The financial strain of family health insurance coverage has reached unprecedented levels for most American workers, averaging $27,000 this year, and projections offer little hope for improvement in 2026. This alarming trend was highlighted in a recent survey released by KFF, a leading health research organization.
While employers typically cover about three-quarters of these costs, employees are shouldering an increasing portion of the burden through higher premiums and deductibles. Workers contributed an average of $6,850 annually—nearly $600 per month—towards family coverage. Many also face significant deductibles, potentially leading to thousands of dollars in out-of-pocket expenses for serious illnesses or accidents.
A staggering 180 million Americans under the age of 65 rely on their employers for health insurance. The remaining population depends on government initiatives like Medicare and Medicaid, or purchases plans through the Affordable Care Act.
Historically, employer-sponsored healthcare costs generally aligned with overall inflation. However, this year witnessed a sharp increase, a trend anticipated to continue into the next year.
“The outlook for affordability is not improving; in fact, it appears increasingly grim,” stated Lisa Hunter, senior director of federal policy and advocacy for United States of Care, a nonpartisan advocacy group based in Washington, D.C.
Hunter emphasized that while companies can sometimes offset these rising costs by passing them on to workers, employees lack that flexibility. “They are left to bear the full financial impact,” she noted.
Americans are already grappling with substantial out-of-pocket costs for medical appointments and prescriptions. A Commonwealth Fund analysis revealed that in 2023, combined premiums and deductibles for family coverage consumed approximately 10 percent of the median household income.
“This leads to people accessing less care, accumulating more medical debt, and ultimately experiencing more health problems due to insufficient treatment,” explained Sara R. Collins, a senior scholar at the Commonwealth Fund and co-author of the report.
Even as Congress debates the future of Obamacare, the private insurance sector is experiencing similar pressures. Expensive new medications, rising hospital fees, and tariffs are all contributing to the surge in costs.
“A quiet alarm bell is now ringing,” remarked Drew Altman, CEO of KFF, in a column accompanying their survey. This survey, conducted among 1,862 public and private employers in early 2025, expressed concern about “a new wave of increasing deductibles and other forms of employee cost sharing.”
High drug prices emerged as a primary driver of these rising expenses. Nearly half of large employers, those with 5,000 or more employees, now cover GLP-1 drugs for weight loss, up from 28 percent last year. This higher-than-expected uptake of these costly medications significantly boosted overall drug expenditures. To manage costs, a growing number of companies are implementing eligibility criteria, such as requiring consultations with dietitians, therapists, or other healthcare professionals.
Paul B. Ginsburg, a professor of health policy at the University of Southern California, highlighted the particular challenge expensive drugs pose for employers. “Traditional cost-sharing mechanisms simply don’t work for these exceptionally high-priced medications,” he noted.
The survey also shed light on the difficulties faced by smaller companies with fewer than 200 employees. These businesses often confront steeper premiums, and their staff frequently pay considerably more for insurance compared to those at larger corporations, if coverage is even offered at all.
More than a quarter of small business employees contributed at least $12,000 annually towards family coverage premiums. Additionally, over half faced annual deductibles of $2,000 or more.
While the vast majority of large corporations provide health benefits, smaller employers are increasingly withdrawing coverage. In 2025, only 54 percent of small employers with 10 to 49 workers offered health plans.
Small employers are also exploring alternative forms of coverage. The survey found that 37 percent of businesses with fewer than 200 employees opted for level-funded plans. These plans tend to attract companies with healthier workforces and often don’t cover all the benefits mandated by traditional insurers.
Gary Claxton, a senior vice president at KFF, warned that these alternative plans could push up costs in the traditional market, potentially creating a “high risk pool” where only the sickest and most expensive employees remain covered.
For workers in small businesses, plans available through the Affordable Care Act are proving to be particularly appealing. An earlier KFF analysis revealed that roughly half of current ACA Marketplace enrollees are either small business owners, employees of small businesses without coverage, or self-employed individuals.
Furthermore, a third of small employers not offering coverage identified Medicaid, the state-federal program for low-income individuals, as a “very important” source of insurance for their workforce, with an additional fifth deeming it “somewhat important.”
“We often overlook how many people on Medicaid are actually employed,” Mr. Claxton pointed out. “For these employers, it essentially means they don’t have to provide coverage for those individuals.”