Family Health Premiums Soar to Nearly $24,000

​The average cost employees—and employers—are paying for health insurance through employer plans is on the rise after relatively little growth over the past two years.

Premiums for employer plans climbed by roughly 7 percent in 2023 to reach nearly $24,000 for family plans and nearly $8,500 for individuals, according to Kaiser Family Foundation (KFF)—news indicating that health costs, according to KFF President and CEO Drew Altman, are resuming their "nasty ways."

The average family premium is $23,968 this year, according to the nonprofit's annual benchmark survey, with workers on average paying $6,575 toward the cost of their coverage. That's up about $500 from last year. Individual premiums reached $8,435, with workers picking up just over $1,400 of the tab, a $75 jump from last year. KFF surveyed 2,133 employers.

That's a sharp departure from virtually no growth in premiums last year, and it is the result of high, persistent inflation. By comparison, the total annual average premium for family coverage was $22,463 in 2022 and $22,222 in 2021.

The rising premiums are "a reminder that while the nation has made great progress expanding coverage, people continue to struggle with medical bills, and overall, the nation has no strategy on health costs," Altman said.

The burden is even greater for employees working at smaller employers. Those working at firms with fewer than 200 employees contribute $2,500 more to their premiums than those at larger firms, according to KFF.

Over the past five years, premiums have risen 22 percent, also consistent with wage growth at 27 percent and inflation at 21 percent, the survey found.

Cost-Sharing

Employers are bearing the brunt of increased health insurance costs, mainly the result of organizations trying to remain competitive.

Among workers who face an annual deductible for single coverage, the average this year stands at $1,735, similar to last year. The average deductible amount has increased 10 percent over the past five years and 53 percent over the past decade. Workers at small firms (under 200 workers) on average face much larger deductibles than workers at larger firms ($2,434 vs. $1,478).

The modest rise in deductibles may "reflect employers' perceptions about the burden of cost-sharing on workers," KFF researchers noted in the analysis. More than half of employers (58 percent) said their workers have at least a moderate level of concern about the affordability of their plan's cost-sharing requirements. 

That's in line with other recent reports that found employers are absorbing the bulk of the increased costs to stay attractive to workers.

Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans (IFEBP), recently told SHRM Online that with a still-tight labor market, most employers want to offer competitive and affordable benefits to woo and keep workers.

"Employers are likely anticipating, 'If we make our employees pay more, will that put us out of alignment with what our competitors for talent in our industry or in our locale are doing?' They don't want to price themselves out of the running," she said.

But things have the potential to shift in the coming years. Nearly a quarter of companies said they will increase employees' premium contributions in the next two years, KFF found.

Growing Costs

KFF's report is the latest finding that health care costs for employers are on the rise. Other observers project cost boosts for next year, as well.

Data from the IFEBP found that employers are projecting a 7 percent hike for health care costs in 2024, while Aon recently projected that average costs for U.S. employers that pay for their employees' health care could increase 8.5 percent to more than $15,000 per employee in 2024. While inflation has been abating in recent months, many industry experts say it's finally caught up with health costs.

"Even though inflation is subsiding, the health care trend is growing as medical providers push insurers for larger cost increases to cover the higher costs of wages and supplies that they endured during the last couple of years but were unable to pass on to payers," Debbie Ashford, the North America chief actuary for health solutions at Aon, said recently.