Employer Health Premiums Climb 5% as Worker Costs Jump 9%

A $28,000 family plan becomes the new normal

The average cost of a job-based family health plan rose again this year. It now sits above $28,000, a level that would have been hard to picture a decade ago. KFF's 2026 Employer Health Benefits Survey, released October 22, puts the average annual premium for employer-sponsored family coverage at $28,303 and single coverage at $9,804. Both are up 5% from 2025.1 The survey is the 28th edition of the benchmark. It draws on interviews with 1,937 firms that together represent nearly 157 million Americans under 65.2

The headline premium growth is not the main story, though. The bigger change is in who pays. Workers' contributions toward family coverage rose 9%, or $621, to an average of $7,471. Employers paid the remaining $20,833.516 Worker contributions for single coverage climbed even faster. States Newsroom reported that the amount employees pay toward an individual plan rose $232, or 16%, to $1,672.1116

KFF researcher Matthew Rae described the family premium in vivid terms, calling it roughly equal to buying a new car every year just to keep a family of four insured.15

Modest growth or the start of a squeeze?

Coverage of the survey splits into two readings, and the split matters.

The first reading is reassuring, at least on the surface. KFF's own analysis says premiums grew at a relatively modest pace even though early projections had pointed to sharper 2026 cost increases. Over five years, family premiums rose 28%. That is roughly in line with inflation at 24.4% and wage growth at 26.9%.1 Rae told Fierce Healthcare that a 5% increase falls short of the double-digit hikes some actuaries and consultants had feared. In his view, that undercuts the idea that employer-sponsored insurance is collapsing.3

The second reading is more alarming. STAT's coverage noted that the 9% jump in family contributions is larger than the 6% and 7% increases KFF recorded in recent years. It framed the finding as a sign that employers may be running out of ways to absorb rising costs.6 Even Rae, the same researcher urging calm, said in an NPR interview that a cost shift onto workers would be a big deal for affordability if this year marks the start of one.15

Both readings rest on the same numbers. The question is which comparison counts. Measured against the past five years, premiums look tame. Measured against this single year, they do not. Premiums rose 5% while inflation was 2.7% and wages grew 3.7%.1 Workers' share rose more than twice as fast as their paychecks.

My reading is that the second interpretation is the one to watch. Total premium growth has been steady for years. What changed in 2026 is that employers began passing more of that growth directly to employees. Employer behavior is far harder to reverse than a single year's pricing.

Employers are passing costs to workers

The survey's questions about how firms responded to projected cost increases explain where the 9% came from. Among large firms (200 or more workers), raising the share of premiums workers pay was the most common response, reported by 44%. Others raised deductibles or cost sharing for most services (21%), changed insurers or plan administrators (16%), or added prior authorization requirements (10%).12 Across all firms, 18% raised the worker share of premiums, a figure that climbs to 66% among employers with 5,000 or more workers.12

The aggregate figures soften this somewhat. KFF Health News noted that the average share workers pay across all companies rose only slightly. It reached 27% of family premiums and 18% of single premiums, with employers covering the rest.10 In other words, the increase is real but uneven. It is concentrated in the firms that acted on their cost projections.

Employers are also trying other approaches. They reported contracting directly with providers, opening on-site or near-site clinics, switching insurers, adopting tiered or narrow networks, and cutting eligibility for some benefits.7 The Hill pointed out that health plans and insurers have historically answered rising provider prices with higher deductibles, cuts to GLP-1 coverage, aggressive prior authorization and narrower choices of doctors and hospitals.19

Small businesses and their workers pay the most

Every outlet that covered the survey agreed on one point: workers at small firms are the most exposed. Covered workers at companies with 10 to 199 employees contributed an average of $9,687 toward family coverage. That compares with $6,840 at larger firms, a gap of $2,847.19 Small-firm workers pay 37% of the family premium, compared with 25% at large employers. Nearly a third are in plans that require them to pay more than half the family premium, compared with 6% of workers at large firms.9 Thirty-one percent of covered small-firm workers face family contributions of $12,000 or more a year.1

Deductibles widen the gap further. The average single deductible is $2,624 at small firms and $1,772 at larger companies.4 Rae told the Associated Press that small firms deal with both higher deductibles and a more volatile market.18

The AP's reporting included an example of that volatility. Jenna Caligaris manages a contractor in upstate New York with about 25 workers. Her company has switched insurers within the past three years to save money and is still facing a 25% premium increase this year. To keep covering 80% of premiums for its nonunion workers, the firm has stretched the life of its vehicles and tools, reduced year-end bonuses and cancelled the company picnic.1314

Where the reporting diverges on deductibles

The coverage does not agree on deductibles. KFF's report puts the average single-coverage deductible at $1,955, up from $1,886 in 2025.37 That is an increase of less than 4%, and Rae described deductibles as largely flat.3 States Newsroom's version, which was widely syndicated, cited a figure of $1,995. Its wording also suggested deductibles had risen by the same 5% as premiums.1116 KFF's own published figure is the more reliable number. Even so, the longer trend is clear. The average deductible is 21% higher than in 2021 and 43% higher than in 2016.12 And 88% of workers with single coverage now have one.11

This matters for the main argument. In past cycles, employers controlled costs mostly by raising deductibles. This year they held deductibles roughly steady and raised payroll contributions instead. Workers feel that change in every paycheck, not only when they get sick.

What is driving costs, and what comes next

The Hill identified higher hospital and provider prices, along with growing use of expensive drugs such as GLP-1s for weight loss, as major drivers of spending.19 The drug issue is visible in the survey. Eighteen percent of large firms cover GLP-1s for weight loss, down from 19% in 2025.11 Among those that do, 29% reported a significant effect on drug spending, and 12% of large firms stopped covering the drugs for weight loss over the past year.2

The outlook for next year is worse. KFF said forecasts for 2027 again project premium increases approaching double digits, and that employers may face growing pressure to keep plans affordable if those increases materialize.12 The Los Angeles Times reported earlier this year that California employer premiums were on track to cost as much as a new car in 2027.13 One caveat: KFF fielded the survey from January to July, so it reflects 2026 plan decisions, not choices made during this fall's open enrollment.4

The political backdrop

The survey arrived weeks before the midterm elections. An AP-NORC poll found that about 7 in 10 registered voters call healthcare one of the most important issues this cycle.14 KFF CEO Drew Altman tied the findings directly to that mood. He said the 9% jump in family contributions adds to cuts to the Affordable Care Act and Medicaid as reasons voters are worried.11 A Commonwealth Fund report released the same day found that about 43% of workers with health benefits had skipped care because of cost in the past year, and about 31% reported medical debt.15

The combined picture is of a system that is under strain but not collapsing. Employer coverage has stayed intact because employers have absorbed most of the cost growth. This year's survey is the first in a while to show that buffer wearing thin. If 2027 premiums rise as forecast, the 9% jump in worker contributions may turn out to be the first step in a larger shift of costs onto workers.