More than a third of large employers surveyed say that prescription drug prices are a big reason for higher premiums in recent years.
Family premiums for employer-sponsored health insurance reached an average of $26,993 this year, according to KFF’s annual benchmark health benefits survey of large and smaller employers.
About 154 million Americans under age 65 rely on employer-sponsored coverage, The report found that on average, workers contribute $6,850 annually to the cost of family coverage, with employers paying the rest.
The survey, which polled 1,862 employers with at least 10 workers, found that family premiums are up six percent, or $1,408, from last year, similar to the 7 percent increase recorded in each of the previous two years. This year’s increase compares to general inflation of 2.7 percent and wage growth of 4 percent over the same period.
Over the past five years, the cumulative increase in family premiums (26 percent) and in what workers pay toward family premiums (23 percent) is similar to inflation (23.5 percent) and wage growth (28.6 percent).
Many employers may be bracing for higher costs next year, with insurers requesting double-digit increases in the small-group and individual markets on average, possibly foreshadowing big increases in the large-group markets as well, KFF said in a news announcement. Employers continue to single out drug prices as a factor contributing to higher premiums in recent years.
Among large firms (at least 200 workers), who are more likely to know details of their health insurance costs, more than a third (36 percent) say prescription drug prices contributed “a great deal” to higher premiums in recent years. Significant shares say the same about coverage for new prescription drugs (22 percent) as well as the prevalence of chronic disease (30 percent), higher utilization of services (26 percent), and hospital prices (22 percent).
“There is a quiet alarm bell going off. With GLP-1s, increases in hospital prices, tariffs, and other factors, we expect employer premiums to rise more sharply next year,” KFF President and CEO Drew Altman said in the announcement. “Employers have nothing new in their arsenal that can address most of the drivers of their cost increases, and that could well result in an increase in deductibles and other forms of employee cost sharing again, a strategy that neither employers nor employees like but companies resort to in a pinch to hold down premium increases.”
Other key findings:
- Among workers who face an annual deductible for single coverage, the average this year stands at $1,886, compared to $1,773 last year. Deductibles are up 17 percent since 2020 when the average was $1,617.
- On average, workers with a deductible at small firms (under 200 workers) face much larger deductibles than workers at larger firms ($2,631 vs. $1,670). More than half (53 percent) of covered workers at small firms now face a deductible of at least $2,000, and more than a third (36 percent) face an average single deductible of at least $3,000.
- In 2025, nearly three-quarters (72 percent) face an out-of-pocket maximum of more than $3,000 for single coverage, including one in five (21% percent who face an out-of-pocket maximum of more than $6,000.
- Only 27 percent of large firms and 18 percent of small firms offer coverage to part-time workers.
- Thirty-four percent of small employers that do not offer health benefits say that Medicaid is a “very important” source of coverage for their workers, and another one in five (22 percent) say Medicaid is “somewhat important.”