Double-digit health costs are coming. So is a new benefits playbook. Inside the employer healthcare reset and the models reshaping benefits in 2026.

This article originally appeared in HR.com on December 16, 2025, and was written by Victor Leclere, SVP of Commercial at Castlight.

Employer healthcare is entering its most consequential reset in decades. Costs are rising at their fastest pace in 15 years, workforce expectations are splintering across generations and AI is pressuring every part of the system to rethink what “digital-first” actually means. Beneath the noise, a deeper transformation is taking place. Employers aren’t just optimizing benefits anymore. They’re rewiring the entire architecture that supports how care is accessed, delivered and paid for.

Total employer health benefit costs are projected to rise between 6.5% to as much as 10%, according to multiple sources, with many employers privately bracing for double-digit increases if nothing changes. In that environment, experimentation is giving way to clarity. Employers don’t want more point solutions, more hubs, more layers. They want integrated, accountable, intelligent systems that help people make good decisions without putting more burden on HR teams or members.

This is what the next era of employer healthcare looks like and it will feel very different from the past decade.

AI is powerful, but trust still dictates adoption

AI adoption in healthcare is accelerating quickly. According to a 2025 report, 22% of healthcare organizations now use domain-specific AI tools – a 10x increase in just two years. Many systems, including hospitals and payers, are already integrating predictive AI, reshaping workflows and enabling new efficiencies. Yet employer-sponsored benefits sit in a different trust zone altogether.

This year, nearly 70% of those using AI in HR experienced challenges – ranging from data privacy concerns and lack of trust in AI systems to employee resistance – and admitted they lacked resources to audit and correct flawed algorithms.

Employers want to simplify the experience for their employees and reduce inefficiency, but they are trying to avoid handing over the keys to fully automated systems. Data security, algorithmic transparency and member trust remain foundational. The breakthrough moment will not come from more AI. It requires governed AI; models that are explainable, auditable and embedded into human-guided frameworks. In 2026, AI will augment the benefits experience, not define it. The winners will be platforms that use AI to anticipate needs, not automate empathy.

Traditional value-based care has run its course

For more than a decade, employers were told that value-based care would solve cost and quality challenges. Yet the reality has been mixed: inconsistent provider participation, opaque savings calculations, and attribution methodologies that vary by plan and market.

Today, the market is pivoting. Employers are increasingly gravitating toward direct contracting models. About 44% of employers with more than 50,000 employees use direct contracting with high-value hospitals, as do 20% of those with less than 1,000 workers, according to the National Alliance of Healthcare Purchaser Coalitions.

These direct contracting models are simple, transparent and tied to tangible savings methodologies. Rather than chasing abstract incentive structures, they are willing to pay for three concrete deliverables:

• Expanded, reliable access
• Meaningful steerage to high-performing providers
• Outcomes that translate directly into total cost of care

Over the next two years, most large employers will treat networks not as static lists, but as performance-based marketplaces where volume can shift dynamically. This is the beginning of dynamic networks, not value-based care 2.0.

“Alternative health plans” won’t work without real engagement

A wave of alternative plan designs has emerged in recent years, often positioning themselves as the answer to rising costs: lower premiums, consumer-style choice and “empowered decision making.” And companies are increasingly considering these options. The number of employers offering a non-traditional or alternative model health plan is anticipated to grow significantly, from 17% in 2025 to 24% in 2026, with another 36% of respondents considering this option by 2028, according to Business Group on Health’s (BGH) 2026 Employer Health Care Strategy Survey.

Most of these alternative plans rely on one underlying assumption that has yet to be proven: Employees will make rational, data-driven decisions when given choices.

Like early high-deductible health plans (HDHPs), these models push responsibility onto the member without equipping them to succeed. Price comparison tools do not fix misaligned networks. Lower premiums do not replace clinical guidance. And dynamic co-pays do not meaningfully change behavior without a connected system around it.

What many of these designs fail to consider is that cost pressure on the member alone doesn’t change behavior or improve outcomes. There needs to be accountability for providers and connected engagement and guidance for employees.

The models that will succeed apply pressure on both sides – provider networks and member behavior – while embedding a continuous, intelligent guidance layer that supports decision-making at every step. In 2026, the battleground shifts from “consumer-driven” to “guided-choice” health plans – where intelligence does the heavy lifting, not the member.

Budget pressure will force a shift toward scalable, tech-forward platforms

There is no stopping increases in medical and pharmacy costs as a result of rising inflation, drug prices and utilization. The Centers for Medicare & Medicaid Services (CMS) projects that U.S. national health spending will consistently outpace gross domestic product (GDP) growth, rising from 17.6% in 2023 to 20.3% by 2033. And pharmacy currently accounts for about one-quarter of all employer healthcare spent – up 21% from just three years ago – and those costs are expected to increase as much as 12% in the next year.

Facing serious budget constraints, employers are increasingly adopting tech-forward, efficient, self-service platforms that can be supported by humans where necessary, rather than relying entirely on high-cost, human-heavy models. Employers want platforms they can grow with and configure over time, not a patchwork of siloed vendors solving narrow problems.

Modern benefits strategies are increasingly defined by technology that distills complexity into simplicity, supported by people who intervene only when their expertise adds real value.

The next generation of ecosystem partnerships will replace point-solution aggregation

Nearly half of employers already manage four to nine different point solutions, and 47% of employees say this abundance of options is overwhelming. The inevitable conclusion is becoming clear: aggregation without orchestration is just noise.

In 2026, ecosystems will evolve from “hubs” to operating systems – platforms that behave like a single product and create real movement across the system. These next-generation ecosystems will take financial accountability, route members intelligently based on claims-based value and provide predictable cost structures.

Crucially, they will preserve employer optionality, enabling simpler contracting and rapid onboarding of new partners, while providing the foundation for predictable, curated budgets that give employees choice while maintaining control.

This evolution ends the era of disconnected “benefit silos.” Employers will expect platforms that work more like curated marketplaces, where choice exists – but is intelligently guided, governed and measured.

The bottom line

What employers want in 2026 is simple, but powerful: trust, clarity, and alignment. Technology must reduce complexity, benefits models must deliver real savings, and ecosystems must help employees make good decisions without expecting them to become healthcare experts.

AI will continue maturing. New contracting models will take hold. Disconnected point solutions will fade. In their place, platforms that connect member engagement with provider behavior – combining intelligence with human support – will define the next wave of innovation.

Employers aren’t looking for more tools. They’re looking for better systems, and those systems are finally starting to emerge.