Higher health-care expenses forcing financial trade-offs, surveys say

Rising health-care expenses as part of an overall increase in the cost of living are forcing some Americans — including higher earners — to make tough financial choices.

In 2026, employees could see their total health benefit cost increase by 6.7% on average, pushing the average cost per employee above $18,500, according to global consulting firm Mercer. It’s the steepest jump in 15 years, the firm said.

This year, premiums for families with employer-sponsored plans rose 6%, more than twice the rate of inflation, at 2.7%, and outpacing wage growth of 4%, according to KFF, a nonprofit health policy research firm. The vast majority of Americans, about 165 million people, including employees and their dependents, obtain health insurance through their employer.

It’s not only the cost of coverage that’s going up. Consumers are also using more medical services and prescriptions, experts say, contributing to higher health-care expenses.

“We’re getting older as a population. So there’s going to be ailments, there’s more heart disease, there’s more diabetes, all of those things are trending higher, hence additional usage,” said Kaleialoha Cadinha-Pua’a, CEO and chief investment officer of Cadinha & Company in Honolulu, which is ranked No. 15 on CNBC’s Financial Advisor 100 list for 2025.

About 21% of all adults surveyed said health care and insurance are the expenses that have increased the most for them amid the rising cost of living, according to the 2026 KeyBank Financial Mobility Survey. Among higher earners, or those making $100,000 a year or more, 30% rank health care and insurance as the most impactful expense in their cost-of-living increase. 

The online survey polled more than 1,000 Americans ages 18 to 70 in July who have sole or shared responsibility for financial decisions in their household. 

As a direct result of the rising cost of living, 26% of all adults surveyed said they’ve drawn from emergency savings, and 12% have reduced retirement contributions to their 401(k) or IRA. Among those making $100,000 or more, 19% said they have reduced retirement contributions. 

Managing the rising costs of living is “a constantly moving goal,” Cadinha-Pua’a said. “More investors now are having to worry about all these moving pieces and all these varying sizes of eggs in their baskets.”

Even as some Americans make intentional trade-offs to keep up with daily expenses, they’re still watching their savings shrink, according to the KeyBank survey. Two-thirds of those polled said they have less money in their savings in 2025 than they did last year. 

Experts we spoke with recommended taking these steps to manage increasing health-care costs. 

Take time to understand all the costs of your health-care plan.

“The vast majority of people I speak to — and I don’t care how well-educated they are, I don’t care how much they earn — they don’t understand what’s in their health care. Until something happens,” said Mary Clements Evans, a certified financial planner and owner of Evans Wealth Strategies in Emmaus, Pennsylvania.

Among the terms to know:

• Copayments are fixed amounts you pay for specific services, such as a prescription or a doctor’s visit.
• Deductibles are the amount you pay for medical expenses before insurance coverage begins.
• Co-insurance is the portion of health costs that you share with the insurer, once you have reached your deductible.
• Out-of-pocket maximums are a cap on the expenses you’ll pay for the plan year, but they don’t include premiums or any services not covered. 

“They might be going along, everything’s fine, and then, you know, stuff just happens, and we end up in the emergency room, or we end up with a surgery, and now all of a sudden, they’re getting a bill for $5,000 and they’re stunned,” said Evans, who is also the author of “Emotionally Invested.” 

Employers may change some of the plan terms — often, deductibles — to prevent premiums from rising further, which can result in higher out-of-pocket costs for employees, experts say. Last year, the average deductible was $4,063 for family coverage and $2,085 for an individual, according to KFF. 

Add up your potential out-of-pocket costs for an idea of how much you should have in savings for a health emergency.

“I want to see that money saved and on the side, ready to go. So if something happens, you have it, and then if you have to use it, you know, you can go ahead and replenish it,” Evans said. 

One strategy that can help: Take advantage of specialty health accounts that your employer may offer:

• A flexible spending account, or FSA, lets you pay for health-care expenses, like co-pays, medications, or eyeglasses, with pretax dollars. In 2026, the amount set aside can be up to $3,400. But money put in for the year typically must be spent on medical expenses by the end of the year, or it is forfeited. Some employers offer a grace period to spend your prior year’s balance, or allow you to carry over a set amount to the following year.

• A health savings account, or HSA, is a savings and investment account that offers significant tax savings. If you enroll in a qualified high-deductible health insurance plan, you can put pretax dollars into an HSA, see tax-free growth on those funds, and enjoy tax-free withdrawals so long as the funds are used for qualifying medical expenses. Contributions for 2026 are capped at $4,400 for individuals and $8,750 for a family. People age 55 and older can make an additional $1,000 catch-up contribution.

“If you can afford not to touch that health savings account for current medical expenses, and you let that continue to grow, that can grow to be a really meaningful source of health-care coverage down the road,” said Emily Harper, a CFP at Monument Wealth Management in Alexandria, Virginia. 

Just make sure you can afford the worst-case out-of-pocket expenses that may come with a high-deductible plan, she said.

Examine your cash flow and goals to identify potential trade-offs to manage higher health costs. With insurance, electricity, and grocery costs also increasing, it can be hard to find additional savings. Still, experts say to take a hard look at spending before cutting back on retirement or other savings. 

“Realizing that inflation is very real for all Americans, and we’re all dealing with it, I would just make sure that before people start hitting some of those levers in their personal situation, that they step back and … holistically, evaluate your budget,” said Dan Brown, executive vice president and director of consumer product management at KeyBank.

Evaluating your paycheck tax withholding may help improve cash flow. 

“If you’re getting a tax refund, that means that you are paying too much throughout the year,” said Harper. Adjustments and new deductions in President Donald Trump’s “big beautiful bill” may result in bigger refunds for some taxpayers next year. “People’s tax situation might look very different than it did when they started the year,” she said.

Still, be sure to pay enough during the year so that you won’t have to pay a penalty. 

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