Workers Face Rising Health Care Costs as Open Enrollment Nears

As U.S. employees prepare for 2025 health care open enrollment, rising medical expenses and shifting employer contributions are raising concerns about affordability. In 2024, employers covered between 75% and 85% of health plan costs, according to the Kaiser Family Foundation, but surveys show that companies may soon pass more expenses along to workers as overall plan costs increase.

A Mercer survey of nearly 700 organizations found that employers are likely to shift a larger share of premiums and copays to employees in 2025. Meanwhile, the nonprofit Business Group on Health projects a 9% rise in health plan expenses by 2026, based on responses from 121 large companies covering more than 11 million workers.

Surveys also show that many employees dedicate little time to selecting the best coverage. Nearly one-third of enrollees spent less than 30 minutes choosing a plan in 2024, according to the Employee Benefit Research Institute, while a Justworks survey found that 48% of millennials admitted to selecting plans without fully understanding them.

Man looking at a laptop | Source: Pexels

To prepare, some workers are tracking annual out-of-pocket health expenses to better evaluate deductible and premium trade-offs. Flexible spending accounts (FSAs) and health savings accounts (HSAs) remain key tools, offering tax advantages for medical spending. FSAs, funded through paycheck deductions, must typically be spent within the year, while HSAs allow funds to roll over and grow tax-free if invested.

In 2024, the average household FSA contribution was $2,250, with 77% spent by November, according to Numerator. For HSAs, two-thirds of employers offered investment options, though only 18% of participants invested their balances, the Plan Sponsor Council of America reported.