Health care cost and subsidies fueled a major debate among politicians when it came to the last government shutdown. The irony here is that in the end what really reopened the government was not health care costs, but unpaid TSA government employees and restrictions on airline travel that would impact the Thanksgiving holiday travel and the holiday season. Now that we are back to reality and open season is here, what are your options and how should you think about health care and cost.
The 2026 Health Insurance Landscape:
It should come as no surprise to you that your health care insurance cost will increase in 2026. According to the Business Group on Health, your insurance cost is projected to increase by 9%. Among the reasons for higher cost are increased cancer diagnosis, more employees using mental health services and rising pharmaceuticals cost. You will find the increased costs in the form of higher premiums, and higher co-payments and deductibles. But what does that translate into from a numbers perspective? According to the same study, the median annual employee out-of-pocket costs will increase from $1,825 to $2,224. It also projects that annual premiums will increased from $2,983 to $3,251.
According to human resource and employee benefits consulting firm Mercer you can expect a number of employers to offer healthcare plans with low, or no deductibles, and that may turn out to be good news. For next year, employers may offer more plans that incentivize employees to choose high quality and cost efficient services. Another group of employers may offer “variable co-pay plans.” These plans offer a range of co-payments which vary by providers with no deductible. Other employer features include centers of excellence and use of healthcare navigators.
Planned Approach:
What benefits are in your insurance plans? Some plan benefits may include payment towards gym membership as an example. Other benefits may include mental health services both in person and virtually. The point is to look to take advantage of any benefits your policy may cover.
Calculate your total cost. You can do this by calculating premiums, cost of care, add to that prescription drugs, and compare to your family needs under the plan. Throw into the calculation the possibility of a serious diagnosis which may require surgery. Now look at your health savings account and employer contribution and subtract it from your potential cost and see where you land. This may give some understanding or guidance in choosing a plan.
Finally, if you and your spouse both have health insurance plans evaluate which plans is better. Here’s a hint, the bigger company doesn’t always have the better plan. This may mean that you work out a creative arrangement, such as one spouse remaining on their employer’s plan, while the other spouse carries the children on their other plan. It may be simply a matter of making the most of each person’s medical plan.
Affordable Care Option:
If it turns out that you have no health insurance coverage through your employer’s health care insurance plan, then health care will have to be obtained through the Affordable Care Act. The 2026 market place costs are projected to increase, if for no other reason than the uncertainty about the health care tax credits subsidies expiring at the end of 2025. From a financial perspective, there are two important factors to consider.
The first is that starting in 2026, you are eligible to open a HSA even if you have a bronze level health care plan. Prior to 2026, only individuals with highly deductible plans were eligible to open a HSA. This change in the law is significant for at least two reasons. The first is what I stated in the “What’s Up” section below. The second is the tax implications associated with the impact on your Modified Adjusted Gross Income (MAGI).
The other financial perspective to consider is that if you have no health insurance, your medical cost can escalate out of control and potentially force you into filing bankruptcy. With the market place Affordable Care Act insurance, your maximum out of pocket cost is capped at $10,600 for the entire year. Choose wisely.
WHAT’S UP! Today’s What’s Up is about the difference between a Health Saving Account (HSA) and a Flexible Spending Account (FSA). While both can be used for medical expenses the HSA can be rolled over from year to year indefinitely, funds can be taken with you to your next job and the funds can also be invested. With the FSA the account belongs to your employer and cannot be rolled over from year to year, taken with you when you leave the job or be invested indefinitely. Think about it as another investment tool and something that will help defray your medical cost in retirement. And that’s what’s up!
Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2025 All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.
