More than 154 million people with health insurance through an employer face steep price increases, and the situation is likely to get worse, a new report shows.
The increases are coming as the federal government shutdown has been spurred by a stalemate over health insurance for another group, the 22 million Americans on Affordable Care Act plans.
Premiums for job-based health insurance rose 6% in 2025 to an average of $26,993 a year for family coverage, according to a yearly survey of employers by KFF, a health information nonprofit that includes KFF Health News.
It’s the first time in two decades the cost of covering a family of four has risen by 6% or more for three straight years, data from KFF shows.
Over the past five years, the average premium for family coverage is up 26%, compared with a 29% increase in workers’ wages and nearly 24% growth in inflation.
That means the average cost for family coverage is now about the same as a new Toyota Corolla hybrid.
The average annual premium for an individual health plan provided by employers increased by 5% to $9,325 — nearly $3,000 higher than in 2016, according to the survey.
“It’s a concern as health costs just keep going up,” said Eric Trump, controller at Steve Reiff Inc., a small company in South Whitley, Indiana, that specializes in sandblasting and painting heavy equipment.
Trump, who is not related to President Donald Trump, said his company’s health insurance costs rose 8% for the 2026 fiscal year — roughly the same as they have in the last few years.
Workers at Reiff pay about half the cost of their health coverage. About half of its 20 current employees decline the insurance because they get coverage through a family member or choose to go uninsured, he said. “There’s not a lot we can do, as we don’t have enough employees to spread out the costs.”
Most people with job-based insurance contribute to the cost of their premiums, with the average worker this year contributing $1,440 for individual coverage or $6,850 for family coverage.
Over time, more workers have paid increasingly higher deductibles, the amount they must spend out-of-pocket on medical services before their insurer pitches in.
More than one‑third of covered workers are enrolled in a plan with a deductible of $2,000 or more for an individual. The share of workers with such a plan has increased 32% over the last five years and 77% over the last 10 years, the report said.
Rising drug and hospital costs are often cited as major culprits for rising health insurance costs, and neither shows signs of ebbing.
“Early reports suggest that cost trends will be higher for 2026, potentially leading to higher premium increases unless employers and plans find ways to offset higher costs through changes to benefits, cost sharing or plan design,” the KFF survey said.
One big concern among employers is the high price of GLP-1 drugs for weight loss, which a growing number of companies cover. Their high prices, combined with strong demand, have led some workplaces to tighten or eliminate coverage for weight loss.
“Large employers know these new high-priced weight-loss drugs are an important benefit for their workers, but their costs often exceed their expectations,” study author Gary Claxton, a KFF senior vice president, said in a press release. “It’s not a surprise that some are rethinking access to the drugs for weight loss.”
Employers typically respond to higher health costs by shifting costs to their workers, but it’s unclear how much more financial pain workers can take. The survey found nearly half of large employers said their employees have “moderate” or “high” concerns about their level of cost sharing.
While the rising cost of employer-sponsored insurance has outpaced general inflation, the issue received scant attention in recent months on Capitol Hill.
To help pay for extending tax cuts, Trump’s tax and spending law reduces by billions of dollars the amount the government spends on Medicaid, the state-federal health insurance program for 70 million low-income and disabled people. Congressional budget scorekeepers predict the cuts to Medicaid will lead to millions more people becoming uninsured over the next decade.
The federal government shut down Oct. 1. Democrats refused to vote for a new spending measure unless Republicans agree to extend tax credits that help about 22 million people buy health coverage through the ACA marketplaces. Without congressional action, the tax credits will expire and premiums will double for many consumers, starting in January.
The KFF report is based on a survey this year of 1,862 randomly selected non-federal public and private employers with 10 or more workers.
KFF Health News is a national newsroom that produces in-depth journalism on health.