- Posted October 24, 2025
U.S. Family Health Insurance Hits $27,000 Per Year as Costs Soar
The cost of employer-provided health insurance has surged for a third straight year, with the annual cost of a family plan approaching $27,000, according to a new survey from the nonprofit KFF.
That’s the average one-year premium cost shared by one family and employer.
Zoom out: This year’s 6% cost jump follows two years of 7% gains, meaning health costs are rising faster than the inflation rate. Economists warn that this trend is beginning to strain the economy, potentially limiting increases in employment and wages.
“If health care costs go up faster than the economy in general, that means there’s less money left over to go to wages,” Gary Claxton, a senior vice president at KFF, told The Wall Street Journal.
The KFF survey, which includes more than 1,860 employers, captures the reality for nearly half of the U.S. population that receives health coverage through their jobs.
A 2025 WSJ/Vistage survey of 336 small businesses found 51% facing health insurance cost increases of 10% or more.
Zoom in: What’s driving the surge?
The main cause of the rising premiums is people needing and using newer, more costly therapies. According to WSJ, insurers and businesses point to a few key factors:
Costly New Drugs: Employers are seeing dramatically increased costs for new and expensive drugs, particularly the popular class of drugs known as GLP-1s, which includes widely used weight-loss treatments like Wegovy and Zepbound. The KFF survey shows not all employers are willing or able to cover these drugs for weight loss at this time.
Chronic Conditions Up: Costly chronic conditions, including cancer, are on the rise among the working-age population.
Rising Hospital Prices: Health care providers have successfully negotiated higher rates in their contracts, leading to significant increases in hospital bills.
For small businesses, these increases are particularly painful. Many face double digit percentage increases this year and worry about affordability, according to The WSJ.
In response, many are passing the burden onto their employees. The KFF survey shows that, after a brief period of flattening, employees’ out-of-pocket costs for deductibles and copays are ticking upward again.
William Duff Architects in San Francisco covered full premiums in the past but was forced to change course after being hit with a 38% rate increase on its most generous health plan.
“Over the years, we’ve been managing the cost increases through cuts in other areas, efficiencies and less profits,” founder William Duff Jr. told The WSJ. “We couldn’t absorb it all any longer.”
One strategy: A small, but growing, number of small employers are abandoning traditional health plans, instead opting to provide workers with Health Reimbursement Accounts to pay their own premiums.
More information
The U.S. Department of Health and Human Services (HHS) offers information on health insurance options.
SOURCES: Wall Street Journal, Oct. 22, 2025; KFF, 2025 Employer Health Benefits Survey, Oct. 22, 2025
