The health insurance landscape in Washington State is undergoing significant changes, with major implications for employers, employees, and individuals purchasing coverage through the individual market. As we look ahead to 2026, rising premiums, regulatory shifts, and evolving market dynamics are shaping the future of group health insurance. This blog post dives into the current trends in Washington’s health insurance market and offers predictions for what employers can expect in 2026, focusing on the critical topic of cost management—a top concern for businesses providing employee benefits. Current Trends in Washington’s Health Insurance Market:

Significant Premium Increases

The Washington State Office of the Insurance Commissioner has reported that 14 health insurers have requested an average rate increase of 21.2% for the 2026 individual health insurance market, affecting over 305,000 residents. While this primarily impacts the individual market, trends in the individual market often signal future rate hikes for group plans, as both markets face similar cost pressures. These proposed increases, ranging from 9.6% to 37.3%, are the largest since 2018 and are driven by rising healthcare costs, including medical services, prescription drugs, and labor expenses.

Expiration of Enhanced Premium Tax Credits

A significant driver of the proposed rate hikes is the potential expiration of Enhanced Advance Premium Tax Credits, set to end on December 31, 2025, unless Congress renews them. These credits, introduced under the American Rescue Plan Act and extended by the Inflation Reduction Act, help individuals earning above 400% of the Federal Poverty Level afford coverage. If these subsidies lapse, up to 80,000 Washingtonians could lose coverage, and out-of-pocket premiums could rise by over 75%, potentially destabilizing the market. Insurers have factored this uncertainty into their rate filings, with a potential 6.4% reduction in proposed increases if the credits are extended.

Rising Healthcare Costs and Utilization

Insurers cite escalating healthcare costs as a primary factor driving premium hikes. Key contributors include:  Increased Utilization: More people are seeking care, including emergency room visits and mental health treatments, increasing claims costs. 

Prescription Drug Costs: The growing demand for high-cost drugs, such as GLP-1 medications (e.g., Ozempic and Wegovy) for diabetes and weight loss, is significantly impacting premiums. For example, Kaiser Foundation Health Plan of Washington noted a 7% increase in prescription drug utilization for 2026.  

Labor and Inflation Pressures: Workforce shortages and inflation are pushing providers to demand higher reimbursement rates, which insurers pass on to policyholders.  

Market Dynamics and New Entrants

The Washington health insurance market is seeing some new activity, with Wellpoint Washington, Inc. planning to enter the individual market in Grays Harbor, King, and Spokane counties. This could increase competition, but the immediate impact may be limited given the scale of proposed rate hikes. Additionally, provider consolidation, such as hospital mergers, is reducing competition and driving up service costs, further contributing to premium increases.
 

Innovative Cost-Containment Strategies

To combat rising costs, some employers are exploring innovative solutions like Business Health Trust (BHT), which offers access to Nice Healthcare. This service provides $0 virtual and in-home visits, $0 generic medications, and comprehensive primary care, helping employers manage costs while maintaining robust benefits. Additionally, the state is implementing regulatory measures, such as a uniform cost-sharing reduction silver load adjustment, to mitigate the impact of subsidy expiration and stabilize the market.
 

Predictions for 2026: What Employers Can Expect

Group Health Insurance Premiums Will Likely Rise. The 21.2% rate increase proposed for the individual market is a strong indicator of broader cost pressures that will likely spill over into group health insurance plans. Historical trends show that individual market rate hikes often precede group plan increases by a year. Employers should prepare for premium increases in the range of 10-20% for 2026 group plans, driven by the same factors affecting the individual market, including rising medical costs and utilization.

Cost-Shifting to Employees. As health benefit costs are projected to rise by 6% in 2025 and potentially faster in 2026, many employers may shift a larger share of costs to employees through higher deductibles, copays, or out-of-pocket maximums. A Mercer survey indicated that 51% of large employers are likely to implement such changes in 2026, a trend that could extend to smaller businesses in Washington. This shift could impact employee satisfaction and retention, making it critical for employers to balance cost management with competitive benefits.

Increased Focus on Cost-Effective Benefits. Employers will likely prioritize cost-effective health plans that maintain value for employees. Options like high-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs) or innovative primary care solutions like Nice Healthcare will gain traction. Additionally, employers may invest in wellness programs to reduce healthcare utilization and long-term costs, emphasizing preventive care and mental health support.

Uncertainty Around Federal Policy. The potential expiration of Enhanced Premium Tax Credits introduces significant uncertainty. If Congress does not renew these subsidies, the individual market could see healthier enrollees drop coverage, leaving insurers with sicker, costlier pools, which could indirectly affect group plan rates. Furthermore, federal policy changes, such as the end of automatic ACA enrollment renewals and special sign-up periods for low-income individuals, may reduce marketplace enrollment, potentially impacting employer-sponsored coverage dynamics.

Technology and Telehealth Expansion. The emphasis on technology-driven solutions, such as telehealth and virtual care, will continue to grow as employers seek to manage costs while improving access to care. These solutions can reduce the need for expensive in-person visits and enhance employee convenience, making them a key component of 2026 health plans.

What Employers Can Do Now

To prepare for 2026, employers should take proactive steps to manage rising costs and maintain competitive benefits:  

Review Plan Options Early: Work with a benefits advisor like PNW Insurance Solutions to explore cost-effective group health plans, including those offered through Business Health Trust or similar programs.  

Communicate with Employees: Transparently explain benefit changes and their value to maintain trust and engagement. Highlight wellness programs or telehealth options to underscore your commitment to employee health.  

Advocate for Policy Changes: Contact state legislators to push for reforms that address unsustainable premium increases and support the renewal of Enhanced Premium Tax Credits.  

Invest in Preventive Care: Encourage employee participation in wellness initiatives to reduce long-term healthcare costs and improve workforce health.

The Washington State health insurance market is at a critical juncture, with proposed 21.2% rate increases for 2026 signaling significant cost pressures for both individuals and employers. As group health insurance premiums are likely to rise, businesses must navigate these challenges strategically to attract and retain talent while managing costs. By exploring innovative solutions, advocating for policy changes, and prioritizing employee well-being, employers can position themselves for success in a rapidly evolving market.For the latest updates on 2026 health insurance rates or to explore group plan options, contact a licensed insurance broker or visit the Washington State Office of the Insurance Commissioner’s website. Stay informed and proactive to ensure your business and employees thrive in 2026.  Disclaimer: Rate filings are preliminary and subject to review. Final rates will be determined in late summer 2025. For specific plan details or pricing, consult with one of our benefits advisors.  PNW Insurance Solutions 425-314-0988.