Premiums for employer-sponsored family health coverage have hit nearly $27,000 a year, according to a new Kaiser Family Foundation (KFF) analysis — a new record that should set off shock waves for employers.
Annual premiums rose 6% over the past year to reach $26,993 in 2025, according to KFF's annual employer health benefits survey, released Oct. 22. KFF surveyed more than 1,800 employers. The jump is similar to the 7% increase recorded in each of the previous two years and is much higher than the general inflation rate of 2.7%.
On average, workers contributed $6,850 toward the cost of family coverage this year, with employers footing the rest of the bill. The average deductible among covered workers in a plan with a general annual deductible was $1,886 for single coverage.
While the cost of coverage significantly jumped in 2025, experts warned that next year could be even worse.
"There is a quiet alarm bell going off," KFF President and CEO Drew Altman said in a statement. "With GLP-1s, increases in hospital prices, tariffs, and other factors, we expect employer premiums to rise more sharply next year."
GLP-1 Drugs, Other Concerns
High prescription drug costs, including for popular GLP-1 drugs, are among the top culprits for the soaring costs of premiums. A growing number of employers are covering drugs for weight loss — among companies with at least 5,000 workers, 43% told KFF they cover GLP-1 drugs for weight loss, up from 28% in 2024 — but the average cost of $1,000 per month per consumer is worrisome for employers.
According to KFF, 59% of the biggest employers — those with at least 5,000 workers — that offer GLP-1s for weight loss say their cost has exceeded expectations, and two-thirds (66%) say that these high costs had a "significant" impact on their health plan's prescription drug spending.
Those factors may lead some employers to reduce or eliminate coverage or implement additional restrictions, according to KFF.
Meanwhile, among large firms (those with at least 200 workers), more than a third (36%) said prescription drug prices contributed "a great deal" to higher premiums in recent years, according to KFF. Significant shares say the same about coverage for new prescription drugs (22%), as well as the prevalence of chronic disease (30%), higher utilization of services (26%), and hospital service costs (22%).
The analysis from KFF comes on the heels of other data findings that show employers are bracing for even higher health costs in 2026. The International Foundation of Employee Benefit Plans, a nonprofit organization based in Brookfield, Wis., with 31,000 employer members, recently found that organizations are projecting a 10% hike in health care costs in 2026. And a survey of employers from benefits consultant firm Mercer last month found that the increase in health benefits costs for 2026 may be the biggest in 15 years.
"It's definitely a concern," Kimberly Landry, associate research director at LIMRA, an insurance industry trade association based in Windsor, Conn., said last month of growing health care costs. "We had a couple years where the health care cost trend wasn't as high, and now it's shooting up again. It's clearly a huge challenge for employers and employees."
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