Employer-Provided Health Insurance Costs Surge for Third Straight Year

Strategic Insights -

The cost of employer-provided health insurance has jumped 6% for the third consecutive year, with the average annual premium for a family plan reaching nearly $27,000, according to a new survey from the nonprofit KFF. This steep rise in health care costs is driven by high spending on new drugs, chronic disease care, and hospital bills, forcing many employers to pass the burden onto their workers or limit wage growth.

Key Takeaways:

  • The average one-year premium cost for a family plan is approximately $27,000, with a 6% increase for the third consecutive year.
  • This trend is driven by high spending on new drugs, chronic disease care, and hospital bills, with employers struggling to absorb rising costs.
  • Nearly half of the U.S. population receives health coverage through their jobs, according to the KFF survey.
  • A 2025 WSJ/Vistage survey of 336 small businesses found 51% facing health insurance cost increases of 10% or more.
  • Costly new therapies, such as GLP-1s, are a major contributor to rising premiums, with employers not all willing or able to cover these drugs for weight loss at this time.
  • Chronic conditions, including cancer, are on the rise among the working-age population, adding to health care costs.
  • Rising hospital prices are also contributing to the increase in health care costs, with providers successfully negotiating higher rates in their contracts.
  • Many small businesses are passing the burden onto their employees, with some employers limiting wage growth or pushing more costs onto workers.
  • A small but growing number of small employers are abandoning traditional health plans, opting instead to provide workers with Health Reimbursement Accounts to pay their own premiums.

Statistics:

  • Average one-year premium cost for a family plan: $26,800
  • Rate of increase for third consecutive year: 6%
  • Percentage of U.S. population receiving health coverage through their jobs: 48% (KFF survey)
  • Percentage of small businesses facing health insurance cost increases of 10% or more: 51% (WSJ/Vistage survey)
  • Percentage of employers not willing or able to cover GLP-1s for weight loss: Unknown
  • Percentage of workers facing double digit percentage increases in health insurance costs: Unknown

Sources:

  • KFF, 2025 Employer Health Benefits Survey, Oct. 22, 2025
  • Wall Street Journal, Oct. 22, 2025