Job-Based Health Plan Costs Rise, With Little Relief in Sight

Rising healthcare costs aren't a problem just for those who buy their own health insurance. Increases hit employers and their workers this year, too, and more are expected for 2027 plans — adding to growing concerns about affordability heading into the midterm elections.

Polls show that healthcare costs — and affordability, in general — are among top concerns cited by likely voters. Much attention has been focused on mounting costs and declining enrollment in Affordable Care Act plans, the insurance used by roughly 19 million people who buy their own. But work-based plans are adding financial pressure for the more than 150 million Americans covered through their jobs.

One of the biggest changes this year, for instance, came in the amount workers pay toward their own coverage, rising an average of 9% to $7,471 annually for a family, according to a broad annual survey released Oct. 22 by KFF, a health information nonprofit that includes KFF Health News. That's up from the 7.6% jump seen from 2024 to 2025.

Their employers, too, faced additional costs, with the average family coverage premium rising 5% to hit $28,303, according to the survey.

In response to that increase — which comes on the heels of a 6% increase the previous year — 44% of large employers, with at least 200 employees, said they upped what workers had to pay toward coverage.

"When we start to see higher use or higher prices, there are only a limited number of things employers can do" to try to slow premium increases, said Matthew Rae, associate director of the Program on the Health Care Marketplace at KFF.

Employers reported taking other actions in the past year to hold down their costs, such as increasing deductibles (the amounts people pay toward their care before insurance pitches in), changing insurers, adding preapproval for some services, or offering workers a narrower choice of healthcare providers, the KFF report said.

Workers' earnings rose an average of 3.7% this year, the survey found, while overall inflation was 2.7%.

People who work for small companies, with fewer than 200 employees, paid more for healthcare than their counterparts at larger companies.

For example, health plans at large companies had a $1,772 average annual deductible for an individual employee, while small workplaces averaged $2,624.

Overall, though, the share workers pay toward the total premium across all companies ticked up only slightly from the previous year, hitting 27% of the cost for family coverage and 18% for individual coverage, with employers picking up the remainder.

Driving Up Costs

Other groups have recently posted projections of what employers might face next year.

Consulting firm AON, for example, projected employers could pay 9.5% more next year, the fourth consecutive year of big increases, while a similar company, Marsh, estimated 8.2%, the highest jump since 2003. Costs are going up for many reasons, from people utilizing more services to skyrocketing prices of prescription drugs and rapidly rising hospital prices, the reports say.

Also helping drive up costs is artificial intelligence, say other reports, including one from the Business Group on Health, a membership organization of self-insured employers. The report said hospital systems and other medical providers use the technology to maximize insurer and patient billing.

The business group predicted a median premium increase of 9.2% next year, although employers might reduce that by making benefit changes.

Until recently, employers absorbed the lion's share of cost increases, "but that's starting to change a bit," said Jim Winkler, chief strategy officer for the group. "When open enrollment starts, most people will see their out-of-paycheck costs and probably their out-of-pocket costs going up."

Looking ahead, the group suggests employers take further action to forestall increases in 2028, Winkler said. One idea is to offer lower copayments for some health providers based on their prices or quality, similar to "tiered networks," a strategy employers and insurers have tried, with only 4% of companies sticking with it, according to the KFF survey. "What's old is new again," Winkler noted, saying it might work better now because it's easier than ever for apps to show consumers the providers with the lowest copayments, which would be set by an employer or insurer.

Overlooked in much of the discussion on rising health costs, said Elizabeth Mitchell, president and CEO of the large employer organization Purchaser Business Group on Health, is the role played by the healthcare industry — from hospitals to drugmakers to insurers.

She asked: Why are the customers — the employers, in this case — being asked what they are doing about it? "The industry is doing absolutely nothing to control costs, as evidenced by the relentless growth in costs," she said.

Businesses are using new pricing information made available under federal rules to contract directly in some cases with hospitals and other providers and to invest in primary care.

Mitchell and others say Congress should also get involved. Health policy researchers at Georgetown University, for example, suggest capping annual deductibles, setting hospital price caps, and extending lower drug prices negotiated by Medicare to the private sector.

Keeping Costs Flat

Not all companies saw an increase this year.

Take KFF survey respondent Phifer Inc., a company based in Tuscaloosa, Alabama, that makes insect screens and precision woven products, such as outdoor furniture fabric. Its health costs remained flat this year, likely because it has put a strong focus in recent years on providing zero-cost primary care to its workers through on-site clinics and direct contracts with doctors' offices, said Russell DuBose, the company's vice president of human resources.

Only 7% of companies in the KFF survey reported having an on-site clinic, although 24% said they had one on-site or nearby.

Workers get in quickly to see a primary care doctor, DuBose said, and that can help with both prevention of disease and catching problems early. The company also directly contracts with other types of specialists.

"We steer plan members to the best providers that we can find," DuBose said. "When we do that, we're paying a more reasonable price."

The company is self-insured, like many employers. That means it pays all the bills itself and buys what's called stop-loss insurance to help with very high bills. That coverage has also jumped in price, DuBose said.

He often gets calls from other employers asking about his company's strategy — and how to control costs. Now, far more so than in recent years, he said, employers are nervous, worried about costs continuing to rise and what that would mean.

"The worry is 'Could the rising cost of healthcare be the next job killer?'" he said.

Among other findings from the annual KFF report:

* Twenty-nine percent of all companies surveyed said covering GLP-1s, a new class of weight loss drug, had a "significant" effect on their drug costs.

* Many companies — about 29% of large ones — reported difficulty getting information on how much their plans paid for medical care or price comparisons among providers.

* About 9% of companies with 50 or more workers buy prescription drugs from outside the U.S. to save money.

Distributed by Newsbank, inc.