Why 2026 is the Year to Break the Group Health Cycle

TJ Bullock | March 9th, 2026

If you’ve been in business for more than a few years, you know the drill. Every year, around renewal time, your broker walks in with a folder (or a Zoom link) and a grimace. They tell you that healthcare costs are up, again. They show you a 12% increase from your current carrier, but "good news," they found another carrier that will only hike your rates by 8% if you just narrow the network and bump the deductible up another $500.

You take the deal. You tell your employees their costs are going up slightly, but "it could have been worse." Then, you do it all over again next year.

Welcome to the Group Health Cycle. It’s a loop of predictable disappointment.

But 2026 is different. We are looking at a projected 9% increase in healthcare costs across the board. The old playbook of cost-shifting to employees and shrinking networks has officially hit a wall. If you keep playing the same game, you’re going to lose.

As I always say: "It’s not your plan, it’s how you’re paying for it."

The Breaking Point: Why 2026 is Different

For a long time, the traditional "fully insured" model worked well enough. You paid a fixed premium, the insurance company took the risk, and everyone moved on. But the math has changed.

In 2026, we’re seeing a convergence of factors that make the old way unsustainable:

1. Price Hikes: A 9% jump is a massive hit to the bottom line for any business, regardless of industry.
2. Structural Shifts: CMS (Centers for Medicare & Medicaid Services) is changing how they pay for procedures, pushing more care toward outpatient centers.
3. High-Cost Meds: New weight-loss drugs (GLP-1s) and specialty therapies are amazing for health but are blowing up traditional group plan budgets.

The traditional carriers win either way. If you have a "good" year with low claims, they keep the profit. If you have a "bad" year with high claims, they raise your rates to make up for it. It’s a "heads they win, tails you lose" scenario.

2026 is the year to stop playing that game.

Stop Buying Insurance, Start Funding Healthcare

Most employers think they are "buying" a health plan. In reality, you are funding a healthcare delivery system for your employees. The "plan" (the PPO, the HMO, the shiny logo on the card) is just the wrapper.

The real magic, and the real savings, happens when you change the funding mechanism.

If you are a business with 20 to 500 employees, you have options that didn’t exist (or weren't viable) five years ago. This is how you regain control.

1. Level-Funding: The Best of Both Worlds

Level-funding is the "gateway drug" to breaking the group health cycle. It looks and feels like a fully insured plan, you pay a set monthly amount, but it’s actually a form of self-insurance.

Here’s why it’s a game-changer for 2026:

• Transparency: You actually get to see where your money goes. If your employees are healthy and claims are low, you get a refund at the end of the year. When was the last time a big-name carrier sent you a check back because your team didn't get sick?
• Cost Containment: Because you have data, you can see if your costs are being driven by ER visits that should have been Urgent Care visits. You can actually manage the risk instead of just paying for it.

2. ICHRA: The Individual Coverage HRA

If you want to get out of the "group" business entirely, the Individual Coverage Health Reimbursement Arrangement (ICHRA) is your best friend.

Instead of picking one plan for everyone, you give your employees a tax-free monthly allowance. They go to the individual exchange and pick the plan that fits their life.

• Budget Certainty: You decide exactly how much you want to spend per employee. No more 9% surprises. If you want to increase your contribution by 3%, you do it. The risk of high claims is shifted away from your business and onto the individual market carriers.
• Employee Choice: Your 22-year-old assistant and your 55-year-old CFO have very different health needs. ICHRA lets them choose the plan that works for them.

You can learn more about how these arrangements work in our comparison of HSAs, HRAs, and FSAs.

The Power of Clinical Breakthroughs and AI

We can't talk about 2026 without talking about technology. We are seeing a shift from "sick care" to "proactive health."

AI is finally moving out of the "cool demo" phase and into actual operations. Modern plans are using AI to identify employees who might be headed for a major health event, like a heart attack or a chronic complication, and intervening before it happens.

In a traditional fully insured plan, you don't benefit from those interventions. The carrier does. But in a level-funded or self-insured environment, helping your employees stay healthy actually keeps money in your company's pocket.

Why Narrow Networks are a Failing Strategy

For years, the "fix" for rising costs was to offer a narrower network. "Hey, you can't go to that hospital anymore, but your premium stayed the same!"

This makes employees miserable. It's a "takeaway" benefit. In a tight labor market, your benefits package is a recruiting and retention tool. If your plan is a headache to use, you're losing talent.

Instead of narrowing the network, 2026 is about strategic benefit planning. This means looking at things like voluntary benefits to fill the gaps. It means using Health Savings Accounts (HSAs) to give employees a way to save for future costs while reducing your current tax liability.

Making the Move: How to Transition

Breaking the cycle isn't about making a radical, risky jump. It’s about being intentional.

1. Audit Your Data: Ask your current broker for your claims data. If they can’t (or won't) give it to you, that’s your first red flag. You can't fix what you can't see.
2. Evaluate Funding Options: Ask for a side-by-side comparison of your current plan vs. a Level-funded plan vs. an ICHRA.
3. Focus on Education: When you change the funding, you have to help your employees understand it. We provide tools like the Uniform Glossary of Health Coverage to make sure everyone is speaking the same language.

The Bottom Line

The "Group Health Cycle" is a choice. You can choose to accept the 9% increase, or you can choose to look under the hood and change how the engine is fueled.

At Bullock & Associates, we don't just sell plans. We help business owners regain control of one of their largest line-item expenses. 2026 is going to be a tough year for companies that stay on the treadmill. But for those willing to look at alternative funding, it’s an opportunity to build a more sustainable, employee-friendly future.

It’s not your plan, it’s how you’re paying for it. Let's change the "how."

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In Plain Benefits: The 2026 Outlook

TJ Bullock, REBC | President | Making Complicated Simple

2026 is shaping up to be a wake-up call for employers. With a projected 9% increase in costs, the "business as usual" approach to health insurance is officially broken. Here is how you can break the cycle and actually save money this year.

1️⃣ REJECT THE FULLY INSURED TRAP
In traditional plans, the carrier wins regardless of your performance. Switching to alternative funding models allows you to keep the surplus when your team stays healthy, providing a direct ROI on wellness efforts.

2️⃣ EXPLORE LEVEL-FUNDING FOR STABILITY
Level-funding offers the predictable monthly costs of a traditional plan but with the transparency of self-insurance. It’s a low-risk way to get your data back and potentially earn premium refunds.

3️⃣ USE ICHRA TO CAP YOUR COSTS
Stop letting the insurance market dictate your budget. With an ICHRA, you set a fixed contribution and let employees choose their own plans, shifting the risk away from your company and providing ultimate budget certainty.

4️⃣ EMBRACE PROACTIVE INTERVENTION
Leverage new clinical breakthroughs and AI-driven data to catch health issues early. In a unique funding model, preventing a major claim doesn't just help the employee; it directly impacts your bottom line.

Ping me.

MAKING COMPLICATED SIMPLE

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Making complicated simple.

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