By Bill Pan

Health care costs continued to rise for employers and workers this year, with employees paying more for family coverage as companies increasingly look for ways to control higher expenses, a new report suggests.

The average annual premium for employer-sponsored family health insurance reached $28,303 in 2026, up 5 percent, or $1,310, from a year earlier, nonprofit health research group KFF said in its annual survey released on Thursday.

Workers paid an average of $7,471 toward those premiums, up 9 percent, or $621, from 2025, the survey found. Employers covered the remaining roughly $20,800 on average.

The increase in workers’ contributions outpaced both wage growth and overall inflation, KFF said.

Wages rose 3.7 percent over the past year, while general inflation was 2.7 percent.

The survey was based on responses from 1,937 private and non-federal public employers with at least 10 workers.

Among companies with at least 200 workers, 44 percent said they increased the share of premiums paid by employees in response to higher expected health care costs.

Another 21 percent increased deductibles or other forms of cost sharing for most medical services.

There are only a limited number of things employers can do to mitigate premium increases, Matthew Rae, associate director of KFF’s Program on the Health Care Marketplace, told KFF Health News.

Employers also reported changing insurers, requiring more advance approval for some medical services, and offering plans with narrower networks of doctors and hospitals as ways to control expenses.

Smaller Companies Carry Heavier Burden

Employees at smaller businesses generally face higher out-of-pocket costs than workers at large companies.

Workers at companies with fewer than 200 employees contributed an average of $9,687 toward family premiums in 2026. That was $2,847 more than workers at larger companies, according to KFF.

Deductibles also tended to be significantly higher at smaller employers.

Among workers whose plans have an annual deductible, the average deductible for individual coverage was $1,955 this year, largely unchanged from $1,886 in 2025.

At companies with fewer than 200 workers, however, the average deductible was $2,624, compared with $1,772 at larger employers.

Higher Costs Expected in 2027

Several recent surveys suggest employers are bracing for even larger increases in health care costs next year.

Insurance brokerage Aon has projected that employer health care costs could rise 9.5 percent in 2027, while consulting firm Mercer estimated an 8.2 percent increase.

WTW, another insurance and benefits consulting firm, forecasts an even steeper 11.1 percent increase, which it said would be the largest rise in employer health care costs in more than two decades.

The Business Group on Health, which represents large employers, found in its latest survey that employers are projecting a median increase of 9.2 percent before any plan benefit changes.

Those changes are expected to bring the increase down to about 8 percent, which still represents a significant year-over-year spike.

Factors contributing to the increases include greater use of medical services, higher hospital prices, and more expensive prescription drugs, the BGH said.

The group also noted that employers have underestimated their actual health care spending for each of the past three years, and that each subsequent “miss” has been bigger than the one before it.