Health insurance premiums continue to increase

For the survey, KFF partnered with Davis Research to interview business owners and HR/benefits managers at 2,142 firms between January and July 2024 to assess their employee health insurance and costs.

In 2024, annual premiums for single coverage averaged $8,951, a 6% increase from 2023. For families, the average annual premium was $25,572, a 7% increase from 2023. In comparison, the overall U.S. inflation rate increased by 3.2% during the same time. 

"Healthcare prices are often set in advance, and there is a lag in how long it takes higher prices to filter through to premiums," said Matthew Rae, associate director of KFF's Health Care Marketplace Program and one of the survey's authors. "While inflation is lower this year, the growth in premiums we are seeing may still be reflecting the higher prices we saw in 2022 and 2023."

Since 2019, there has been a 24% cumulative increase in healthcare premiums, compared to a 23% increase in inflation and a 28% increase in wages.

However, the amount that employees pay toward their premiums has not changed much over the last five years, increasing by less than $300, or 5%. On average, employees contributed $1,787 for single coverage and $6,296 for family coverage in 2024.

"Employers are shelling out the equivalent of buying an economy car for every worker every year to pay for family coverage," said Drew Altman, president and CEO of KFF. "In the tight labor market in recent years, they have not been able to continue offloading costs onto workers who are already struggling with health care bills."

Some of the country's largest employers, which includes those with at least 5,000 workers, are also taking steps to protect lower-wage workers from the full impact of growing healthcare costs. Of these large firms, 29% say they have a program to reduce premiums for lower-wage workers, and 19% say they offer reduced-benefit plans with more affordable coverage.

Employers' coverage of GLP-1 drugs, fertility services, and more

Although GLP-1 drugs, such as Wegovy, have grown significantly in popularity, relatively few employers cover them.

According to the survey, only 18% of large employers with at least 200 workers said they covered GLP-1 drugs for weight loss while 52% said they don't offer coverage for them. An additional 31% said they were unsure if their plans covered GLP-1 drugs.

Among the largest employers with at least 5,000 workers, more than a quarter (28%) said they covered GLP-1 drugs while 64% said they did not.

However, among the large companies that offer GLP-1 drugs, 53% said they had conditions or requirements associated with coverage. Some of these conditions include meeting with a dietician, psychologist, or other professional first (24%); participating in a lifestyle or weight-loss problem either before (8%) or while (10%) taking GLP-1 drugs; or another type of condition (26%).

A third of large companies that currently cover GLP-1 drugs said that they will have a "significant impact" on their plan's spending on prescription drugs. At the same time, 44% of all large firms said that it would be "very important" or "important" to cover GLP-1 drugs to ensure employees' satisfaction with their health plans.

"Employers face the challenge of integrating these potentially important treatments into their already costly benefit plans," said Gary Claxton, a VP at KFF and one of the study's authors.

Some employers are also covering fertility benefits for their workers. Among large employers with at least 200 workers, 37% said they covered fertility medications, 27% said they cover in vitro fertilization, and 26% said they cover artificial insemination. Fewer employers (12%) said they cover egg or sperm freezing. 

When it comes to mental health and substance abuse services, around a quarter of employers said their plan's network is "somewhat" or "very" narrow. However, around half (48%) of large firms with at least 200 workers said they have increased the mental health counseling resources available to their workers. These resources are often available through an employee assistance program or third-party vendors, such as Lyra Health or Headspace. (Suvarna, Bloomberg/Modern Healthcare, 10/9; Minemyer, Fierce Healthcare, 10/9; KFF news release, 10/9; KFF Employer Health Benefits report, accessed 10/10)

These ready-to-use slides detail the current trends and major priorities in the employer-sponsored insurance market. The materials are based on Advisory Board conversations with health plan leaders, benefits brokers and consultants, and — more importantly — employer health benefits and HR leaders. Use these slides to guide your conversations about evolving trends in the employer-sponsored insurance market.