As we move into 2026, employer-sponsored healthcare plans once again sit at the center of long-term uncertainty, shaped by an evolving political and economic landscape. For more than three decades, employers have carefully balanced the need to provide value to employees with the reality of rising healthcare costs that threaten profit margins.

Rising Costs, Stagnant Wages, and Shrinking Coverage

Employers continue to bear the brunt of healthcare inflation, which now grows at a rate of 6–7% annually. The average annual cost of family coverage surpassed $24,000 in 2024, with projections hitting $26,500 in 2025 — and that’s before factoring in deductibles and cost-sharing.

Meanwhile, employees are squeezed: wage growth lags, contributions rise, and coverage becomes less comprehensive. High-deductible health plans (HDHPs) have become the norm for nearly 55% of covered workers, shifting significant financial risk to individuals. The net effect: families are paying more for less protection, with many delaying or forgoing care altogether.

Employers Search for Alternatives

Confronted with this unsustainable trajectory, employers are experimenting with alternatives beyond the traditional group health plan:

• Voluntary benefits such as accident, critical illness, and hospital indemnity insurance
• Consumer-directed accounts (FSA, HRA, and especially HSAs)
• Defined contributions for healthcare, giving employees stipends to purchase coverage on public or private exchanges
• Wellness & navigation tools that guide smarter healthcare choices
  
  

While these options offer short-term relief and flexibility, they are not a complete solution to the systemic cost problem.

Lessons from Retirement: A Look Back at 1978 and the Parallels to Healthcare Today

The healthcare affordability crisis today mirrors the retirement crisis of the 1970s. Back then, most employees relied on defined benefit pensions that guaranteed lifetime income but became financially unsustainable for many companies.

In response, Congress passed the Employee Retirement Income Security Act (ERISA) of 1974, followed by the Revenue Act of 1978, which introduced Section 401(k). By 1980, employees could defer part of their salaries into tax-advantaged, portable accounts, with employers often matching contributions.

That shift transformed the retirement landscape — from employer-guaranteed pensions to employee-managed, defined contribution plans.

Fast forward to today: the situation looks strikingly similar. Employers are increasingly questioning whether it’s sustainable to sponsor comprehensive health plans in their current form. Instead, they’re exploring ways to:

• Provide a defined dollar contribution for employees
• Let employees shop for healthcare on federal, state, or private exchanges
• Rely on HSAs as the healthcare equivalent of a 401(k) — portable, tax-advantaged, and employee-directed
  
  

  This raises the critical question: Are we on the verge of the 401(k)-ization of healthcare?

A Possible Future: The Healthcare "Wallet" 

Imagine this scenario: “Dear Employee: enclosed is a check for $27,000 with access to a high quality Federal, a State, and or a Private Benefits Exchange…Shop for the benefits that you believe are best for your family.”

In this model, employers provide funding, but the responsibility — and the risk lies with employees. However, AI-driven decision support will help employees make choices, much like investment platforms do for 401(k)s. This defined-contribution approach could be bundled into a unified benefits wallet, where employees allocate dollars not just to healthcare but also to HSAs, 401(k)s, or even student loan repayment — fully customizing their total rewards.

The Role of AI in This Transformation

As employees shoulder more responsibility, AI is becoming the essential navigator in this new model:

• Plan selection: AI tools recommend the best-fit coverage based on health history and projected needs.
• Cost transparency: Algorithms predict out-of-pocket costs and suggest lower-cost, high-quality care options.
• Benefits wallets: AI will guide employees in allocating employer contributions across health, retirement, and lifestyle benefits 
  
  

Without AI-driven decision support, the 401(k)-ized healthcare model risks overwhelming employees with complexity. With it, the model becomes more manageable, personalized, and equitable.

Opportunities and Risks

• Flexibility and personalization for employees
• Cost predictability for employers
• Portability of benefits across jobs
• Alignment with broader financial wellness programs
  
  

• Greater financial risk on employees
• Choice overload without adequate guidance
• Equity concerns, as lower-wage workers struggle to maximize benefits
• Risk of underinsurance and worse health outcomes

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Just as the late 1970s ushered in a new era for retirement, the mid-2020s may mark a similar turning point in healthcare benefits. Employers, employees, and policymakers alike must grapple with whether the 401(k)-ization of healthcare is a bold solution or a risky gamble.

What is clear: While many may see this global shift requiring a new blueprint for managing, communicating and delivering global employee benefit programs, we simply see this trend as an acceleration towards a new tier of employer-sponsored voluntary benefits that will include healthcare.