America’s larger employers and their staff have been digging deeper into their pockets this year when it comes to family health care premiums.

KFF, an independent, nonprofit group focusing on health policies, revealed that, because of a 6 percent hike, family premiums are now costing employers an average of $26,993 annually, with employees paying an average $6,850 yearly toward the policy.

Formerly known as the Kaiser Family Foundation, KFF issued a report on Oct. 22 noting that family premiums are now costing $1,408 more than last year. Employers blame escalating drug prices as a major factor contributing to the rise in premiums.

KFF’s research indicates that among companies with at least 200 employees, 36 percent named prescription medications as bearing a large responsibility for increased premiums. More than 30 percent of employers said the growing prevalence of chronic diseases is affecting premium costs, while 22 percent blame newer drugs for driving the price increases.

“There is a quiet alarm bell going off. With GLP-1s [diabetes and weight loss treatment medications], increases in hospital prices, tariffs and other factors, we expect employer premiums to rise more sharply next year,” Drew Altman, KFF’s president and CEO, said in the report.

“Employers have nothing new in their arsenal that can address most of the drivers of their cost increases, and that could well result in an increase in deductibles and other forms of employee cost sharing again, a strategy that neither employers nor employees like but companies resort to in a pinch to hold down premium increases.”

Currently, close to 154 million Americans under the age of 65 rely on employer-sponsored health care coverage. KFF said that nearly 20 percent of larger firms that offer health benefits cover the GLP-1 medications for weight loss, but 57 percent don’t.

Among companies with more than 5,000 employees, 43 percent currently cover the GLP-1 drugs for weight loss—a substantial increase from 28 percent in 2024.

“Large employers know these new high-priced weight-loss drugs are an important benefit for their workers, but their costs often exceed their expectations,” KFF senior vice president and study author Gary Claxton said in the report.

“It’s not a surprise that some are rethinking access to the drugs for weight loss.”

As a result, many employers now require staff members taking these medications to take additional steps to manage their weight, such as meeting with dietitians and participating in exercise programs.

Still, the high cost of these drugs is taking its toll on employers. KFF said that nearly 60 percent of the country’s largest employers claim that weight loss medications have exceeded cost expectations, and 66 percent admit that drug coverage has had a significant impact on their health plan spending.

Some employers said they would provide coverage for these drugs only to treat diabetes. Just 1 percent of firms not currently covering the drugs indicated they were likely to add coverage next year.

According to a report from the KFF partnership with the Peterson Center on health care, obesity is one of the most serious health issues facing the country and is growing among adults and children. Obesity is often associated with many health conditions, ranging from cardiovascular diseases to cancer.

KFF’s employee survey also discovered that as a result of higher health care contributions, almost 30 percent are now enrolled in high-deductible health plans that could be used with a Health Savings Account. More than half of employees at smaller firms now face deductibles of at least $2,000.

Typically, part-time staff members are not eligible for health benefits from their employer; only 27 percent of large firms and 18 percent of small firms offer coverage to them.

To save costs, some employers have started incorporating alternative approaches to providing primary care options for their staff, including virtual care and direct contracts with networks of primary care providers.

Among firms with 50 or more workers that offer health benefits, 30 percent are now offering these services, including telehealth primary care options.