USA Today: Major companies to cut back on 2027 health benefits in blow to workers

Major employers including Disney, Bloomberg, Starbucks, Deloitte and the City of Dallas plan to cut or change health benefits for 2027, shifting more costs to employees amid rising medical expenses. Commercial health care costs are projected to rise 9% in 2027, the highest trend in nearly two decades, according to PwC. Insurer Aon forecasts a 9.5% increase in U.S. employer health care costs next year, pushing average costs above $19,000 per employee. Many big name employers are cutting back and looking for ways to deal with this problem.

Individual coverage health reimbursement arrangements, or ICHRAs (now called CHOICE arrangements), is another option companies are considering to replace one-size-fits-all group plans. One in three businesses currently offering health benefits reported likely ICHRA adoption in the next two years, according to an Employee Benefits Research Institute (EBRI) study. In these arrangements, organizations provide employees with a fixed monthly tax-free reimbursement for individual health insurance premiums and other qualified medical expenses. Power rests with employees to choose and purchase an individual health plan with the network of doctors, coverage levels and monthly premiums that meet their personal and family needs. Transitioning to an ICHRA may be difficult, though. Employees may have a bias toward a group plan, which is what they're familiar with, and there's uncertainty about whether health care would indeed be cheaper for workers with an ICHRA, EBRI said.