How to explain rising benefits costs to your CEO (and not get blamed)

If you work in HR, you feel squarely in the squeeze. Your CEO wants benefits costs down—now. Your employees are feeling inflation in every part of their lives, and expect coverage that actually helps. Finance wants a plan. Managers want certainty. And you’re expected to have answers that satisfy everyone.

You didn’t set medical prices or negotiate provider contracts, but you’re still the one tasked with explaining them. That’s frustrating—and fair to name. This guide is here to help you translate what’s happening to benefits costs and why, so you can lead the conversation instead of absorbing the blame.

We’ll start by answering the question that’s top-of-mind for executives: What forces are actually driving the spike in costs, and how can you frame them so leadership sees strategy rather than excuses? From there, you’ll get clear, data-backed talking points and a plug-and-play slide deck you can take straight to your next exec meeting.

The goal isn’t to defend a bill. It’s to show you understand the market, have a plan, and are ready to steer your company through it, confidently and transparently.

2026 reality check: What’s driving healthcare cost increases

According to PwC’s Behind the Numbers report, employer medical costs are projected to climb 8.5% from 2025 to 2026—the second 8.5% increase in a row after 2025 saw the steepest rise in costs since 2012.

Source: PwC analysis

But what cost drivers are actually responsible for that 8.5% jump? Let’s dive deeper to see what’s at play.

1. Drug spending (and shortages)

Drug spending is one of the most persistent cost drivers in healthcare.

Medical inflation has outpaced general inflation by over 35% over the last two decades, with some of the most significant cost increases occurring in the last five years. But PwC projects pharmacy costs will outpace overall medical costs by 2.5 points in 2026. 

The uptick is further amplified by drug supply disruptions that force plans and patients to either substitute higher-priced alternatives or face gaps in care, sometimes with little warning. The FDA’s drug shortages list showed around 100 active shortages throughout 2024 and 2025, stemming from manufacturing, quality, and supply issues that could recur or persist in coming years.

2. Increasing use of GLP-1 medications

Weight loss and diabetes GLP-1s have quickly become a budget line of their own. A 2025 pulse survey from the International Foundation of Employee Benefit Plans shows GLP-1 drugs represent 10.5% of total employer claims in 2025, up from 8.9% in 2024—a jump that’s driving many finance conversations and fueling employer interest in utilization management and outcomes-based coverage.

3. Cancer and gene therapies with hefty price tags

Breakthrough therapies can be life-changing—and budget-breaking. Individual gene therapies often carry list prices in the six or seven figures (some even reaching millions of dollars for a single dose). The total number of US patients receiving these treatments is expected to more than triple by 2032, and independent analysts estimate cumulative list price spend will top $35 billion over the next decade. Business leaders need to know that these costs are increasingly common, not outliers, even though a single claim can exceed stop-loss layers.

Other forces adding cost pressure

Beyond drug spending, GLP-1s, and gene therapies, these structural pressures are also pushing healthcare costs higher:

• Hospital mergers: Provider consolidation has increased service prices by up to 65% and reduced employer leverage in cost negotiations.

• Chronic conditions: 90% of US health spending now goes to people with chronic and mental health conditions—and prevalence keeps rising.

• Mental health demand: 79% of large employers ranked “improving access to mental health” as a top priority for 2025, reflecting high, sustained utilization.

• Regulatory instability: Policy shifts—like the potential expiration of enhanced ACA subsidies after 2025—can ripple through premiums and market dynamics.

Taken together, these forces compound into the large cost jumps we see year after year—increases driven less by any one plan decision and more by systemic pressures in drugs, delivery, and policy. That’s why the conversation with your company’s executive leadership should center on facts and the levers you’re already pulling—so they hear strategy, not excuses.

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HR caught in the middle: How to explain benefits costs and stay credible

Now comes the part that matters in the boardroom: connecting those market realities to business outcomes your executives track every day. As an HR leader, you’ll gain credibility by translating cost drivers into a plan that centers CEO priorities: protecting the budget, the growth plan, and the people who deliver it.

So, when you meet with executives, you need to explain how your benefits plan will:

1. Stabilize your budget. While the rise in healthcare costs has stayed somewhat predictable year-over-year, costs have still consistently gone up, which requires businesses to budget more for benefits every OE season, even if the rest of their line items stay consistent.

2. Manage growth. A 7-8% increase in medical costs can outstrip entire percentage points of topline growth for small or low-margin businesses.

3. Retain your top talent. Premiums are rising more than twice as fast as wages. Businesses that cut benefits to chase savings risk inviting churn, especially if their competitors offer more attractive perks that tempt top performers.

Remember what your CEO listens for: predictability over promises, ROI over rhetoric, speed over complexity, and accountability over anecdotes. Next up, we’ll show you exactly how to frame each argument—word-for-word—to be a strategic partner and not a punching bag.

What to say to your CEO: 3 scripts for renewal season

Unless you guide the conversation, executives are likely to default to, “Where can we trim?” These scripts translate some of the most common benefits cost drivers into CEO-ready talking points paired with clear actions that show HR’s strategic impact.

How to align and measure with your CEO

Share this plan with your CEO so you’re aligned on what you’ll review, when you’ll review it, and what will trigger action:

1. Set a clear check-in cadence. Propose 30-60-90 day updates. At each milestone, bring a best/middle/worst-case forecast and walk through three things:

   • 1. What the company actually spent on benefits this month versus the budget

   • 2. How much of that spend came from prescription drugs, especially GLP-1s

   • 3. Whether employees’ out-of-pocket costs are creeping up in a way that could impact retention

2. Report like finance. Track metrics that tie to business outcomes, like:

   • Monthly employer benefits spend vs. plan

   • Pharmacy share of total spend

   • Spending on specialty drugs like GLP-1s

   • Count of very high-cost claims

   • Plan participation by employee group

   • Rate of ineligible enrollments caught and fixed

3. Agree on triggers that will make you pull levers. For example, “If GLP-1 spending rises above 12% of total claims for two months, we’ll tighten coverage with prior authorization or move to an outcomes-based contract,” or “If total costs run more than one percentage point above plan for a quarter, we’ll review plan design and employer/employee contributions.”

4. Show where savings and time will go. When automation or processes save hours or dollars, say exactly how you’ll use them: “The 10 hours a month we’re getting back from automating eligibility checks will go to vendor negotiations and employee education on how to use lower-cost, higher-quality providers.” Closing the loop makes the value visible.

How to close the conversation

Choose your scripts, and then end on a forward-looking offer: “Approve these levers today, and I’ll be back 30 days after enrollment season ends for our first milestone meeting.”

That commitment reframes the discussion from a one-time cost defense to an ongoing performance review, which will impress any CEO looking for a revenue-generating, strategic HR org.

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Don’t own the bill, own the narrative

Healthcare inflation isn’t slowing down, but you don’t have to brace for sticker shock every benefits renewal season. When you ground the conversation in hard data, translate macro forces into executive priorities, and show the cost-saving levers already in motion, you reposition HR from cost center to strategic guardrail.

These scripts will help guide your next renewal discussion with confidence, keeping the dialogue focused on solutions rather than blame. And if you’re ready to reclaim the time you spend wrangling eligibility files and carrier feeds so you can double down on strategy instead of busywork, see how an all-in-one HR platform can help.