November 4, 2025

Leadership Message: UC works to limit rising health care costs for employees

(SACRAMENTO)

Dear Colleagues,

I want to take a moment to talk with you about something that affects all of us, the rising cost of health care. I know these increases touch your lives and families in very real ways. Please know that this isn’t just a spreadsheet issue for us, it’s deeply personal. We care about your well-being, and we’re doing everything we can to keep high-quality coverage affordable and accessible for UC Davis Health employees.

With Open Enrollment underway, you’ll see that health premiums are increasing this year. While the University of California doesn't have control over these rates, we want to keep you informed and supported as you make your 2026 health care choices.

Above all, we understand how difficult it is to see these costs go up year after year, and that’s why I’d like to describe what steps the UC has taken to limit the impacts on you and your family.

First, some context, like employers across the country, the UC is facing an overall increase of 10.2% in medical premiums, which experts describe as the steepest jump at the UC in more than a decade. For CalPERS beneficiaries, rates have also seen an uptick. Across the University of California and here at UC Davis Health, rate increases will vary based on union contracts, pay bands, and other factors.

Larger UC contribution to health care

To minimize these impacts on employees, the UC is now investing an additional $260 million in medical benefits in 2026, which is a 9.5% increase and the largest boost in the past 15 years. This brings the UC’s total investment to $3 billion, covering, on average, 83% of medical premium costs while continuing to pay 100% of dental and vision premiums.

By absorbing hundreds of millions of dollars in expenses, the UC is keeping premium costs lower for employees in UC medical plans. Our contribution rates are based on pay band, meaning lower earners pay less for coverage and higher earners contribute more. This approach helps share costs more fairly and supports affordability for everyone.

New Health Savings+

To further restrain the cost changes, the UC is introducing a new and improved HealthSavings+ program. This will replace the previous UC Health Savings Plan and CORE, and it’s designed to offer you more benefits and flexibility. A few key points about this plan:

HealthSavings+, high-deductible PPO, includes a Health Savings Account that lets you set aside money for health expenses while lowering your taxable income.
The HSA is a valuable way to save for qualified medical expenses, and the account stays with you even if you leave UC.
To help you get started, UC is increasing the annual HSA contribution from $500 to $750 for individuals and from $1,000 to $1,500 for families.

Not all plans will have an increase in employee premiums. Those in UC Care will see a decrease along with those currently in the UC Health Savings plans who are moving to the HealthSavings+ plan.

UC Blue & Gold, transparency

Back here at UC Davis Health, we’re proud to announce that we will continue to offer the lowest rates for UC Blue & Gold compared to any other UC campus. This plan offers low-cost access to UC Davis Health care within a custom network. The UC Blue & Gold plan will be available at the same cost as Kaiser Permanente’s rates, thereby ensuring our community has access to the best care at the most affordable rates.

To be transparent, the UC is facing one of the most serious financial challenges in its 157-year history. Along with rising health care costs, the UC faces an uncertain landscape with regard to the federal funding of research and clinical care.

Meanwhile, across the UC health campuses, labor costs are up 22% in the past year, supply costs have risen, and anticipated growth in uncompensated care is expected due to upcoming federal funding changes.

We know that escalating health care costs can affect employees and their families. Please know that our entire leadership team understands the current situation. Let me also emphasize that we strongly believe that our employees are our most precious resource and we place a tremendous emphasis on employee well-being.

It’s a commitment we take very seriously at UC Davis Health, and it’s why our institution is consistently acclaimed as a model and supportive workplace that empowers employees to bring their very best to our patients and communities.

Finally, I’d like to share some helpful resources with you as you navigate Open Enrollment:

Visit the Open Enrollment website (which launched Oct. 27) and us/facultystaffppo to learn about HealthSavings+ and how it compares to UC’s other medical plans.
Keep an eye out for your UC Davis Health Open Enrollment packet in the mail, as well as important emails from UCPath and your medical plan.
Check out HR’s Open Enrollment website for a schedule of webinars, events and information sessions.
Please email any Open Enrollment questions to benefits@ucdavis.edu.