How Much Does Group Health Insurance Cost?

How Much Does Group Health Insurance Cost? Pricing Expectations for Group Plans Per Employee/Month

Group health insurance costs about $9,325 a year for one worker and about $26,993 a year for a family. Those are the latest national averages from KFF’s 2025 Employer Health Benefits Survey. The employer usually pays most of that bill, and the worker pays the rest out of each paycheck.

When I first looked into group health insurance, I was shocked by the price tag. I wanted a simple answer, but every website gave me a different number. So I dug into the best data I could find and wrote down everything I learned.

In this guide, I’ll break down how much group health insurance costs per employee, who pays what, and why prices keep going up. I’ll also share the tricks I found to lower the bill. I kept the language simple, so you won’t need a dictionary to follow along.

The Short Answer: Average Group Health Insurance Cost

Here is the quick version. Every year, the nonprofit group KFF asks almost 2,000 employers what they pay for health coverage. Its most recent report came out in October 2025. Here is what it found:

A “premium” is the price of the insurance plan itself. You pay it every month, whether you go to the doctor or not.

I noticed two big things in these numbers:

• Employers carry most of the load. On average, workers pay 16% of the premium for single coverage. They pay 26% for family coverage.
• Prices went up again. Single plans rose 5% from 2024. Family plans rose 6%. That was faster than wages, which grew about 4%.

What about 2026? KFF usually puts out its new report in late October, so I’m keeping an eye out for it. Big benefits firms like Mercer said costs would climb about 6.7% in 2026. If I apply that to the 2025 numbers, I get my own rough guess: about $9,950 for single coverage and about $28,800 for family coverage in 2026.

How Much Does Group Health Insurance Cost Per Employee Per Month?

Yearly numbers are hard to picture, so I split them into months. Most business owners budget this way, and most workers see it this way on their pay stubs.

So if you run a business, plan on about $650 to $1,700 a month for each worker you cover. The low end is for a worker on a single plan. The high end is for a worker who adds a spouse and kids.

A quick example for a small business

Let me show you how this adds up. Say I own a shop with 10 workers. Six choose single coverage, and four choose family coverage. I’ll use KFF’s numbers for small firms (10 to 199 workers):

1. Single plans: Each costs about $9,211 a year. The worker pays about $1,474, so I pay about $7,737. Six of those cost me about $46,400.
2. Family plans: Each costs about $26,054 a year. The worker pays about $8,889, so I pay about $17,165. Four of those cost me about $68,700.
3. My total: About $115,000 a year, or roughly $9,600 a month.

That is a big number for a small shop. But keep reading, because there are ways to bring it down.

Who Pays for Group Health Insurance: The Employer or the Employee?

The short answer is both. The employer picks the plan and pays a share. The worker pays the rest through paycheck deductions.

Here is how the split usually works:

• Single coverage: Workers at both small and large firms pay about 16% on average.
• Family coverage: Workers at small firms pay about 36%. Workers at large firms pay only about 23%.
• Free coverage is more common at small firms. About 29% of covered workers at small firms pay nothing for single coverage. Only 7% at large firms get that deal.
• But family coverage can hurt at small firms. About 29% of covered workers at small firms pay more than half of the family premium.

Do employers have to pay a certain amount?

It depends on business size. Here are the two rules I think every owner should know:

1. Businesses with 50 or more full-time workers must offer “affordable” coverage or risk a tax penalty. For plans starting in 2026, coverage counts as affordable if the worker pays no more than 9.96% of household income for the cheapest single plan.
2. Businesses with fewer than 50 workers don’t have to offer health insurance. But many insurers require employers to pay at least half of each worker’s single premium. They often also want a set share of workers to sign up.

In my view, the smartest owners don’t just aim for the legal minimum. Good health coverage helps you hire and keep great people.

8 Things That Change the Cost of Group Health Insurance

The averages above are just a starting point. Your price could be much higher or lower. Here are the eight things I found that matter most:

1. Where your business is located; health care costs more in some places. KFF found premiums run higher in the Northeast and lower in the South.
2. How old your workers are. Older people tend to need more care. At firms where at least 35% of workers are 50 or older, family premiums averaged $27,699. At other firms, they averaged $26,332.
3. How much your workers earn. Oddly enough, firms with more high earners pay more. Their family premiums averaged $27,957, compared with $26,313 at other firms. Those firms often pick richer plans.
4. The type of plan you choose. A PPO costs more than a high-deductible plan. I cover this in the next section.
5. The deductible. A higher deductible usually means a lower premium. But workers pay more when they actually get care.
6. How many people sign up for family coverage. Family plans cost almost three times as much as single plans. More families means a bigger bill.
7. What kind of group you are. For-profit firms tend to pay less. Nonprofit groups tend to pay more.
8. What the plan covers. Extras like weight-loss drugs can add a lot. Among firms with 5,000 or more workers, 43% now cover GLP-1 drugs for weight loss. That was up from 28% the year before.

Group Health Insurance Cost by Plan Type

Not all plans cost the same. The plan type you pick is one of the biggest levers you can pull. Here is how the most common types compare, based on KFF’s 2025 data:

Here is what each plan type means in plain words:

• PPO (Preferred Provider Organization): You can see almost any doctor, in or out of the network. You don’t need a referral to see a specialist. This freedom is why it costs the most.
• HMO (Health Maintenance Organization): You must stay inside the plan’s network, except in emergencies. It is less flexible, but it is often cheaper. About 12% of covered workers use one.
• POS (Point of Service): This is a mix of an HMO and a PPO. You need a main doctor to send you to specialists. About 9% of covered workers use one.
• HDHP/SO (High-Deductible Health Plan with a Savings Option): You pay a bigger deductible before the plan kicks in. In return, the premium is lower. These plans come with a health savings account (HSA) or a health reimbursement arrangement (HRA).

If I were picking a plan for a young, healthy team, I would look hard at a high-deductible plan. I would also add money to each worker’s savings account to soften the deductible.

Small Business vs. Large Company: Who Pays More?

You might think big companies get a much better deal. The truth surprised me. The premiums are close, but the way costs are split is very different.

Here is what jumped out at me:

• Small firms pay about the same premium. Family plans are actually about $1,200 cheaper at small firms.
• Small-firm workers pay more out of pocket. They pay a bigger share of family premiums and face higher deductibles.
• Many small firms skip coverage. Only 59% of small firms offer health benefits. Almost all large firms do.
• Big firms often pay claims themselves. About 80% of covered workers at large firms are in “self-funded” plans. That means the company pays medical bills directly instead of buying a regular insurance policy.
• Small firms are trying “level-funded” plans. About 37% of covered workers at small firms are in one. These plans mix self-funding with insurance that caps the employer’s risk. They can save money for a healthy group, but they come with more risk.

Why Group Health Insurance Costs Keep Rising (and What to Expect in 2027)

The bad news is that costs are going up faster each year. Mercer, a big benefits consulting firm, tracks the total yearly cost of health benefits for each employee. Here is what it reports:

That 8.2% jump for 2027 would be the biggest since 2003. Mercer says the average cost per employee was already above $18,500 in 2026. Another firm, Aon, expects costs to rise 9.5% in 2027 before employers make changes. That would push the average past $19,000 per employee.

So why is this happening? Here are the main reasons I found:

1. Weight-loss drugs. GLP-1 drugs cost a lot, and more people are using them. Mercer says they add about one full percentage point to 2027 cost growth.
2. Fewer, bigger hospital systems. When hospitals merge, competition decreases. That lets them charge insurers more.
3. New, pricey treatments. New cancer drugs and other advanced therapies cost a lot.
4. AI billing tools. Some doctors now use AI software to help send bills. Mercer says this has led to more claims and more high-level claims.
5. People using more care. Chronic illnesses are more common, and there are more very expensive claims.

What does this mean for workers? Mercer found that 59% of employers plan to cut costs in 2027. Many will raise deductibles or ask workers to pay a bigger share. So I expect many paycheck deductions to rise faster than 8.2%.

9 Ways to Lower the Cost of Group Health Insurance

Rising prices don’t mean you’re stuck. Here are nine ways I found to keep group health insurance costs under control:

1. Claim the Small Business Health Care Tax Credit. If you have fewer than 25 full-time workers, you might get back up to 50% of what you pay in premiums. For 2026, average yearly wages must be under about $68,200. You must pay at least half of each worker’s single premium. You usually have to buy through the SHOP Marketplace, and the credit lasts only two years. Sadly, SHOP plans aren’t sold in many states, so check your state first.
2. Offer a high-deductible plan with an HSA. The premiums are lower. Workers can also save money tax-free to pay for care.
3. Try an ICHRA. An Individual Coverage Health Reimbursement Arrangement lets you give workers a set amount of tax-free money. They use it to buy their own plan. You know your exact monthly cost. In 2025, 9% of firms that don’t offer a group plan gave workers money this way.
4. Look at a QSEHRA if you have fewer than 50 workers. It works a lot like an ICHRA, but it is built for very small businesses. The IRS sets a yearly cap on how much you can give.
5. Pick a narrow or tiered network. These plans steer workers to lower-cost doctors and hospitals.
6. Shop around every year. Ask a licensed broker to get quotes from several insurers. Don’t just accept your renewal price.
7. Change how you split the cost. You might pay more for workers and less for spouses and kids. Just stay within the law if you have 50 or more workers.
8. Add virtual primary care. Online doctor visits can cost less than office trips. About 30% of firms with 50 or more workers already contract for virtual primary care.
9. Invest in wellness. Programs that help people quit smoking or manage diabetes can cut claims over time.

Group Health Insurance Cost FAQ

Here are answers to the questions I get asked most.

What is the average cost of group health insurance per employee?

The 2025 average was $9,325 a year for single coverage and $26,993 for family coverage. That works out to about $777 and $2,249 a month.

How much does an employer pay for health insurance per employee?

On average, employers paid about $7,885 a year for single coverage. They paid about $20,143 a year for family coverage. That is roughly $657 and $1,679 a month.

How much will I pay as a worker?

The average worker paid $1,440 a year for single coverage, or about $120 a month. For family coverage, the average was $6,850 a year, or about $571 a month. At small firms, family coverage averaged $8,889 a year.

Does the premium cover all my health costs?

No. You also pay when you get care. The average single deductible in 2025 was $1,886. The average copay was $27 for a primary care visit and $45 for a specialist.

Is group health insurance cheaper than buying my own plan?

For most workers, yes. The employer pays a big share of the premium. Workers’ shares are usually taken out before taxes, which saves even more.

Can a business deduct health insurance costs?

In most cases, yes. Premiums an employer pays are usually a business expense. I’d still check with a tax pro, because the details depend on how your business is set up.

Do I have to cover my workers’ families?

No law says a small business must cover families. Businesses with 50 or more full-time workers must offer coverage to workers’ children up to age 26. They don’t have to pay toward spouses.

How many employees do I need for a group plan?

In most states, you need at least one worker who isn’t the owner or the owner’s spouse. Rules vary by state and insurer, so ask a broker.

The Bottom Line on Group Health Insurance Costs

So, how much does group health insurance cost? Based on the latest data, plan on about $9,300 a year per worker and about $27,000 per family. Employers pay most of that. Prices are climbing fast, with costs per employee expected to rise about 8% in 2027.

Here is what I would do if I were in your shoes:

• Get real quotes. Averages are helpful, but your price depends on your location, team, and plan.
• Check for the tax credit if you have fewer than 25 workers.
• Compare plan types, including high-deductible plans and ICHRAs.
• Review your plan every year so rising costs don’t catch you off guard.

Group health insurance is a big expense. But I’ve found it’s one of the best ways to support your team. With smart choices, you can make it work for your budget.

Why choose Steve Turner Insurance Specialist?

Because I’m an “Insurance Specialist.” An “insurance specialist” is a broad term that includes insurance agents and insurance brokers, but the key difference is who the agent represents versus who the broker represents.

An “insurance agent” works directly for an insurance company and sells its specific policies to clients.

An “insurance broker” acts as an independent intermediary, comparing policies from multiple companies to find the best fit for their client’s needs, essentially representing the client rather than the insurance company.

I am both a licensed Insurance Agent and a licensed Insurance Broker.

My number one goal in life is to help people and ensure, without a shadow of a doubt, that you and your family are secure and protected. I will always be by your side, helping you mitigate risk by providing the industry’s best and most affordable insurance solutions.

I will find insurance plans for the entire family to help cover whatever life throws at you. I can help you save on severe medical emergencies, find a health insurance plan with low- or no-cost doctor visits and affordable prescription medications, and protect your family in the event of an unexpected accident or illness.

Best of all, it doesn’t cost you anything extra to use an experienced Insurance Agent and Broker like me to help you find the Insurance Plans that fit your individual, family, or business needs.

The companies that sell the insurance plans “you choose“ pay me – you don’t pay me. Calling any big insurance company directly won’t get you a lower price, as they will forward your call to the next available insurance agent on their list. You won’t have had any opportunity to learn about the insurance agent you’re speaking with in advance, understand their qualifications or experience level, or make an informed choice about who you want to work with.

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