What happened to employer costs and wages
Employer health insurance outlays rose 6.4% in the year through September, a pace last seen in 2005. Economists say those higher benefit bills are one reason wage and salary growth has slowed to a five-year low.
"As employers are spending more money on health insurance plans, that will have a very direct impact on wage growth," said Sneha Puri of the Indeed Hiring Lab. "That can have a very dire impact on people's purchasing power and their standard of living." For much of 2026, prices for everyday goods have grown faster than paychecks, and rising healthcare costs are piling on.
How rising premiums hit workers and small firms
Workers are paying more out of pocket. KFF reports that in 2026 the typical employee contribution for family coverage went up 9% to just under $7,500 across firms of all sizes, tying the biggest annual jump since 2010. At companies with fewer than 200 employees, the average worker share is close to $9,700 a year.
"That's astronomical," said Matthew Rae, who serves as associate director for KFF's Health Care Marketplace Program. "And then on top of that you have a deductible. You could be spending more than $10,000 easily on healthcare." Counting both worker and employer payments, KFF estimates family premiums top $28,000 on average this year.
Rising price tags stem from several forces: higher prices for medical care, more care being used, new treatments such as GLP-1s, and policy shifts. Looking ahead, insurance broker Aon Plc expects employer healthcare costs to rise another 9.5% in 2027.
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What business owners and nonprofit leaders are doing
Coverage decisions are getting tougher. KFF reports that this year roughly 98% of employers with 200 or more employees offered health benefits. Among smaller employers, the share offering coverage has dropped to 66% today from roughly 80% in the early 2000s.
SugarBot Sweet Shop in Saint Charles, Missouri, felt the strain. The bakery used to pay half of workers' marketplace premiums, but after federal subsidies were reduced and premiums became more expensive, owner Jackie Huebbe gave staff a choice: the monthly subsidy or higher pay.
"A healthcare benefit is awesome. But if you can't pay your rent and you can't eat, that health insurance isn't going to fix it," she said. "Everything is like you're shopping for it in the airport now." Every full-time worker chose a raise over premium help.
Nonprofits are juggling the same tradeoffs. "People are foregoing coverage in healthcare to pay their rent," said Mannat Singh, the Colorado Consumer Health Initiative's executive director. "Employers have to make the devastating choice to not offer those benefits to their employees." Her organization expects its own premiums to jump 7% to 10% this year and is holding down raises instead of trimming benefits. "Everybody's getting a sub-3% raise," she said. "Some of us are getting 0%."
Coverage shifts, political concern, and what it means for your money
When employers scale back benefits, more workers turn to the individual market. That option is also pricier after premium increases and the end of enhanced federal tax credits. KFF says individual market enrollment declined by 18% from June 2025 to June 2026, and some Americans are opting out of coverage entirely. A Commonwealth Fund survey found that among adults ages 19 to 64, the uninsured share increased this year to 11.2%, up from 8.9% in 2024, after more than a decade of declines that had cut the rate roughly in half from 2010 to 2024.
Healthcare costs are a ballot-box issue too. Nearly 60% of voters told KFF they are very concerned about the price of care. The bottom line: higher premiums, deductibles, and usage are feeding through to corporate expenses and household budgets. With another 9.5% increase in employer costs projected for 2027, expect continued pressure on compensation packages, hiring decisions, and how much of your take-home pay goes to staying insured.
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