Cost continues to challenge employers
COST PRESSURE MOUNTS, BUT ACTION ISN'T KEEPING PACE WITH URGENCY
While plan sponsors are actively exploring a wide range of cost management strategies, adoption of the most impactful approaches remains limited. Employers are weighing trade-offs between savings, disruption, and employee experience and, in many cases, opting for incremental change over structural transformation.
Cost reduction is the top consideration
Reducing costs remains the top employer priority when making benefit plan decisions. 54% of employers ranked it No. 1 — rising 16 points from 2025 to 2026.
of employers said reducing costs was the most important factor when making benefits decisions.
REDUCING COSTS SELECTED AS NO. 1 BENEFITS FACTOR BY EMPLOYERS
Source: 2026 Lockton National Benefits Survey
More employers are moving to self-funded plans
Over the past few years, more employers have moved away from fully insured plans to other funding strategies, such as self-funded and level-funded plans, as they look for greater transparency and cost control:
- Self-funded plans provide plan sponsors with more control over their plan design and opportunities for cost mitigation; however, self-funded plans have greater compliance considerations and increased risk exposure (a critical consideration for smaller group sizes).
- Level-funded plans are a middle ground between fully insured and self-funded plans. They provide better access to claims data and potential savings for employers who aren’t ready for a full transition to self-funding. These plans also come with the compliance responsibilities of self-funding.
What to keep in mind before choosing a self-funded group health plan
As healthcare premium costs continue to rise, companies that offer fully insured group health plans may consider switching to a self-funded plan. While there can be cost benefits and more flexibility with self-funded plans, they also come with more compliance responsibilities, variability, and risk.
EMPLOYERS MOVING AWAY FROM FULLY INSURED FUNDING STRATEGIES
Source: 2026 Lockton National Benefits Survey
Despite cost concerns, disruption & complexity are primary barriers
Strategies that meaningfully reduce cost often introduce operational complexity and employee friction, slowing employer decision-making.
of employers report that the impact to employees is a primary consideration and a determining influence as they consider changes to benefit plans.
Where are employers currently focused within their benefit strategies?
Employers are actively evaluating solutions, but few are making significant changes. Reference-based pricing and ICHRAs are still not widely used, since employers tend to stick with traditional strategies instead of embracing potentially disruptive changes.
Commonly implemented strategies & programs
LEVERAGED BY MORE THAN HALF OF EMPLOYERS
PLAN CONTRIBUTION CHANGES
60% moved to a lower-cost option like a higher-deductible plan.
PHARMACY CARVED IN OR BUNDLED WITH MEDICAL CARRIER OR MEDICAL PLAN ADMINISTRATOR
67% have carved in or bundled pharmacy.
WELLBEING PROGRAMS
73% of employers invest in wellbeing programs.
Versus more impactful cost mitigation strategies
43% use a narrow network to drive care to more affordable, higher-quality care.
3% have mandatory specialty site of care management.
Less than one third have a chronic condition management program in place.
Less adopted strategies & programs
LEVERAGED BY LESS THAN HALF OF EMPLOYERS
DIRECT CONTRACTING
7% of self-funded employers leverage direct contracting with a health system or hospital.
REFERENCED-BASED PRICING
7% leverage reference-based pricing (RBP).
ICHRAS
1% leverage an individual coverage health reimbursement account (ICHRA).
ELIGIBILITY MANAGEMENT
11% exclude spouses with access to other coverage.
21% implement a spousal surcharge.
On average, spousal plan paid costs are 35% more versus employees, according to Infolock®.
Source: 2026 Lockton National Benefits Survey
Read more insights from the 2026 National Benefits Survey
1,705 employers across the U.S. responded to Lockton’s 2026 National Benefits Survey, representing a broad range of industries, group sizes, and ownership structures. Responses provide valuable insight into how employers are managing costs while providing benefits to their workforce.
WHAT IS RBP?
RBP is a payment structure where the plan sponsor pays a set amount toward the cost of a specific healthcare service.
The goal of RBP is to promote price discipline and transparency while reducing unnecessary healthcare spending. RBP can drive meaningful savings, but only when implemented with clear plan design, strong compliance controls, and comprehensive employee support.
WHEN IS RBP A GOOD FIT?
Employers who generally see the best financial results:
- Have a high percentage of out-of-network claims.
- Are located in areas with a competitive provider market.
- Have robust communication channels to educate employees.
- Are willing to explore innovative healthcare cost management strategies and navigate the complexities of RBP implementation.
- Have access to strong member advocacy and communication support to manage provider pushback and balance billing risk.
