Bracing for the 2026 Health Benefits Surge

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Strategies for office technology dealers to stay competitive.

By Scott Cullen

If you run an office technology dealership, health benefits are probably one of your largest non-labor expenses. And if recent increases in benefit costs seemed steep, prepare yourself: 2026 is expected to see the sharpest rise in health benefit cost inflation in 15 years. Understanding what’s causing this increase and how dealers can respond will be essential for maintaining profitability and remaining competitive in hiring.

What Mercer and Others Are Saying

A recent Mercer survey provides a wake-up call. Key findings:

• The health benefit cost per employee is expected to increase by 6.5% on average in 2026, even after employers carry out planned cost-reduction measures. Without those measures, Mercer estimates the increase would be nearly 9%.
• This represents the largest increase since 2010, after four consecutive years of rising costs. For context, over the previous decade, increases averaged approximately 3% annually.
• Both major drivers of cost, the price of healthcare services and utilization, are rising. This means not only are individual service costs increasing (such as hospital fees, provider reimbursements, and new treatments), but employees are also using more services. Delayed care due to COVID-19, expanded virtual care options, and greater comfort with behavioral health services all contribute to this increase in utilization.
• Mercer also finds that 56% of employers plan to implement cost-cutting measures in 2026, up from about 48% in 2025. These include shifting more costs onto employees (such as higher deductibles), focusing on high-cost claims, and emphasizing value in health programs.

Broader Trends & Other Sources

Mercer’s work is echoed in other recent analyses:

• PwC, a professional services network, anticipates that medical cost trends in the group market will be around 8.5% in 2026, and approximately 7.5% in the individual market, with pharmacy costs increasing even more rapidly.
• Aon, a professional services firm that offers risk mitigation products, and others project cost increases near 9-10% for many employers, especially before plan design changes.
• Large companies are increasingly adopting benefit design changes and holding vendors accountable to reduce costs. For example, McKinsey & Company, a multinational strategy and consulting firm, notes that some group segments or regions may experience rate increases of over 10%, depending on regional cost pressures.

Why This Is Especially Relevant for Office Technology Dealers

Office technology dealerships have a few particular vulnerabilities when health benefit costs go up:

1. Margin Sensitivity: Equipment margins are often tight. As health benefits and overall labor costs increase, they can eat into cash flow. Dealers often compete on service, warranty, and response time, all of which are labor-intensive.
2. Workforce Quality & Retention Challenges: Skilled technicians and sales reps are in high demand. Health benefits are a key part of the total rewards package. If a dealer is perceived as offering weak or costly benefits, recruitment and retention issues are likely to increase.
3. Small to Mid-Size Exposure: Many dealerships fall into the SMB category, where bargaining power is limited and options like self-funded plans and large network discounts are fewer. These businesses are more likely to absorb the impact of cost increases, both in premiums and out-of-pocket expenses for employees.
4. Geographic Variation Matters: If the dealer has branches in high-cost regions (urban, high medical reimbursement areas), the price pressures may be exceptionally high.

Considerations & Caution

• Employee Experience vs Cost Cutting: Dealers must balance reducing costs with maintaining benefits that attract and keep employees. Excessive shifts to employees, such as very high deductibles and narrow provider networks, can lower satisfaction and increase turnover.
• Regulatory and Regional Variations: State laws, ACA regulations, or labor agreements may limit design changes. Additionally, medical costs vary greatly by location; what works in Phoenix might not be appropriate in Seattle or New York.
• Lagging Indicators & Data Delays: Some cost increases (e.g., specialty drugs, hospital consolidation) are already built in but haven’t fully surfaced yet. Having timely claims data will help avoid surprises.

Recommendations

As a recruiting firm focused on the office technology industry, Copier Careers suggests dealers take the following steps in the coming months to stay ahead:

1. Run a Benefits Review Well Before Renewal Period — Don’t wait until the last moment. Use the months leading up to renewal to explore cost drivers and design options.
2. Partner with Expert Advisors — These include benefits consultants, brokers experienced in SMB dealership operations, specialty drugs, and behavioral health.
3. Benchmark Against Peers — Find out what other dealers are doing (for example, on deductibles, wellness offerings, telehealth). Sometimes what seems radical is standard in your region or among dealers of similar size.
4. Communicate Transparently with Staff — Even when cost increases are beyond your control, explaining “why health-benefits cost more” helps. It fosters trust and can make shared solutions (higher deductibles, network lab options, telehealth) more acceptable.
5. Plan for Tiered Solutions — Consider offering “premium” and “base” plans, or giving employees choices with different cost/benefit trade-offs. This enables you to manage your financial exposure while maintaining competitive benefits.
6. Monitor New Treatments & Specialty Drugs — For instance, weight-loss drugs like GLP-1s, new cancer therapies, and “high-cost everywhere” items frequently cause significant cost increases. Being early in these discussions can assist in negotiating formulary exclusions, preferred vendor programs, or even carve-outs. Mercer and others explicitly highlight these as rising price pressures.

Outlook

Unless something changes structurally, health benefit cost growth in 2026 is likely to remain elevated. But for dealers who act now there’s an opportunity to control the damage. The difference between Mercer’s 6.5% estimate with cost management and the nearly 9% without demonstrates the significant savings that can be achieved through design and negotiation.

Dealers focused on recruiting and retaining top staff may find that benefits (and benefit stability) are now key differentiators. As rising costs reduce take-home pay, employees will observe and compare offerings more closely.

Over the long term, the growing use of virtual care and behavioral health may require more innovative delivery models. Technology providers who are skilled in tech, process, and customer service could have an advantage in understanding or adopting these models.

Be Prepared

The health-benefit cost storm is approaching, and 2026 appears to be a challenging year. For office technology dealers, that means costs will increase, hiring and retention will become more difficult, and profit margins might shrink if you don’t take action. But there are strategies you can use: better plan design, vendor negotiations, preventive care, and clear communication. Dealers who act early, benchmark wisely, and strike a balance between cost management and employee satisfaction can emerge stronger on the other side.

Sources

Sources: Mercer 2025 Health Benefit Survey; PwC “Medical Cost Trend: Behind the Numbers”; SHRM Health Care Cost Management Toolkit; Marsh McLennan Agency report on reducing employer healthcare costs; FierceHealthcare coverage of employer cost-cutting strategies.