Annual family premiums for employer-sponsored health insurance have surged by 6% in 2025, reaching an average of $26,993, according to the 27th annual health benefits survey conducted by KFF.
The increase marks a $1,408 jump from the previous year, continuing a trend similar to the 7% increases recorded in each of the two preceding years.
Workers are shouldering a significant portion of this burden, contributing an average of $6,850 annually toward the cost of family coverage out of their paychecks.
The 2025 premium increase of 6% is notable as it outpaced both general inflation (2.7%) and wage growth (4%) over the same period. Over the last five years, the cumulative increase in family premiums (26%) and workers’ contributions (23%) has remained similar to inflation (23.5%) and wage growth (28.6%).
KFF warns that employers may face even steeper costs next year, with insurers already requesting double-digit increases in the small-group and individual markets, which could foreshadow large increases in the large-group market.
“There is a quiet alarm bell going off,” stated KFF president and CEO Drew Altman. He pointed to the expected impact of GLP-1 drugs, rising hospital prices, and tariffs, concluding, “employers have nothing new in their arsenal that can address most of the drivers of their cost increases”. Altman suggests this could result in a new wave of rising deductibles and other forms of employee cost sharing.
The high cost of prescription drugs is frequently cited by employers as a major contributing factor to rising premiums. Among large firms (at least 200 workers), 36% said prescription drug prices contributed “a great deal” to higher premiums in recent years. Other significant drivers include the prevalence of chronic disease (30%), higher utilization of services (26%), and hospital prices (22%).
One of the most rapidly changing areas of coverage is the inclusion of costly GLP-1 drugs, such as Wegovy, for weight loss. About one in five (19%) large firms offer coverage for these drugs in 2025. Among the biggest firms (those with at least 5,000 workers), coverage has jumped significantly, with 43% now covering GLP-1 drugs for weight loss, up from 28% in 2024.
Despite the growing coverage, the cost has been startling for employers. Most (59%) of the biggest employers offering these drugs report that the cost has exceeded their expectations. Furthermore, two-thirds (66%) say the drugs have had a “significant” impact on their health plan’s prescription drug spending.
Employers are responding to these high costs by tightening utilization controls and imposing restrictions. Roughly a third (34%) of large firms offering these medications require enrollees to meet with a dietician, therapist, or participate in a lifestyle program for coverage.
“Large employers know these new high-priced weight-loss drugs are an important benefit for their workers, but their costs often exceed their expectations,” said KFF senior vice president and study author Gary Claxton.
Workers are also facing higher out-of-pocket costs. The survey finds that the average annual deductible for single coverage stands at $1,886 this year, an increase from $1,773 last year. Since 2020, average deductibles have risen 17%.
The burden is significantly higher for employees at smaller firms (under 200 workers), where the average deductible is $2,631, compared to $1,670 at larger firms. More than half (53%) of covered workers at small firms now face a deductible of at least $2,000.
Furthermore, nearly three in 10 covered workers (29%) are now enrolled in high-deductible health plans that are qualified to be paired with a tax-preferred Health Savings Account.
The KFF survey, which provides a detailed picture of trends affecting the approximately 154 million Americans under age 65 who rely on employer-sponsored coverage, also highlighted challenges for specific segments of the workforce.
Part-time workers are generally ineligible for employer benefits; only 27% of large firms and 18% of small firms offer coverage to part-time staff.
Coverage rates also lag significantly at firms with many low-wage workers (43%) compared to firms with few low-wage workers (64%). For small employers that do not offer health benefits, Medicaid serves as a crucial backstop, with 34% noting that Medicaid is a “very important” source of coverage for their workers.
Finally, the option of using Individual Coverage Health Reimbursement Arrangements (ICHRAs)—intended to help workers purchase coverage through the Affordable Care Act (ACA) Marketplaces—has not gained widespread traction. Only 9% of small firms that don’t offer health benefits report offering ICHRA funds, a figure similar to the previous year.