You’re going to pay more for health insurance in 2027 as employers see costs jumping for the fifth straight year

The health insurance deduction is one of the quieter numbers on a paystub, but next year, it could hit paychecks harder than inflation or taxes.

Over 165 million Americans rely on employer-sponsored healthcare coverage, but it’s getting more expensive for employers to foot the bill.

Mercer, a global consulting firm specializing in health benefits, projects healthcare costs per employee will jump 8.2% in 2027, the steepest increase since 2003 and the fifth consecutive year of elevated costs, according to a survey of 1,800 U.S. employers.

But the number on employers’ books isn’t what workers will feel: Two-thirds of companies with 500 or more employees plan to raise premiums, meaning paycheck deductions will climb even faster than that 8.2% average.

It’s coming out of your pay, in all likelihood.

“The reality is this does eat into money that could be invested in wages,” Nick Stefanizzi, CEO of Northwell Direct, which provides health benefits to self-insured employers, told Fortune .

Health insurance makes up almost a quarter of the benefits employers pay workers per hour.

Private employers pay about $3.48 on average for employees’ health insurance per hour the employee works, according to June Bureau of Labor Statistics data , out of the $14.07 per hour spent on benefits.

Several factors, both old and new, are driving the 8.2% increase.

Mercer pointed to hospital consolidation and less government spending on healthcare as the structural forces keeping healthcare costs above inflation but noted expensive new cancer treatments, GLP-1 weight-loss drugs, and AI-enabled medical billing are also pushing up costs.

Mercer’s chief actuary Sunit Patel estimated GLP-1 use alone accounted for one percentage point of the total increase in health cost growth for 2027.

Impact on workers’ wallets Higher health insurance costs for employers turn into out-of-pocket costs for their employees in several ways.

They can hike up employees’ share of premiums, the fixed and recurring fees paid to the plan provider that’s split between the employer and employee.

Workers with family coverage contributed an average of about $6,850 toward premiums last year.