Auto dealerships across the country are feeling the squeeze. While inflation, inventory challenges and labor shortages dominate headlines, one cost quietly continues to climb: health insurance. For many dealerships, it’s one of the largest line items in their budget — and it’s rising faster than ever.
Why Health Insurance Costs Are Surging for Auto Dealerships
Employer health insurance costs are projected to rise by 9.5% in 2026, marking the steepest increase since 2010. Dealerships, like other midsized businesses, are struggling with how to absorb these costs without compromising employee benefits or profitability.
Several factors are driving this increase:
- Higher provider prices: Hospitals, doctors, and pharmaceutical companies have raised rates to offset wage increases and pandemic-related losses. Many hospitals are passing increased operating expenses on to commercial payers, while health systems report higher inpatient admissions and care severity — all contributing to rising claims costs.
- Increased utilization: Americans are using more healthcare services, from routine visits to specialty care — including a sharp rise in behavioral health claims, which jumped 45% in one year. This growing demand is driving up overall healthcare spending.
- Expensive new treatments: New weight-loss drugs and high-cost cancer therapies are just a few of the new treatments driving up claims costs.
Employees Are Also Bearing the Burden of Rising Health Insurance Costs
As costs rise, many employers are looking for ways to offset the impact. According to Mercer’s 2025 Survey on Health & Benefits Strategies report, nearly half of employers plan to shift rising health care costs to employees through higher deductibles, copays or coinsurance.
This creates a tough balancing act for auto dealers: trying to control costs while still offering competitive benefits that attract and retain talent. And with high turnover already, passing higher costs to employees can backfire — undermining morale and making retention even harder.
Why Auto Dealers Are Especially Vulnerable to Rising Health Insurance Costs
The 2025 NADA Dealership Workforce Study confirms what many dealers already know: turnover remains high, and benefits are critical to recruitment and retention. But traditional health plans often limit flexibility and cost control — making it harder for dealerships to offer competitive coverage in a tight labor market.
Traditional health plans leave dealerships at a disadvantage. They often face:
- Limited negotiating power with large insurance carriers
- Annual premium hikes with little explanation
- Higher deductibles and copays passed on to employees
- Difficulty budgeting for unpredictable healthcare costs
The Health Plan Strategy That’s Helping Auto Dealers Save Millions
Some dealerships are taking a different route — and seeing real savings.
Chapman Auto Group in Philadelphia switched from a traditional PPO to a self-funded plan with Imagine360 and saved 20% annually, reducing their healthcare spend from $3 million to $2.4 million. Huffines Auto Dealerships in Texas saved $31 million over 12 years by making the same move.
These dealerships didn’t just cut costs — they reinvested savings into better benefits, lower deductibles and employee well-being.
Ready to Take Control of Rising Health Insurance Costs?
Auto dealers and brokers are feeling the pressure of rising healthcare costs — but there’s a smarter way forward. With the right health plan strategy, you can take control, protect your bottom line, and build a stronger, more stable team.
Start with these steps:
- Explore self-funded health plan options for more control over plan design and spending — without the unpredictability of traditional health insurance.
- Consider smarter solutions that use reference-based pricing (RBP) to ensure fair, transparent payments.
- Reinvest savings into benefits that boost employee retention and morale.
Bottom line: Health insurance costs are rising, but your dealership doesn’t have to ride the wave. With help from Imagine360, you can take control — and turn your health plan into a competitive advantage. Let’s connect.
