Family health insurance premiums hit another record: $26,993

The price tag of health insurance from employers keeps getting bigger across the U.S., and the increases this year are fueling concerns over medical spending across all health insurance markets.

The average annual premium for family health insurance rose about 6% this year to nearly $27,000, according to widely watched survey results released Wednesday by KFF, a California-based health care research group.

Most of that price is typically paid by employers and is thus less visible to the consumer.

The average premium, which is roughly equivalent to the base price of a 2026 Subaru Crosstrek, grew by $1,408 compared with last year. And price growth is widely expected to be even more stark in 2026.

New weight loss drugs, higher hospital prices and a host of other factors such as tariffs are driving costs higher.

Some of those same forces are being blamed for sharp price increases in Medicare coverage and individual policies next year.

The annual report on employer-sponsored coverage, which gauges the already burdensome weight of financing the nation’s health care system, suggests the load for employers and families will only get heavier, since the nation lacks new strategies for containing costs.

The survey analyzes trends in the market for employer-sponsored coverage, which insures about 154 million Americans and is the largest source of insurance across the country.

In 2023, about 49% of Minnesota residents were covered through job-based health plans.

The report did not describe trends at the state level, but employers in Minnesota say they’re feeling the pain.

“We find about three-quarters of our folks who offer insurance say: These cost pressures are unsustainable,” said Bentley Graves, director of health care and transportation policy at the Minnesota Chamber of Commerce.

Earlier this month, Minnesota announced double-digit premium increases next year for people who buy health insurance on their own. Premiums for small employers, with two to 50 workers, are increasing an average of 14.2%.

“What you’re seeing is these different markets and the financial pressures being pushed throughout,” said Lucas Nesse, president and chief executive of the Minnesota Council of Health Plans, a trade group for nonprofit health insurers in the state.

The problem might get worse for employers due to future federal reductions in coverage via Medicaid, the state-federal program for lower-income residents.

Nesse said health care providers already are sizing up the Medicaid cuts, which mostly kick in during 2027, and arguing to insurers that they need to make up the difference via even higher reimbursements from employer health plans.

The impact of already high prices, he said, is being magnified by higher use of health care services, pushing overall costs to a new level.

The KFF survey found that, across the country, workers on average are contributing $6,850 this year — about one quarter of the total $26,993 average premium — for family coverage, a similar share to 2024. Employers are paying the rest, an average of $20,143.

Yet the absolute dollars being spent on worker health insurance are big, he said, and getting bigger.

“I am not predicting a return to low double-digit increases, but it would not shock me,” Altman said. “Employers have nothing new to throw at the problem, and that could result in a new wave of increasing deductibles and other forms of employee cost sharing, the tried-and-true strategy that neither employers nor employees like.”

Total health benefit costs per employee next year are expected to rise at the fastest rate in 15 years, according to a report last month from New York-based Mercer that uses a different methodology.

KFF’s survey found that about 1 in 5 large firms offering health benefits said they are covering costly GLP-1 drugs such as Wegovy for weight loss.

The class includes the well-known brand Ozempic, for people with type 2 diabetes managing blood sugar levels.

Employers often put conditions on coverage of the medications, but KFF found use has been higher than expected.

“While recognizing their effectiveness in addressing obesity, many employers indicated they were considering scaling back coverage,” KFF researchers wrote in a companion report being released Wednesday.

Obesity is associated with many serious and costly health problems such as cardiovascular disease and cancer, making it one of the most serious health issues for the nation given its large and growing incidence.

There are hopes that GLP-1 drugs eventually will deliver savings in terms of decreased costs for other health conditions, but any such benefits aren’t uniformly clear yet to employers, said Matthew Rae, an associate director with KFF.

The analysis is complicated, Rae added, since some workers as they lose weight might start using more services like knee replacement surgery, for which their weight previously made them ineligible.

While family coverage in employer-sponsored health plans is nearly $27,000, the average annual premium for single coverage is $9,325, up 5% over last year.

Nearly three-quarters of people with single coverage face an annual out-of-pocket maximum of more than $3,000. This upper limit on spending exceeds $6,000 for about 1 in 5 people with single coverage.