Rising healthcare costs squeeze employee finances

For the survey, KFF collected data from 1,937 randomly selected non-federal public and private employers with 10 or more workers between January and July 2026.

In 2026, the average annual premium for employer-sponsored health insurance was $9,804 for single coverage and $28,303 for family coverage. Premiums increased by 5% for both single and family coverage since 2025. In comparison, employees' wages increased by only 3.7% while inflation was 2.7%.

On average, employees contribute 18% of the premium for single coverage and 27% of the premium for family coverage. This year, the average annual contribution was $1,672 for single coverage and $7,471 for family coverage. The average annual contribution for family coverage has increased by 9% or $621 since 2025.

Employees at small companies are facing the biggest financial burden when it comes to health coverage, paying an average of $9,687 a year. In addition, over a third of employees at small companies have annual deductibles of $3,000 or more. In comparison, the overall average deductible is currently around $2,000.

"Employers are paying the equivalent of buying an economy car for each employee who has family health insurance coverage, and in 2026 they offloaded more of that cost to workers," Altman said.

The most commonly reported actions taken by large companies were increasing the share of the premium covered by employees, increasing deductibles and other cost sharing for most services, changing insurers or plan administrators, and increasing cost sharing for specific services.

Because of the high cost of GLP-1 medications, many employers are resistant to providing coverage for weight-loss use. Only 18% of large employers said they offered coverage for GLP-1s for weight loss, a decrease from the 19% who said they offered coverage last year. Among insurers that do cover GLP-1s for weight loss, 40% require enrollees to meet with a dietitian, case manager, or therapist, or participate in a lifestyle program first.

"You're trying to balance the affordability and the demand for these drugs with the fact they're spending a ton of money, so I'm not totally surprised with the we have a slight retreat on large employers offering GLP-1 coverage," said Matthew Rae, associate director of the healthcare marketplace program at KFF.

Employers are also looking for other ways to decrease prescription drug costs. A third of employers say they offer access to lower-cost mail-order generic drugs through a third-party vendor like GoodRx or Mark Cuban Cost Plus Drugs. A smaller share of employers (9%) participate in an international prescription drug purchasing service like CanaRx or ScriptSourcing.

CMS has also pushed employers to consider CHOICE plans, also known as individual coverage health reimbursement arrangements (ICHRAs), as a way to reduce costs, but so far adoption remains limited. Currently, only 11% of employers who don't offer benefits have ICHRA plans.

According to Rae, the largest potential for ICHRAs so far has been for smaller companies. However, there are also potential trade-offs with networks and access in these plans.

"I think ICHRA still plays a place going forward," Rae said. "We're not seeing the big double-digit increases into ICHRA."