This year, the average family health insurance plan for most American workers hit an astonishing $27,000, and there’s little hope for relief in the coming year. This troubling trend comes from a new survey by KFF, a leading health research organization.
While employers cover roughly three-quarters of these expenses, employees are feeling the pinch more than ever. Workers contributed an average of $6,850—nearly $600 each month—towards family coverage. On top of that, many face rising deductibles, which can lead to thousands of dollars in out-of-pocket expenses if they experience a serious illness or accident.
A significant portion of the American population under 65, approximately 180 million people, rely on employer-sponsored health insurance. The remaining individuals depend on government programs such as Medicare and Medicaid, or they purchase health plans through the Affordable Care Act.
Historically, employer coverage costs have risen in line with general inflation. However, this year saw a dramatic spike, a trend that experts anticipate will continue into 2026.
“The outlook for healthcare affordability is not improving; in fact, it appears to be growing bleaker,” commented Lisa Hunter, Senior Director of Federal Policy and Advocacy for United States of Care, a nonpartisan advocacy group based in Washington, D.C.
Hunter pointed out that while businesses might be able to transfer some of these increased costs to their employees, workers lack similar options. “They are ultimately left to bear the financial brunt,” she explained.
Americans are already grappling with substantial out-of-pocket costs for doctor visits and prescription medications. A 2023 analysis by the Commonwealth Fund indicated that the combined cost of premiums and deductibles for family coverage consumed about 10 percent of the median household income.
“This leads people to seek less care, accumulate more medical debt, and ultimately suffer from more health problems due to delayed or foregone treatment,” stated Sara R. Collins, a senior scholar at the Commonwealth Fund and co-author of the report.
Even as Congress remains deadlocked over the Affordable Care Act’s expenses, the private insurance sector is experiencing similar cost pressures. Exorbitant medication prices, escalating hospital fees, and new tariffs are all contributing to the rising costs.
“A silent alarm bell is ringing,” warned Drew Altman, CEO of KFF, in a column that accompanied their survey of 1,862 public and private employers conducted in the first half of 2025. He voiced concerns about the potential for “a new wave of increasing deductibles and other forms of employee cost sharing.”
High drug prices were identified as a major culprit. Nearly half of large employers with workforces exceeding 5,000 employees now cover GLP-1 drugs for weight loss, which are both popular and expensive. The survey indicated that 43 percent offered coverage this year, a notable increase from 28 percent last year.
Furthermore, more employees than anticipated utilized these medications, significantly driving up drug costs. To manage the duration of covered prescriptions, an increasing number of companies are now imposing eligibility requirements, such as mandatory consultations with a dietitian, therapist, or other healthcare professionals.
Rising drug prices pose a unique challenge for employers, as workers simply cannot afford to cover a substantial portion of these costs, noted Paul B. Ginsburg, a health policy professor at the University of Southern California. “Traditional cost-sharing mechanisms are largely ineffective for these extremely expensive drugs,” he explained.
The survey also highlighted the difficulties faced by companies with fewer than 200 employees. These smaller businesses contend with higher premiums, and their staff often pay considerably more for insurance than those at larger corporations—if coverage is offered at all.
Over a quarter of small business employees contributed at least $12,000 annually towards family coverage premiums. Additionally, more than half faced annual deductibles of $2,000 or more.
While most large companies provide health benefits, smaller employers are increasingly discontinuing coverage. In 2025, only 54 percent of small businesses with 10 to 49 workers offered health plans.
The survey also revealed that small employers are experimenting with alternative forms of coverage. For businesses with fewer than 200 employees, 37 percent participated in ‘level-funded’ plans. These plans typically appeal to companies with healthier employees and do not include all the benefits mandated by traditional insurers.
These alternative plans could potentially drive up costs in the traditional insurance market, leading to a “high-risk pool” where only the sickest and most expensive workers remain covered, according to Gary Claxton, a senior vice president at KFF.
Health plans available through the Affordable Care Act are especially appealing to workers at small businesses. An earlier KFF analysis showed that roughly half of current enrollees either work for small businesses that might not offer coverage or are self-employed.
Furthermore, a third of small employers not offering coverage viewed Medicaid, the joint state and federal program for low-income individuals, as a “very important” source of insurance for their workforce, while a fifth considered 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.”