Workers hit hard by rising employer health insurance costs

Costs are spiking for the millions of Americans who rely on workplace-sponsored health insurance, according to a survey released Thursday, with small businesses and their employees being hit especially hard. 

The average cost of a family plan increased by 5 percent, topping $28,000 this year, according to the annual Employer Health Benefits Survey from KFF. Employers cover a lot of that, but the share that comes from workers’ paychecks is increasing. 

Workers are paying $7,471 annually toward the premiums for employer-sponsored family health benefits this year on average, $621 more than in 2025 — a 9 percent increase. 

Overall, the average deductible for U.S. workers is approaching $2,000 before insurance kicks in, according to the survey. 

The increase hits particularly hard for employees at small firms with fewer than 200 workers. On average, those employees contributed $9,687 annually toward family coverage this year. That’s $2,847 more than workers in firms with at least 200 workers.  

In 2025, smaller business employees paid roughly $8,900, compared with about $6,200 for larger companies, the report said. 

Health cost worries have resonated throughout campaigns for the midterm elections, and Democrats have made those concerns a centerpiece of their messaging.  

A recent KFF poll found healthcare costs, alongside gas prices, outranked food, housing and utilities as the top economic concern for voters in the midterm elections. 

Employer-based healthcare is the dominant form of coverage in the country for people younger than 65 years. About 160 million Americans get health insurance through an employer.  

The reasons for the spike vary. Higher prices for hospitals and other care are a significant driver of spending by insurers and employers, as is increased utilization of expensive prescription drugs, like GLP-1s for weight loss.   

“We have been hearing a lot about Affordable Care Act and Medicaid cuts. Now add a 9% increase in what workers with employer coverage paid toward family premiums in 2026 to the reasons voters are so concerned about their health care costs,” KFF President and CEO Drew Altman said in a statement. 

Last year, job-based premiums for a family of four averaged about $27,000. But the cost pressures don’t stop at premiums.   

As provider prices rise, employer health plans and insurers have historically responded by shifting costs to workers and families through higher deductibles and other strategies that discourage care, like cutting coverage of GLP-1 drugs and aggressive prior authorization.  Companies are also increasingly restricting employees’ choices of doctors or hospitals. 

KFF’s annual health benefits survey of large and small employers includes roughly 1,900 employers with 10 or more workers.