How Rising Health Care Costs Could Put a Dent in Paychecks

Estimated reading time: 3 minutes

Health Care Outpacing Pay

Wage growth in the U.S. has picked up the pace in the years since the pandemic (even if it may not have felt like that for all Americans between high prices and elevated interest rates). 

But even though inflation has come off of its highs, there’s a new challenge on the horizon for people’s paychecks: climbing health care costs.

Monitor Your Benefits

The cost of health care benefits is expected to increase 5.8% in 2025, according to preliminary data from consulting firm Mercer cited by the Wall Street Journal. Meanwhile, employers are generally planning on smaller merit-based pay bumps next year – 3.3% on average, per a separate study from the firm. 

Of course, these are percentages, so it’s hard to say how each and every paycheck may be affected exactly. But it’s nonetheless notable. The combination of higher health care costs and lower wage growth will eat into people’s take-home pay.
That means it’s especially important to monitor your benefits during this year’s open enrollment period. Ask for specifics regarding your company’s health care plan and lean on HR to fully understand how different plans can affect your finances.

Shifting Benefits Environment

Benefits are an important consideration for job hunters as well. Workplace perks help prospective employees evaluate the financial benefits of switching jobs, for example. If health care costs continue to rise, it could compel companies to rethink how they structure benefits and perks, in order to attract and retain top talent.

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