Employers Abandon Traditional Health Plans for Cash Reimbursement

The scale of this transition matches the historic erosion of corporate pension plans. According to data from Mercer, group insurance premiums are set to climb 6.7% this year—the sharpest increase in 15 years. Faced with these mounting expenses, employers are increasingly turning to Health Reimbursement Arrangements (HRAs) to decouple themselves from the volatile insurance market.

New figures from the HRA Council reveal a rapid adoption of this model, with over 20,000 companies making the switch in 2026. This represents a 53% surge in corporate participation compared to the previous year. Under these arrangements, companies bypass the administration of group plans, instead providing workers with tax-advantaged cash to purchase individual policies on the Affordable Care Act marketplace.