2026 Contracting Agency Minimum Employer Contribution Calculation
May 16, 2025
Circular Letter: 600-023-25
Topic: Health Benefits
To: Contracting Agency Health Benefits Officers and Assistant Health Benefits Officers
Purpose
This Circular Letter informs contracting public agencies and schools of the new minimum employer health contribution for calendar year 2026.
Background
The Minimum Employer Contribution amount is prescribed by Government Code section 22892 of the Public Employees’ Medical and Hospital Care Act (PEMHCA)1. This section provides that “the employer contribution shall be adjusted annually by the board to reflect any changes in the medical care component of the Consumer Price Index-Urban (CPI-U) and shall be rounded to the nearest dollar.”
Inflation Rate Changes
In January 2025, the U.S. Bureau of Labor Statistics determined the annual percentage change in the medical care component of the CPI-U for 2024 was 2.7%.
The table below provides an inflation comparison of medical care rates.
| Medical Care Inflation | ||
|---|---|---|
| Year | Index | Percent |
| 2020 | 518.876 | 4.1 |
| 2021 | 525.276 | 1.2 |
| 2022 | 546.554 | 4.1 |
| 2023 | 549.084 | 0.5 |
| 2024 | 563.841 | 2.7 |
Calculation of the Minimum Employer Contribution
Using the 2.7% increase in the medical care component of the CPI-U, the minimum employer contribution for Calendar Year 2026 is $162; see calculation below.
- $158 × 2.7% = $4.26
- $158 + $4.26 = $162.25, rounded to $162.00
Minimum Employer Contribution
The table below displays the annual amounts of the Minimum Employer Contribution for members by calendar year.
| Minimum Employer Contribution by Calendar Year | |
|---|---|
| Year | Employer Contribution |
| 2022 | $149 |
| 2023 | $151 |
| 2024 | $157 |
| 2025 | $158 |
| 2026 | $162 |
Contribution Change Process
Contracting agencies that have designated the PEMHCA Minimum as their monthly employer health contribution will have their employer billing automatically updated to reflect the new amount effective January 1, 2026.
Contracting agencies do not need to act unless they wish to make a change to their current contribution method. To do so, they must submit a change resolution. Change resolutions are effective the first day of the second month following receipt by the California Public Employees’ Retirement System (CalPERS).
Questions
If you have questions or to request the necessary change resolution template, call our CalPERS Customer Contact Center at 888 CalPERS (or 888-225-7377888-225-7377).
Yesenia Croft, Chief
Health Account Management Division
Footnotes
- California Government Code § 20000, et seq. (1)