The financial burden of family health insurance for most American employees has hit a startling average of $27,000 this year, with no signs of relief on the horizon for the coming year. This significant increase comes from a recent survey by KFF, a leading health research organization.
While companies generally cover about three-quarters of these escalating costs, employees are feeling the pinch directly through higher premiums and deductibles. On average, workers are now contributing a hefty $6,850 annually – almost $600 each month – towards family coverage. This often means facing thousands in out-of-pocket expenses when serious illness or accidents occur.
The majority of Americans under 65, a massive 180 million individuals, rely on their employers for health insurance. The remaining population turns to government-backed programs like Medicare and Medicaid, or opts for plans offered through the Affordable Care Act.
Historically, employer-sponsored coverage costs have mirrored general inflation. However, this year saw a dramatic surge, a trend that experts predict will continue into 2026.
“The picture of affordability isn’t improving; it’s looking increasingly grim,” remarked Lisa Hunter, Senior Director of Federal Policy and Advocacy at United States of Care, a nonpartisan advocacy group based in Washington, D.C. She highlighted that while businesses might offset some costs by passing them to employees, workers have no such recourse, effectively “holding the bag.”
Many Americans are already grappling with substantial out-of-pocket costs for medical appointments and prescriptions. A 2023 analysis by the Commonwealth Fund indicated that premiums and deductibles for family coverage consumed roughly 10% of the median household income.
“People are accessing less care, accumulating more medical debt, and consequently experiencing worse health outcomes,” noted Sara R. Collins, a senior scholar at the Commonwealth Fund and a co-author of the report.
As Congress navigates complex debates surrounding the Affordable Care Act’s expenses, the private insurance sector faces similar intense cost pressures, driven by costly medications, inflated hospital charges, and various tariffs.
“Now there is a quiet alarm bell ringing,” stated Drew Altman, KFF’s chief executive, in a column accompanying the survey. The survey, conducted among 1,862 public and private employers in early 2025, warns of “a new wave of increasing deductibles and other forms of employee cost sharing.”
A primary contributor to these rising costs is the high price of prescription drugs. Nearly half of large employers (those with 5,000 or more employees) now cover the popular, yet expensive, GLP-1 medications for weight loss – a jump from 28% last year to 43% this year.
Furthermore, a greater number of workers utilized these medications than anticipated, significantly boosting overall drug expenditures. In response, a growing trend among companies is to implement eligibility requirements such as consultations with a dietitian, therapist, or other health professionals, to manage prescription duration.
Paul B. Ginsburg, a health policy professor at the University of Southern California, emphasized the unique challenge posed by exorbitant drug prices. Employers find it particularly difficult because employees simply cannot absorb a large portion of these costs. “Traditional cost-sharing mechanisms are ineffective for these extremely expensive drugs,” he explained.
The survey also shed light on the struggles faced by smaller companies (under 200 employees). These businesses contend with higher premiums, and their staff often pay significantly more for insurance than those at larger corporations, assuming coverage is even provided.
Over a quarter of small business employees paid at least $12,000 annually towards family coverage premiums, and more than half faced annual deductibles of $2,000 or more.
While most large corporations consistently offer health benefits, smaller employers are increasingly discontinuing coverage. In 2025, only 54% of small businesses with 10 to 49 workers provided health insurance.
Additionally, small employers are exploring alternative, non-traditional coverage options. The survey found that 37% of businesses with fewer than 200 employees are adopting “level-funded plans.” These plans often appeal to companies with generally healthy workforces and don’t always include all the benefits mandated for traditional insurers.
Gary Claxton, a senior vice president at KFF, expressed concern that these alternative plans could inflate costs in the traditional market, potentially creating a “high-risk pool” where only the sickest and most expensive workers remain covered.
Conversely, plans available through the Affordable Care Act are proving especially appealing to small business employees. An earlier KFF analysis indicated that roughly half of current ACA Marketplace enrollees either work for small businesses that don’t offer coverage or are self-employed.
Furthermore, one-third of small employers who don’t offer coverage view Medicaid, the joint state and federal program for low-income individuals, as a “very important” insurance source for their workers. Another fifth consider 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 bear the cost of covering those individuals.”