Health Insurance Costs: Worker Family Premiums Jump 9% in 2026

A bigger bill for workers, even as total premiums rise more slowly

KFF's annual survey of employers has a split message in its 2026 results. The total price of job-based coverage rose about as much as it has in recent years. The share that workers pay out of their own paychecks rose much faster.

The 2026 Employer Health Benefits Survey puts the average annual premium for family coverage at $28,303, up 5% from 2025. Single coverage averages $9,804, also up 5%.1 Workers now contribute an average of $7,471 a year toward family coverage. That is $621, or about 9%, more than last year. Over the same period wages grew 3.7% and inflation was 2.7%.2 KFF surveyed 1,937 public and private employers with at least 10 workers.3 Almost 157 million Americans under retirement age get health coverage through an employer.9

The 9% figure is the one most outlets put in their headlines, and for good reason. Recent increases in what workers pay ran around 6% to 7%.5 One report put last year's increase at 7.6%.7 So this year's jump is a clear acceleration, even though the overall share of the premium paid by workers barely changed. Workers still cover about 27% of the family premium and 18% of the single premium on average.7 The likely explanation is uneven cost-shifting. Some employers pushed costs onto staff and others held steady. Among firms with at least 200 employees, 44% said they had raised what workers pay.7

Small businesses take the hardest hit

The pressure is heaviest at small firms. Workers at companies with 10 to 199 employees pay an average of $9,687 a year toward family coverage. At larger firms the average is $6,840.1 In 2025, small-firm workers paid roughly $8,900 and large-firm workers about $6,200.8 Small-firm workers pay 37% of the family premium on average, compared with 25% at larger firms. Nearly a third of covered small-firm workers, 32%, are in plans where they pay more than half the family premium. Only 6% of large-firm workers are.19 And 31% of covered workers at smaller firms face family contributions of $12,000 or more.1

The Associated Press described what this looks like for one employer. Jenna Caligaris manages a contractor in upstate New York with about 25 workers. Her firm has switched insurers in recent years to save money, but it is still facing a 25% premium increase this year. To keep covering 80% of premiums for its nonunion workers, the company is keeping vehicles and tools longer, shrinking year-end bonuses and dropping the annual company picnic.19 KFF's Matthew Rae noted that small firms also face higher deductibles and a more volatile market than large companies.16

Is the sky falling? The coverage disagrees

Here the reporting splits, and the split is about interpretation, not numbers.

KFF's own discussion pushes back on alarm. The authors note that early forecasts pointed to steeper increases in 2026, and that family premiums over five years have grown roughly in line with inflation and wages: 28%, compared with 24.4% for inflation and 26.9% for wages.1 Rae told Fierce Healthcare that the 5% rise undercuts the idea that employer coverage is collapsing. He added that holding increases to 5% takes real work from HR teams, who are redesigning benefits and shopping hard among vendors.3 The ten-year view is less comfortable. Family premiums are up 55% since 2016, while inflation rose 37.9%, though wages kept closer pace at 50.1%.1

Other coverage is darker. STAT framed the results as a sign that employers may be running out of ways to absorb rising costs.5 One outlet went further and declared that the era of manageable employer health costs is over.10 USA Today quoted a benefits expert who said the health care industry is taking a growing share of workers' take-home pay.6

The more convincing reading is that both sides are right about different time frames. Looking back, total premiums have not run away from wages. Looking ahead, the picture is worse, and the 9% jump in worker contributions suggests employers have started passing more of their costs along. Rae said benefits consultants project that employer cost increases could approach double digits in 2027.6 The Business Group on Health predicts a median premium increase of 9.2% next year before employers make benefit changes.7 If those forecasts hold, 2026 may look like the last moderate year.

Hospitals, prices and new pressures on costs

What is driving costs up? Insurers reported an underlying medical cost trend of roughly 7% to 8% for 2026. They pointed to hospital-system consolidation, higher physician fees and expensive new biologic drugs.4 Rae said actuaries also cite rising spending on behavioral health services and hospital care.6 A Business Group on Health report adds artificial intelligence to the list, saying hospital systems and other providers use it to maximize what they bill insurers and patients.7 Rae said AI could push spending in either direction depending on how it is used.6

Employers are also cutting coverage for some expensive drugs. Among firms with 5,000 or more workers, coverage of GLP-1 drugs for obesity fell from 43% last year to 33% in 2026. Most of these employers said the drugs added significantly to their prescription spending.6 Deductibles have stayed fairly flat. The average single-coverage deductible is $1,955, compared with $1,886 in 2025.3 That suggests employers chose to raise premium contributions rather than push deductibles higher this year.

The Medicaid shift could raise private premiums

The employer survey arrives about ten weeks before major Medicaid changes take effect, and the two are closely linked. Starting January 1, 2027, adults in the expansion population in states that expanded Medicaid must show they work, attend school or volunteer at least 80 hours a month, or earn $580 a month. They must also re-verify eligibility every six months instead of every year. KFF estimates about 20 million people are in that group.21 The Congressional Budget Office projects $326 billion in federal savings over ten years and 4.8 million more uninsured people by 2034. KFF notes the savings come mostly from people losing coverage.22 Some health policy experts warn that as many as 10 million people could lose coverage.24

Early evidence suggests paperwork, not ineligibility, will cause most of the losses. Nebraska began applying the rule in the spring. In its first renewal groups, 533 of 7,280 enrollees lost coverage. Only 43 were found ineligible. The other 490 lost coverage because they did not return forms within 30 days.22 When Arkansas tried a similar rule in 2018, more than 95% of the people it targeted already met the requirements or qualified for an exemption. Employment did not rise.26

Hospitals are where these coverage losses will turn into costs for everyone else. The Urban Institute estimates the 2025 law will produce $278 billion in uncompensated care by 2034. Many hospitals already operate on very thin margins.21 Washington's hospitals expect to lose nearly $6 billion in revenue through 2033, and about 200,000 state residents are expected to lose coverage by the end of next year.27 Those losses are projected to grow from $339 million in 2027 to $1 billion a year in the 2030s.28 In New Hampshire, a policy institute study warns that hospitals will likely raise prices for privately insured patients to make up lost revenue. That would push up premiums.25 U.S. Senator Maria Cantwell (D-Wash.) made the same point: rising uncompensated care raises costs for everyone.27

That is the link the employer survey cannot yet show. Workers whose contributions just rose 9% may soon also be covering unpaid hospital bills from people who lost Medicaid, through higher prices that insurers pass back to employers.

The political backdrop

All of this is landing in the middle of midterm campaigns. An AP-NORC poll in October found that about 7 in 10 registered voters rank health care among the most important issues in the election.13 President Trump has pitched his most-favored-nation drug pricing policy and promised rebates. But AP reporting notes that other administration actions have raised costs for some people.19 KFF president Drew Altman listed the 9% jump in worker contributions alongside the ACA and Medicaid cuts as reasons voters are worried about health care costs.2

The overall picture is clear even with the disagreement over how to describe it. Employer coverage is not collapsing, but its costs are moving onto workers faster than wages are rising, especially at small firms. Forecasts for 2027 point to bigger increases. The Medicaid changes starting in January are likely to add pressure on hospitals that could show up in private premiums. The 5% headline increase understates how much strain the system is under.