US workers are facing significant increases in health insurance costs, a trend expected to worsen in 2026. The average annual premium for family job-based coverage reached $26,993 in 2025, a 6% increase from the previous year. Individual coverage premiums also rose by 5% to $9,325. This marks the first time in two decades that family coverage costs have increased by 6% or more for three consecutive years. Over the last five years, family coverage premiums have surged by 26%, outpacing workers' wage growth of 29% and inflation at nearly 24%.
Employers are preparing for the steepest increase in health benefit costs in 15 years, with some projections estimating an almost 9% rise per employee on average for 2026. Consultancies like Mercer, Aon, and Segal project health plan cost increases ranging from 9% to 9.5%. This is largely attributed to rising drug prices, particularly expensive GLP-1 drugs for weight loss, and general hospital costs. As a result, 67% of large companies are expected to raise monthly premiums for employee health coverage through paycheck deductions in 2027. Additionally, 48% of employers plan to implement other changes, such as higher deductibles and copays, increasing workers' out-of-pocket spending.
Many employers intend to pass these increased costs onto their workers. Surveys indicate that workers can expect to pay an additional 6% to 7% in premiums, on average, in 2026. This means the average worker contribution for individual coverage, currently $1,440, and for family coverage, currently $6,850, will likely climb. Some companies may opt to keep premiums steady but increase deductibles and copays, with over one-third of covered workers already enrolled in plans with a deductible of $2,000 or more for an individual. This share has increased by 32% over the last five years and 77% over the last ten years. While some employers might absorb the costs to retain employees in a competitive labor market, the prevailing trend is towards higher employee contributions.
