Costs for employer-based health insurance outpaces inflation

A new 50-state analysis shows that employee costs for health insurance offered through their job—the primary source of coverage for more than half of all people in the United States—rose sharply and outpaced inflation from 2023 to 2024, the latest data available.

Annual premiums for family coverage offered through employers rose to $24,540 last year, an increase of more than $600 from the year prior. Premiums for individuals increased by more than $300 to $8,486. The analysis of trends in employer-sponsored insurance (ESI) was prepared by researchers from the State Health Access Data Assistance Center (SHADAC) at the University of Minnesota.

Employers in several states saw premium increases that outpaced the national average. Delaware employers and their workers saw the largest increase in family premiums, rising by more than $5,800 from $22,049 to $27,859—an increase of more than 26%. Alabama and Rhode Island also top the list of states seeing significant year-over-year premium increases.

Researchers say deductibles grew even faster than premiums, rising an average of 8% for both individual and family coverage. The average annual deductible for family coverage surpassed $4,000 for the first time in 2024, the result of a $330 increase over the year prior.

The analysis shows that more than half of private-sector workers (51.7%) enrolled in ESI are now in high-deductible health plans, which offer lower monthly premiums but expose people to significantly higher out-of-pocket costs. Enrollment in high-deductible plans now exceeds 60% in 22 states.

“Employer-sponsored insurance remains the backbone of health coverage in the United States, but it is becoming increasingly unaffordable for employers and their employees,” said Elizabeth Lukanen, director at SHADAC. “As policymakers look for solutions to curb the growing healthcare affordability crisis, addressing the decades-long trend of increasing costs in employer-sponsored insurance must be part of the conversation.”

Experts say the findings come at a time when rising healthcare costs have emerged as a top consumer and policymaker concern. Yet ESI is often overlooked in policy debates with a greater focus on coverage provided through the Affordable Care Act and public health programs like Medicare and Medicaid.

“Employer-provided health coverage is not immune from the healthcare affordability crisis that is tightening its grip throughout America,” said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. “The trend of moving to high-deductible plans to shield companies and individuals from large monthly premium increases is understandable, but it means greater financial risk down the road in the event of a medical emergency. It’s a gamble no one should have to take.”

Researchers say employee contributions to their ESI costs held steady nationally, with single coverage contributions holding around 20% (20.0% in 2023 and 21.1% in 2024), and nearly 30% for family coverage (28.8% in 2023 and 29.4% in 2024). Offers of health insurance from employers increased slightly, while eligibility and enrollment held steady. Among employees eligible for ESI, overall enrollment remained steady in 2024 at 69% of workers accepting offers of health insurance.