Employer-Sponsored Health Insurance Costs Are Rising: How to Compare Your Options
Employer-sponsored health insurance costs are climbing: family coverage now averages more than $28,000 a year, including the employer’s share. Workers are paying more, too, through higher premium contributions and out-of-pocket expenses.
Nearly 157 million people under age 65 get health coverage through an employer, according to a KFF survey. Rising costs affect workers choosing benefits during open enrollment and employers deciding which plans they can afford to offer.
The survey points to several pressures: higher use of healthcare services, rising prices, and added costs for workers at small firms. Knowing how plan premiums, deductibles, provider networks, and drug coverage work can help you make a more informed choice.
Employer-sponsored health insurance costs are rising for workers and employers
The KFF survey shows that the total cost of coverage is increasing, but the full premium isn’t the same as the amount a worker pays. Employers cover part of the premium, while employees pay their share through payroll deductions.
Family coverage now costs more than $28,000 a year
The average total premium for employer-sponsored family coverage is just over $28,000 a year. That figure includes both employer and worker contributions, and is about $1,300 higher than the prior year. The survey describes the increase in premiums as roughly 5%.
That total can be easy to mistake for an employee’s bill. Workers usually pay only part of the premium, but they may also face deductibles and other out-of-pocket expenses when they get care.
Employees are paying more for family and single coverage
Workers contribute nearly $7,500 a year toward family coverage on average, a 9% increase from 2025. That’s the employee share, not the full cost of the plan.
The average total premium for single-person employer coverage is $9,800. The survey also reports that out-of-pocket costs for single coverage have risen 34% over the past decade, adding to workers’ financial strain.
Higher healthcare use and prices are driving premium increases
Matthew Ray, an associate director at KFF, said rising premiums reflect several factors. He pointed to greater use of healthcare services and higher prices over time as key drivers.
More use of healthcare services adds pressure to premiums
When people use more healthcare services, insurers and employers face higher costs for care. Those costs can feed into premiums when plans set prices for future coverage.
This doesn’t mean every worker or company uses more care than before. It means higher use across a group of insured people can affect the overall cost of a plan.
Higher prices add to the cost of care over time
Ray described premium increases as “largely driven by more utilization and higher prices over time.” Even when the amount of care stays the same, higher prices for services can raise the total bill.
Employers have limited control over many prices charged for care. When healthcare costs rise, companies may respond by changing plan design or shifting more of the premium to employees.
Small-company workers can face higher health insurance costs
Workers at smaller companies often pay more for coverage than workers at larger firms. The KFF survey found that employees at firms with fewer than 200 workers face higher contributions and deductibles.
Small-firm employees contribute more toward family coverage
Workers at small firms contribute more than $9,700 a year for family coverage, on average. That’s roughly $2,000 more than the average worker contribution across plans.
Small firms can also find it more expensive to offer benefits. Ray said these costs can make it harder for smaller employers to decide whether they can provide health coverage.
Deductibles can reach $3,000 or more
Workers at small firms often face deductibles of $3,000 or higher, according to Ray. A deductible is the amount you pay for many covered services before your plan begins paying its share.
A lower monthly premium doesn’t always mean a plan will cost less overall. If the deductible is high, you could pay more when you need care, so compare the premium with the deductible and other out-of-pocket limits.
Employers are changing plans to manage rising costs
Employers have only a few ways to respond to higher healthcare spending. Some shift more costs to workers, while others change which providers or services their plans cover.
Some companies are shifting premium costs to employees
Eighteen percent of companies surveyed said they shifted more of their overall premium costs to workers. That can raise an employee’s payroll deductions even if the plan remains available.
A change in the employee contribution is only one part of the cost. Check whether the plan’s deductible, provider network, or covered services also changed during open enrollment.
Narrower networks and reduced benefits can change coverage
Ray said some employers are removing high-cost providers from their networks. Others are changing who qualifies for coverage or reducing benefits.
Check whether your doctors, clinics, and hospitals remain in network before choosing a plan. If a provider is out of network, your share of the bill may be higher, depending on the plan’s rules.
Employer-sponsored health insurance costs are rising across markets
The increases in the KFF survey concern employer coverage, but Ray said costs are also rising in the small-group market and ACA marketplaces. Each market has its own pricing factors, so the employer survey doesn’t explain every change in marketplace premiums.
Premium increases affect more than employer plans
Healthcare costs are putting pressure on multiple types of insurance. Still, costs may change by different amounts across employer plans, small-group coverage, and marketplace plans.
If you buy your own coverage, review the plan options and financial help available to you. Employer-sponsored coverage figures don’t show what any one marketplace enrollee will pay.
ACA marketplace premiums may rise in 2027
Ray said ACA marketplace plans were also expected to see premium increases in 2027. The interview also raised reduced tax subsidies as relevant context for marketplace enrollees, since changes to subsidies can affect what some people pay.
The KFF employer survey does not measure the effect of those subsidies. Marketplace shoppers should check their own plan costs and any available financial assistance during enrollment.
Compare plan details to limit unexpected costs
Workers may have few plans to choose from, and they can’t control all healthcare prices. But reviewing the details can help you understand what you may pay before you enroll or receive care.
Compare total costs, not premiums alone
Look at each plan’s premium, deductible, and out-of-pocket maximum. The deductible affects when the plan starts paying for many services, while the out-of-pocket maximum sets a limit on what you pay for covered care in a plan year.
A plan with a lower premium may have a higher deductible. Consider how often you expect to use care and whether you could manage the costs before the plan pays more.
Check provider networks and prescription coverage
Confirm that your doctors and other preferred providers are in network. Plans may cover out-of-network care differently, which can increase your costs.
Review the drug list and coverage rules for any prescriptions you take. Drug coverage can be complex, and the amount you pay may depend on the medication and plan terms.
Understand incentives before choosing care
Some plans offer incentives for using certain providers and may charge more for others. Check which providers qualify and how the rules affect your costs.
Read the plan details before you choose a plan or book care. Knowing when deductibles and out-of-pocket maximums apply can help you avoid surprises.
Conclusion: Use open enrollment to check your costs
Family premiums now average just over $28,000 a year, while workers contribute nearly $7,500 toward family coverage. Average single-person employer coverage costs $9,800 in total, and workers at small firms may face higher contributions and deductibles.
Before enrolling, compare premiums with deductibles and out-of-pocket limits. Check provider networks and prescription coverage, too. Your choices may be limited, but a careful review can help you pick the plan that best fits your needs and budget.