KFF's 2025 Employer Health Benefits Survey, the most recent full-year benchmark available, puts the average annual premium for employer-sponsored health insurance at $9,325 for single coverage and $26,993 for family coverage. Those are total premiums. After the average worker contribution of $1,440 for single and $6,850 for family coverage, the employer's share comes to about $7,885 for single and $20,143 for family. These figures shift by plan type, employer size, and industry, and they cover premiums only. They do not include deductibles, copays, or administrative costs, which add to the true cost of coverage.
What's Driving the Cost of Employer-Sponsored Health Insurance?
The average employer healthcare cost per employee is not a static number. Several factors move it, and understanding them helps benefits professionals anticipate changes and design plans that hold up.
- Medical inflation: Prices for medical services, prescription drugs, and hospital care rise faster than general inflation, which feeds directly into premiums.
- Plan design: High-deductible health plans (HDHPs) carry lower premiums, while Preferred Provider Organizations (PPOs) and richer-tier plans cost more.
- Employee demographics: Older workforces and groups with chronic conditions generate higher claims, which raises premiums for the whole pool.
- Geographic variation: Employer costs differ sharply by state because of local market prices and regulations.
- Employer size: Large employers can use their size and self-funded arrangements to spread risk, while small employers buy fully insured policies with less bargaining power.
Breaking Down the Numbers for Different Plan Types and Firm Sizes
Here is how the 2025 data breaks down by plan type and firm size. KFF's survey remains the benchmark most employers and brokers cite.
By Plan Type
- PPO: The highest average premiums, at $9,818 for single and $28,272 for family coverage in 2025.
- HDHP with savings option (HSA-eligible): Premiums run below PPO levels; employers accept the lower premium in exchange for higher deductibles and more cost-sharing on employees.
- HMO: Premiums vary by region and network and tend to run below PPOs.
By Employer Size
- Small firms (10-199 workers): Buy fully insured coverage with less negotiating power, so premiums swing more from year to year.
- Large firms (200+ workers): Spread risk across more lives and more often offer several plan types.
- Self-funded employers: Pay claims directly rather than buying insurance, which removes insurer margins and risk charges but leaves the employer holding the claims risk.
Industry effects mostly arrive through these same variables. A 300-person manufacturer and a 300-person restaurant group can pay very different premiums because their workforces differ in age, location, and plan design. These figures are premium-only. A self-funded employer's year-end cost depends on how the covered group actually uses care, so two employers with identical premiums can end the year with very different total spend.
Beyond Premiums: The Total Cost of Employment Healthcare
When advising clients or stakeholders, factor in the total cost of care, not just the premium. That total includes:
- Employer contributions to health accounts such as HSAs and HRAs, which often sit alongside HDHPs.
- Administrative costs for plan management, including third-party administrator (TPA) fees and broker commissions.
- Wellness and care-management program spending, which adds cost today and may reduce claims later.
- Employee cost-sharing such as deductibles and copays, which shifts cost off the employer and shapes utilization and satisfaction.
Adding these layers means an employer's true per-employee health benefit cost runs above the premium figure in survey benchmarks. Tracking the full amount matters for ERISA and ACA reporting and for benchmarking against industry peers.
How Much of the Per-Employee Average Is Waste
A 2019 review in JAMA estimated that about 25% of U.S. health care spending, between $760 billion and $935 billion a year, is waste across six categories: failure of care delivery, failure of care coordination, overtreatment and low-value care, pricing failure, administrative complexity, and fraud and abuse. Per employee, that means a meaningful slice of the premium above pays for care that never shows up as better health.
The employer takeaway is direct. If roughly a quarter of the average cost is waste, the biggest lever is not shaving a point or two off a renewal. It is routing employees to the care they actually need before small problems become claims. Preventive services are among the most underused opportunities in the system: few adults complete all the preventive care recommended for them each year, and care that catches a condition early costs less than treating it late.
That is why the premium, by itself, understates the opportunity. An employer that negotiates the premium alone manages a symptom. Employers that see durable savings change where money flows first, toward prevention, transparent pricing, and care delivered before the primary plan.
How Employers Can Manage These Costs
Premiums keep rising: single coverage grew 5% and family coverage 6% in 2025, and family premiums are up 24% over the past five years. Cost-control strategies that do not cut coverage:
- Telehealth and virtual care: Diverts low-acuity visits from the ER and lowers per-visit costs.
- Reference-based pricing: Caps what the plan pays for certain procedures, pushing back on inflated prices for high-cost services.
- Chronic disease management: Programs that keep conditions such as diabetes or hypertension under control reduce avoidable complications and claims.
- Plan design changes: Moving to an HDHP with an HSA contribution lowers premiums and gives employees more control, though it shifts more cost-sharing onto them.
- Self-funding: For employers with 500 or more employees, paying claims directly removes insurer profit margins and adds flexibility, at the cost of carrying claims risk.
The average employer healthcare cost per employee is a starting point for planning, not a fixed target. By analyzing your workforce demographics, plan options, and utilization patterns, you can build a package that balances affordability with coverage, while staying within state and federal rules such as the ACA's employer mandate and HIPAA privacy requirements.
The 2025 benchmark is $9,325 for single and $26,993 for family coverage in total premiums, with employers paying about $7,885 and $20,143 of that. Budgets for the next renewal should assume premiums keep climbing at roughly the 5-7% annual pace of recent years. Track the annual KFF Employer Health Benefits Survey and the Business Group on Health's plan design survey for updated benchmarks.
This article is for general information only and is not legal, tax, or medical advice. Employers should consult their own advisors.