Employer-Provided Health Insurance Costs Surge for Third Straight Year

Strategic Insights -

The cost of employer-provided health insurance has significantly increased for the third consecutive year, with the average one-year premium cost for a family plan approaching $27,000. This 6% cost jump follows two years of 7% gains, exceeding the inflation rate. Economists warn that this trend may strain the economy, potentially limiting employment and wage increases. Employers are facing rising costs due to the increased need and use of newer, more expensive therapies, as well as higher hospital prices and costly chronic conditions.

Key Takeaways:

  • The average one-year premium cost for a family plan is approaching $27,000, with a 6% increase from the previous year.
  • This is the third consecutive year of a significant increase in health insurance costs, following two years of 7% gains.
  • Economists warn that these rising costs may strain the economy and limit employment and wage increases.
  • The main causes of the surge in health insurance costs include the increased need and use of newer, more expensive therapies, higher hospital prices, and costly chronic conditions.
  • Costly new drugs, particularly GLP-1s, are driving the increase in health insurance costs.
  • Chronic conditions, including cancer, are on the rise among the working-age population.
  • Rising hospital prices are another factor contributing to the increase in health insurance costs.
  • Small businesses are particularly affected, with 51% facing health insurance cost increases of 10% or more.
  • Employers are passing the burden of increased health insurance costs onto their employees, with employees' out-of-pocket costs for deductibles and copays ticking upward again.
  • Some employers are abandoning traditional health plans and opting for Health Reimbursement Accounts to pay their own premiums.

Statistics:

  • The average one-year premium cost for a family plan is approaching $27,000.
  • The 6% cost increase is the third consecutive year of a significant increase in health insurance costs, following two years of 7% gains.
  • 51% of small businesses face health insurance cost increases of 10% or more.
  • The number of employees' out-of-pocket costs for deductibles and copays is ticking upward again.
  • The cost of new and expensive drugs, particularly GLP-1s, is significantly driving the increase in health insurance costs.

Sources:

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