Healthcare costs are on the rise, and careful planning during open enrollment periods can help save significant amounts of money. Whether you're insured through your employer, Medicare, or the Affordable Care Act (ACA), understanding your options and making strategic adjustments can counteract these price hikes. Here's how you can prepare for the expected increases.

Rising healthcare costs in 2026

Healthcare prices are poised for major increases, influencing decisions for millions. If you receive insurance through the ACA, note that subsidies are under scrutiny, with premium increases estimated at a staggering 114%. Congressional debates on this issue remain inconclusive, so enrollees need to brace for potential cost increases. Employer-provided insurance, covering 165 million Americans, is also seeing its largest average premium increase in 15 years at 6.5%.

For those on Medicare, the maximum out-of-pocket prescription drug costs will rise to $2,100. On the bright side, Medicare has negotiated lower prices for certain high-cost drugs in recent years, offering some relief. Benefits calculators and online resources can help Medicare participants understand the impact of these changes.

Practical tips during open enrollment

Use your open enrollment window wisely to ensure you're making the best decisions for the coming year. Reviewing your past year's healthcare costs helps determine what plan fits your family's needs. Here are actionable steps:

• Maximize end-of-year benefits: If you've hit your deductible for the year, schedule pending procedures or medical visits before December 31. This period allows you to make the most of “cheap” spending, as further healthcare costs typically become more affordable once the deductible is met.
• Evaluate available plans carefully: Don't let that open enrollment packet gather dust. Identify changes in premiums, deductibles, and benefits. Compare plans side by side to select one that aligns with your family's medical needs and financial goals.
• Adjust pre-tax contributions: Pre-tax accounts such as Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) can make a big difference. Review and adjust these contributions for next year based on anticipated healthcare expenses.

Leveraging HSAs and FSAs

Health Savings Accounts (HSAs)

HSAs are a valuable tool for those enrolled in high-deductible healthcare plans. These accounts allow you to set aside pre-tax dollars for medical expenses. Funds in HSAs grow tax-free and roll over year to year, making them an excellent long-term investment in health-related expenses. When you switch employers, the account remains with you. HSAs can be used to pay for various costs such as caregivers, braces, prescriptions, and even certain over-the-counter items.

For maximum benefit, contribute to an HSA early and let the investment grow. The ability to use these funds in retirement makes an HSA a strategic tool for managing future medical costs.

Flexible Spending Accounts (FSAs)

FSAs differ from HSAs in their “use-it-or-lose-it” policy. While some employers allow a small rollover into the next year, most unused funds are forfeited. For this reason, it’s important to spend your FSA dollars before the end of the calendar year. Eligible expenses include:

• Dental work such as braces
• Eye exams and corrective lenses
• Dermatology visits
• Flu season essentials like humidifiers and cold aids
• Health monitoring devices like blood pressure cuffs and wearable tools

What’s the difference?

Feature	HSA	FSA
Eligibility	High-deductible plan required	Available to any plan holder
Fund rollover	Unlimited	Limited (varies by employer)
Ownership	Stays with you	Employer-managed
Tax advantages	Triple tax benefit	Pre-tax savings on expenses
Contribution flexibility	Can adjust anytime	Fixed for the year

How to optimize pre-tax accounts

Start by forecasting next year’s medical expenses—routine care, ongoing prescriptions, and one-off procedures—to estimate how much to set aside.

If using an FSA, check your current balance and spend remaining funds on eligible items before December 31. From braces and chiropractor visits to everyday items like sunscreen and humidifiers, pre-tax dollars can cover a wide range of health-related expenses. Keep in mind that some purchases, such as massages, may require a prescription from your doctor to qualify.

If an HSA is available through your employer, now is the time to enroll or increase your contributions. Even small contributions can add up over time, as the funds roll over indefinitely and can eventually be used as a nest egg for medical expenses in retirement.

Key takeaways

• Understand your plan: Rising healthcare costs highlight the importance of selecting the right insurance during open enrollment. Review all plans and calculate which offers the best value for your household.
• Utilize all options: Maximize HSAs and FSAs to lower taxable income and save on current or future medical costs. For FSAs, prioritize spending leftover funds before year-end.
• Be proactive: Book any needed appointments and invest in eligible services or products if you’ve met your annual deductible.

Rising premiums call for smarter choices. Choosing the right plan, leveraging pre-tax accounts, and planning for upcoming expenses can help offset the burden of healthcare inflation.

FAQ

What’s the expected increase in ACA premiums for 2026?

ACA premiums are expected to rise by 114%. This significant increase will vary depending on congressional actions and subsidy adjustments.

How much will employer-provided premiums rise?

Employer-provided healthcare premiums are expected to increase by 6.5%, the largest hike in 15 years.

What is the benefit of an HSA?

HSAs allow you to save pre-tax dollars that grow tax-free. The funds roll over indefinitely, providing a long-term option for managing healthcare costs.

Do FSA funds roll over?

FSA funds typically expire at the end of the year, but some plans allow small rollovers into the next year. Check with your employer to clarify your terms.

What expenses qualify under an FSA?

FSAs can be used for braces, dermatology visits, eye care, flu aids, humidifiers, and certain wearable health monitors. Check with your provider for eligible items.

Conclusion

Taking time to evaluate your healthcare options during open enrollment is more important than ever. From selecting the right insurance plan to maximizing savings through pre-tax accounts, preparing now can help you navigate rising costs effectively. By understanding and utilizing tools like HSAs and FSAs, you can mitigate financial pressure while securing better healthcare for yourself and your family.