Milliman projects average health care cost of $8,460 per covered person in 2026, up 7.9 percent. When that increase is compared with federal construction compensation data, a 50 person enrolled group adds about $18,038 in estimated employer cost, equal to roughly 352 hours of construction labor compensation. Price the renewal in labor hours before deciding whether it is affordable.
Health plan renewal percentages are too abstract for a construction budget. A carrier can show 9 percent, 14 percent, or 22 percent on one page. None of those figures tells an owner how many crew hours must be sold, how much gross profit must be found, or whether the increase consumes money reserved for raises.
There is a more useful way to read the renewal. Convert it into the same units used to estimate work: dollars per covered person, labor hours, crew weeks, and required revenue. That translation does not replace underwriting. It gives the finance team and the benefits advisor a common language before anyone changes contributions, deductibles, or networks.
This article provides that calculation for 2026 and a worksheet a contractor can apply to an actual renewal.
The missing number is hours, not percent
The 2026 Milliman Medical Index estimates $8,460 in annual health care cost for an average person covered by an employer sponsored plan. The estimate rose 7.9 percent from $7,838 in 2025. Milliman assigns $4,899 of the 2026 total to the employer, $2,295 to employee premium contributions, and $1,266 to employee out of pocket spending.
The United States Bureau of Labor Statistics reports that construction employers paid an average of $51.23 per work hour in total compensation in March 2026. Wages accounted for $35.54. Benefits accounted for $15.69.
Put those two reports together and the annual employer health contribution for one average covered person equals about 95.6 hours of construction compensation. That is almost two and a half 40 hour weeks.
The increase alone matters too. If the employer share remains 58 percent, the $622 rise in average medical cost adds about $361 per covered person. A contractor with 50 enrolled people would absorb about $18,038. At $51.23 per construction hour, that equals roughly 352 hours of total labor compensation, or 8.8 worker weeks.
What the 2026 increase looks like by enrolled headcount
The table below isolates the estimated employer portion of the 7.9 percent cost increase. It is a planning benchmark, not a prediction of a specific carrier renewal.
| Enrolled people | Estimated added employer cost | Construction compensation hours | Forty hour worker weeks |
|---|---|---|---|
| 25 | $9,019 | 176 | 4.4 |
| 50 | $18,038 | 352 | 8.8 |
| 75 | $27,057 | 528 | 13.2 |
| 100 | $36,076 | 704 | 17.6 |
The calculation uses Milliman's $622 increase per average person, multiplied by the 58 percent employer share, then divided by the Bureau of Labor Statistics construction compensation cost of $51.23 per hour. Rounding explains small differences.
This is the article's central finding: a market level medical trend that looks like a single digit percentage can consume more than two months of one worker's total compensation in a 50 person enrolled group.
Your carrier renewal is not the same as medical trend
Medical trend measures expected change in health care cost when the covered population and plan remain broadly comparable. A renewal is the actual price offered to a particular group. The renewal can land above or below trend.
A construction employer's result may reflect several items at once:
- Changes in the ages and family tiers of enrolled workers
- Large claims and ongoing conditions
- Carrier adjustments to its book of business
- Prescription drug use, including specialty medications
- Hospital and outpatient facility prices
- Plan design and network changes
- Taxes, assessments, administration, and risk charges
- The credibility the carrier gives the group's own claims experience
That distinction matters. A 15 percent renewal does not prove the group caused 15 percent more claims. A 5 percent renewal does not prove the plan is efficient. Ask for the bridge from current cost to proposed cost.
Benefitra's health plan cost benchmarking guide explains how to separate market pressure from group specific experience: https://benefitra.com/employer-health-plan-cost-benchmarking-renewal-expectations/
Two cost engines explain most of the national rise
Milliman identifies outpatient facility care and pharmacy as the two largest contributors to the 2026 increase. Together, they produced 69 percent of the rise for the average person.
Outpatient facility care reached $2,590 per average person and rose 7.5 percent. It now represents about 31 percent of total cost. Milliman points to hospital ownership of physician practices, higher cost settings for imaging and diagnostics, specialty drugs administered in outpatient facilities, and continued movement of care away from inpatient hospitals.
Pharmacy reached $1,907 per average person after rebates and rose 14.8 percent. Milliman identifies use of GLP 1 medicines and other high cost therapies as primary drivers.
Those mechanisms suggest two direct renewal questions. Where did outpatient services occur, and what did the plan pay after rebates? A renewal packet that answers neither question leaves the employer looking at price without the machinery behind it.
Why construction firms feel the increase differently
Construction labor is priced into work before much of the work occurs. A health plan increase that arrives after estimates are committed can compress margin on jobs already sold. The problem gets sharper when the company has a mix of field employees, project managers, estimators, office staff, seasonal hires, and union labor.
The Bureau of Labor Statistics data shows why a health plan cannot be treated as a small side expense. Benefits represented $15.69 of the construction industry's $51.23 average hourly compensation cost in March 2026. That was 30.6 percent of total compensation.
Health insurance is only part of the benefits figure. Paid leave, retirement, legally required benefits, and supplemental pay also draw from the same compensation budget. When medical cost takes another dollar, it competes with those items and with wages. The decision is not simply premium versus profit. It is premium versus every other use of compensation dollars.
Convert your actual renewal into four job cost numbers
Start with the carrier's proposed annual employer cost, not the total premium shown on the first page. Then calculate four figures.
1. Added annual employer cost
Subtract the current annual employer contribution from the proposed annual employer contribution. Include all enrolled tiers. Do not multiply one average rate by total headcount if the actual enrollment file separates employee only, employee plus spouse, employee plus children, and family tiers.
Formula:
Proposed annual employer contribution minus current annual employer contribution equals added annual employer cost.
If the current employer contribution is $410,000 and the proposal is $463,300, the added cost is $53,300.
2. Added cost per enrolled person
Divide the increase by the number of people enrolled, not the total number employed.
Formula:
Added annual employer cost divided by enrolled people equals added cost per enrolled person.
With 82 enrolled people, the $53,300 increase equals $650 per enrolled person. Compare that figure with the $353 national planning estimate calculated from Milliman. The difference is not automatically unfair. It is a signal to inspect claims, demographics, plan design, and carrier pricing.
3. Construction labor hours consumed
Divide the added employer cost by your own loaded hourly labor cost. Use the Bureau of Labor Statistics figure only when your company does not yet have a reliable internal number.
Formula:
Added annual employer cost divided by loaded hourly labor cost equals labor hours consumed.
At the federal construction average of $51.23, a $53,300 increase equals about 1,040 hours. That is 26 worker weeks. Your actual payroll burden may produce a very different result, which is exactly why the conversion is useful.
4. Revenue required to fund the increase
An extra dollar of premium needs more than one dollar of sales when the company earns less than a 100 percent margin.
Formula:
Added annual employer cost divided by gross margin percentage equals required added revenue.
At a 20 percent gross margin, the $53,300 increase requires $266,500 in added revenue. At a 15 percent gross margin, it requires about $355,333. This calculation turns a benefits decision into a bid and backlog question.
Use the free Premium Renewal Stress Test to compare several scenarios with your own census and contribution assumptions: https://benefitra.com/premium-renewal-stress-test/
A renewal review needs a price bridge
The first meeting should produce a written bridge between the current plan and the proposed plan. One page is enough if the data is clear.
Ask for these items:
- Current annual premium by enrollment tier
- Proposed annual premium by enrollment tier
- Employer and employee contributions under both years
- Enrollment and demographic changes
- Paid claims and large claim detail allowed for the group's size
- Prescription drug spending and rebate treatment
- Inpatient, outpatient, professional, and emergency service use
- Administrative fees, commissions, taxes, and risk charges
- Network or formulary changes hidden inside a similar looking plan
- At least two viable alternatives shown on an equal contribution basis
The point is not to demand data the carrier legally cannot provide for a small group. The point is to identify what is known, what is pooled, and what is merely assumed. Blank spaces should be labeled as blank spaces.
Do not solve a price problem by creating an employee problem
Moving the full increase to employees can preserve the employer budget on paper. It can also make family coverage unaffordable, reduce participation, and weaken the benefit employees notice every payday.
Milliman's 2026 average person already pays $2,295 through premium contributions and $1,266 out of pocket. Combined, that is $3,561. At the Bureau of Labor Statistics construction wage of $35.54 per hour, the amount equals about 100 wage hours before taxes.
That is the second insight from the combined data. The average employee share of health care cost is equivalent to two and a half weeks of construction wages. A larger payroll deduction is not invisible to the crew.
Model employee contributions by tier. Check the dollar change per paycheck. A $40 weekly increase sounds smaller than $2,080 a year, but they are the same burden.
Check the funding structure before cutting coverage
Plan design changes alter who pays at the point of care. Funding changes alter how risk, claims, reserves, and carrier charges move through the plan. They are not interchangeable.
A fully insured plan transfers claim risk to the carrier for a fixed premium. A level funded plan usually combines a claims fund, administration, and stop loss protection into a fixed monthly payment. A self funded plan gives the employer more direct claim responsibility and usually more access to claim detail, with stop loss used to limit defined risks.
None is automatically right for every contractor. Group size, cash flow, claims history, risk tolerance, state rules, network needs, and data quality determine fit.
Employers considering a funding change should start early. Underwriting may need 12 to 24 months of credible claims history. Benefitra explains that preparation window here: https://benefitra.com/claims-history-lead-time-self-funded-transition/
For a plain comparison of level funding mechanics, see https://benefitra.com/employee-benefits/funding/level-funded/
Start with the costs that changed fastest
A general request to reduce claims is too loose to guide a decision. Use the Milliman categories to focus the review.
For outpatient facility cost, ask:
- Which services moved into hospital owned settings?
- Did imaging, infusion, or diagnostics generate facility charges?
- Are independent sites available in the network?
- Does the plan offer usable price and site information before care occurs?
For pharmacy cost, ask:
- What were gross drug costs and net costs after rebates?
- Who keeps rebates and when are they credited?
- Which drugs account for the largest spend?
- What clinical rules apply to specialty and GLP 1 medicines?
- Are employee assistance and prior authorization processes practical?
These questions do not assume that a treatment is unnecessary. They test whether the plan pays a rational net price and directs care without placing an impossible process in front of employees.
Timing creates or destroys renewal options
A contractor that starts review after the renewal arrives may have weeks to evaluate a decision that affects the entire year. Funding alternatives, data requests, employee communication, payroll changes, and plan documents all take time.
Begin the financial model about 150 days before the renewal date. Confirm the census and current contributions. Request claims and pharmacy information as soon as it is available. Set a date for the first written renewal bridge. Leave time for underwriting and a final employee communication check.
The schedule should include operational owners. Finance validates cost. Payroll tests deductions. Human resources checks enrollment and employee impact. Field leadership can flag whether a network change removes doctors or hospitals people actually use.
A rushed market quote may look cheaper because it changes something nobody noticed in the spreadsheet.
Use three scenarios, not one forecast
One renewal number creates false certainty. Build three cases.
The base case uses the carrier proposal with current enrollment and contributions. The pressure case adds a reasonable allowance for enrollment shifts, late changes, or a less favorable final rate. The action case reflects a specific alternative such as a network change, contribution adjustment, or funding move.
For each case, show:
- Annual employer cost
- Annual employee cost by tier
- Cost per enrolled person
- Labor compensation hours
- Worker weeks
- Revenue required at the company's gross margin
- Deductible and out of pocket exposure
- Network and prescription access changes
Keep every assumption visible. If a proposed saving depends on lower enrollment, say so. If it depends on a surplus refund, do not book the refund as guaranteed cash.
The decision test for a construction owner
A renewal is ready for approval when the owner can answer five questions in plain words.
- How much more will the company pay in dollars?
- How many labor hours and how much revenue does that increase represent?
- Why did cost change, using available claim and market evidence?
- What changes for employees at payroll, at the pharmacy, and at the doctor?
- Which realistic alternatives were tested on the same assumptions?
If the answer to the third question is only medical trend, the review is unfinished. Trend is a starting benchmark. It is not a price bridge for a particular group.
Use Benefitra's 12 point provider evaluation when comparing the service, reporting, contract, and financial terms behind competing proposals: https://benefitra.com/benefits-provider-evaluation-12-point-checklist/
The number to carry into the renewal meeting
For 2026 planning, $361 per enrolled person is a useful estimate of added employer cost when the Milliman average increase and employer share are held constant. For a 50 person enrolled construction group, that is about $18,038, 352 construction compensation hours, or 8.8 worker weeks.
Your actual renewal can differ sharply. Use the actual census, tier rates, employer contribution rules, and loaded labor cost before making a decision.
The important change is the unit of measure. Stop discussing the renewal only as a percentage. Put it next to payroll, crew time, gross margin, and bid revenue. That is where the cost lands.
Frequently asked questions
What is a normal health insurance renewal increase for 2026?
There is no single normal rate for every employer. Milliman estimates that health care cost for an average person in an employer sponsored plan rose 7.9 percent from 2025 to 2026. A carrier renewal may be higher or lower because it also reflects the group's demographics, claims credibility, plan design, network, pharmacy terms, and the carrier's pricing. Compare dollars per enrolled person, not only the percentage.
How much does a 10 percent health insurance increase cost a construction company?
Multiply the current annual employer contribution by 10 percent. A company paying $400,000 would add $40,000 if enrollment and contributions stay unchanged. At the March 2026 construction compensation average of $51.23 per hour, $40,000 equals about 781 labor compensation hours, or 19.5 worker weeks. At a 20 percent gross margin, the company needs $200,000 in added revenue to fund it.
Should we pass the health plan increase to employees?
Model the dollar impact by enrollment tier before changing contributions. Milliman estimates that the average covered person already pays $3,561 through premium contributions and out of pocket costs in 2026. Compare any new payroll deduction with wages, affordability rules, participation risk, and the coverage employees receive. A contribution shift can solve the employer budget while creating a retention and access problem.
Why did our health plan go up when claims were good?
Your own claims may be only one part of the rate. Depending on group size and funding method, the carrier may pool experience and apply market trend, demographic changes, network pricing, pharmacy cost, administration, taxes, and risk charges. Ask the carrier or advisor for a written bridge that separates group experience from pooled and market factors. A favorable claims year does not guarantee a lower renewal.
When should a construction company start reviewing its health plan renewal?
Start about 150 days before the renewal date. Confirm the census and contributions first. Request available claims and pharmacy information, define the date for the first renewal analysis, and leave time for underwriting, payroll testing, plan documents, and employee communication. A funding change can require 12 to 24 months of claims history, so preparation may need to begin much earlier.
What data should we request before accepting the renewal?
Request current and proposed rates by tier, employer and employee contributions, enrollment changes, available claims detail, large claim information, prescription cost and rebate treatment, service category use, fees, commissions, taxes, network changes, and formulary changes. Ask which figures are group specific and which are pooled. For small groups, some detail may be restricted, but the missing data should be identified rather than replaced with assumptions.
References
- Milliman. 2026 Milliman Medical Index. May 2026. https://www.milliman.com/en/insight/2026-milliman-medical-index
- United States Bureau of Labor Statistics. Employer Costs for Employee Compensation, March 2026. https://www.bls.gov/news.release/pdf/ecec.pdf
- Centers for Medicare and Medicaid Services. Prescription Drug Data Collection. https://www.cms.gov/marketplace/about/oversight/other-insurance-protections/prescription-drug-data-collection-rxdc
- Centers for Medicare and Medicaid Services. Transparency in Coverage Technical Clarification. https://www.cms.gov/healthplan-price-transparency/resources/technical-clarification
- United States Department of Labor. Reporting and Disclosure Guide for Employee Benefit Plans. https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/reporting-and-disclosure-guide-for-employee-benefit-plans
This analysis is provided for educational purposes and does not constitute financial, legal, tax, or insurance advice. Actual plan cost and legal obligations depend on the employer, plan, funding arrangement, contract, and jurisdiction. Consult qualified advisors for guidance about a specific plan.
About the Author
Sam Newland, CFP®, is the founder and president of Benefitra and Business Insurance Health. With more than 13 years in employee benefits, Sam helps construction, roofing, and trade employers build benefits programs that support skilled worker retention while controlling cost. Learn more at https://benefitra.com/about-us/ or contact Benefitra at https://benefitra.com/contact/