Employees and their employers are paying a lot more for workplace health insurance this year.
According to the survey, the annual cost of family health insurance at work has risen to an average of nearly $24,000 this year, that’s up 7% from last year.
Employees are paying an average of $6,575 for their share of the premium, up almost $500, or nearly 8%, from last year, the annual survey found. Their companies are footing the rest of the bill.
“We have a huge increase in premiums this year. There’s just no other way to cut it,” said Matthew Rae, who co-authored the survey. “There are a lot of affordability challenges for employer coverage.”
For single coverage, the average annual premium has risen to $8,435, also up 7% from last year. Employees are picking up just over $1,400 of the tab, about $75 more than last year.
While the jump in premiums is large, it is roughly in line with the rise in wages and inflation since 2022, as well as over the past five years. That’s a change from the early 2000s, when premiums soared by double digits but inflation and wage growth were relatively subdued.
The tight labour market has encouraged companies to avoid watering down their health benefits, which can be a recruiting and retention tool.
Deductibles were essentially flat this year, which may reflect employers’ concerns about how much workers will have to pay out of pocket if they need medical care, KFF said. The average annual deductible is about $1,735 for employees with single coverage.
“Employers want to continue to offer good benefits to keep good people,” Rae said.
Still, workers should prepare for premiums to take a bigger bite out of their paychecks in coming years. Nearly a quarter of companies said they would increase employees’ premium contributions over the next two years, KFF found.
Higher costs for smaller companies
Employees in smaller companies tend to pay much more for coverage than their counterparts in companies with at least 200 employees.
KDC Mailing & Bindery faced an overall premium increase of about 13% this year, said Steve Van Loon, director of operations at the 42-employee company in Tempe, Arizona.
The company, which only started offering health benefits in 2019 to be more competitive, raised workers’ premiums by 3%, but had to raise its prices by as much as 5% to cover the increased costs. KDC covered the rest.
Next year, the company probably won’t be able to be as generous to its employees, Van Loon said.
“Our profit margins do not allow us to absorb these costs,” he said. “We would be out of business.”
