As the federal shutdown enters its fourth week caused by a stalemate over health insurance costs for the 22 million Americans enrolled in Affordable Care Act plans, new report shows that more than 154 million people with employer-based insurance are also facing steep price increases—and that the situation is likely to get worse.
Work-based health insurance premiums rose 6% in 2025 to an average of $26,993 per year for family coverage, according to an annual survey of employers released Oct. 22 by KFF, a nonprofit health information organization that includes KFF Health News.
For the first time in two decades, the cost of insuring a family of four has risen by 6% or more for three years in a row, according to KFF.
Over the past five years, average family insurance premiums have increased 26%, compared with a 29% rise in worker wages and a nearly 24% rise in inflation. The average cost of family insurance is now about the same as new Toyota Corolla hybrid.
The average annual premium for an employer-provided individual health plan rose 5% to $9,325, nearly $3,000 higher than in 2016, according to the survey.
“It's a concern as health care costs continue to rise,” said Eric Trump, controller of Steve Reiff Inc., a small company in South Whitley, Ind., that specializes in sandblasting and painting of heavy equipment.
Trump, who is no relation to President Donald Trump, said his company's health insurance costs rose 8% in fiscal 2026, about the same as the last few years.
Reiff workers pay about half the cost of their health insurance. About half of its 20 current employees refuse coverage because they get coverage through a family member or choose to remain uninsured, he said. “There’s not much we can do because we don’t have enough staff to spread the costs.”
Most people with coverage through their job contribute to the cost of their premiums: The average worker contributed $1,440 for individual coverage or $6,850 for family coverage this year.
Over time, more workers are paying higher deductibles—the amount they must spend out of pocket on health care before their insurance company steps in. More than a 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 by 32% over the past five years and by 77% over the past 10 years, the report says.
Rising drug and hospital costs often quoted are the main culprits behind rising health insurance costs, and neither is showing signs of abating.
“Early reports suggest cost trends will be higher in 2026, potentially leading to higher premium increases unless employers and plans find ways to offset higher costs through changes in benefits, cost sharing or plan design,” the KFF survey said.
A big concern among employers is the high price of GLP-1 weight loss drugs, which are covered by a growing number of companies. Their high prices, combined with high demand, have led some businesses to tighten or discontinue coverage for weight-loss products.
“Large employers know that these new, expensive weight-loss drugs are an important benefit for their workers, but the cost often exceeds their expectations,” study author Gary Claxton, a senior vice president at KFF, said in a press release. “It’s not surprising that some are rethinking access to weight loss medications.”
Employers typically respond to higher health care costs by passing the costs onto their workers, but it's unclear how much more financial pain workers will be able to bear. The survey found that nearly half of large employers said their employees had “moderate” or “high” concerns about the level of cost sharing.
Although rising costs of employer-sponsored insurance have outpaced overall inflation, the issue has received little attention on Capitol Hill in recent months. To help pay for further tax cuts, Trump's tax and spending bill cuts by billions of dollars the amount the government spends on Medicaid, the federal health insurance program for 70 million low-income and disabled people. Congressional budget experts predict that cuts to Medicaid will leave millions of people uninsured over the next decade.
The federal government has been shut down since Oct. 1 as Democrats refuse to vote on a new spending measure unless Republicans agree to provide tax breaks that would help about 22 million people buy health insurance through the ACA marketplaces. Without Congressional action, the tax breaks will expire and insurance premiums for many consumers will double starting in January.
The KFF report is based on a survey conducted this year among 1,862 randomly selected non-federal public and private employers with 10 or more employees.
