will absorb the increase—the organization, the employee, or both?

That decision has implications well beyond the benefits budget. It affects compensation strategy, employee retention, recruiting, workforce productivity, and ultimately the organization’s ability to manage margins.

The Cost Curve Is Moving in the Wrong Direction

The data heading into 2027 is difficult to ignore.

• ACA Marketplace plans: Insurers are proposing average premium increases of roughly 14-15 percent for 2027, according to KFF’s analysis of preliminary filings.
• Employer-sponsored coverage: Mercer projects an 8.2 percent increase in employer health benefit costs for 2027, the largest increase since 2003. Aon’s projection is closer to 9.5 percent.
• Medical cost trend: PwC estimates the commercial group medical cost trend at approximately 9 percent for 2027, its highest level in 17 years.

This is not a one-year anomaly.

Provider consolidation, specialty care utilization, behavioral health demand, pharmaceutical costs, and the continued growth of GLP-1 medications are all putting upward pressure on the cost of care.

For employers, the result is straightforward: the status quo is becoming increasingly expensive.

The Subsidy Cliff Adds Another Layer of Pressure

The enhanced ACA subsidies expired at the end of 2025, returning Marketplace coverage to the pre-pandemic eligibility structure and restoring the 400 percent federal poverty level subsidy cliff.

The policy debate continues, but employers cannot build a 2027 benefits strategy around legislation that may or may not materialize.

Insurers are already pricing for the environment they expect to face.

The consequences are particularly significant for households just above the subsidy threshold. A family that crosses the 400 percent income line can lose its subsidy entirely and move from partially subsidized coverage to paying the full premium.

That creates a difficult dynamic for employers competing for talent.

Employees are already facing higher housing, food, transportation, and other household costs. Asking them to absorb another substantial increase in health care expenses effectively amounts to a reduction in disposable compensation.

And that has a cost of its own.

The Employee Share Is Becoming a Compensation Issue

Employers have historically managed rising health care costs through some combination of plan design, carrier negotiations, employee contributions, deductibles, copays, and out-of-pocket limits.

That toolkit is still available.

But executives should recognize that cost shifting isn’t simply a benefits decision anymore. It is a compensation decision.

Nearly half of large employers expect to increase deductibles or copays for 2027, and roughly two-thirds anticipate increasing employees’ share of premiums.

Those strategies may protect the employer’s P&L in the short term. But they also increase the employees’ total cost of employment.

For lower- and middle-income employees in particular, a higher premium or deductible can materially change the value of the compensation package.

That means the benefits strategy should be evaluated alongside salary budgets—not in isolation.

GLP-1s Are a Symptom of a Larger Problem

GLP-1 medications have become an easy target in the healthcare cost conversation.

They are also a useful example of the broader challenge executives face: how to manage utilization without undermining access to potentially valuable care.

Mercer estimates GLP-1 utilization will add approximately one percentage point to employer health care cost increases in 2027.

Employers are responding. About 11 percent have dropped or plan to drop GLP-1 coverage, while another 27 percent are tightening utilization requirements.

But the strategic question is bigger than whether to cover a particular class of drugs.

Executives need to understand what drives their organization’s claims experience, which populations generate the greatest costs, and where targeted interventions can produce measurable results.

Simply cutting coverage is easy.

Managing the underlying risk is harder—and potentially much more valuable.

Medicare Is Sending the Same Signal

The pressure isn’t limited to employer-sponsored coverage.

The 2026 Medicare Trustees Report projects the standard Part B premium at approximately $209.50 per month for 2027, compared with $202.90 in 2026. The final amount will be announced by CMS later this year.

Part D’s base beneficiary premium is expected to reach $41.33 in 2027, subject to the statutory limit on annual increases.

The Inflation Reduction Act’s redesigned prescription-drug benefit provides some relief, with the annual Part D out-of-pocket cap increasing to $2,400 in 2027.

But the larger point remains that health care inflation is affecting every segment of the system.

There is no single payer, carrier, plan design, or government program that will make the problem disappear.

The Executive Decision

The mistake in 2027 will be treating open enrollment as an administrative exercise.

It isn’t.

It is an annual opportunity to reassess one of the organization’s largest controllable expenses and determine how that expense aligns with the broader business strategy.

Before simply renewing the existing plan, leadership should be asking:

• What is driving our claims and utilization?
• Where can we reduce unnecessary or low-value spending without reducing access to care?
• What level of cost increase can the organization realistically absorb?
• How much additional cost can employees reasonably bear?
• Are our contribution and plan-design decisions consistent with our compensation strategy?
• Are we using our data effectively enough to negotiate with carriers and vendors?
• What does our current benefits strategy say about our ability to compete for talent?

These aren’t questions for HR alone.

They belong in the executive conversation.

The Bottom Line

Health care costs aren’t going back to where they were.

The organizations that manage 2027 well won’t necessarily be the ones with the cheapest health plan. They’ll be the ones who understand what they’re paying for, why they’re paying it, and where the cost should be.

That requires more than accepting a renewal proposal.

It requires modeling alternatives, challenging assumptions, understanding the organization’s risk, and having a candid conversation with your broker and benefits team before the renewal decision is effectively made for you.

Open enrollment is not just about choosing a health plan. It’s about deciding how your organization will allocate one of its highest and fastest-growing costs.

That is an executive decision.

Michele Harmon

“Your employees are the heart of your organization.” Dr. Michele Harmon is a Human Resource professional, supporting clients in Texas and New Mexico that range in size from five to more than 3,000 employees. Email: micheleharmon1@gmail.com