Employer-sponsored health insurance continues to be a critical benefit for employee retention and satisfaction, but in 2025 it comes with an increasingly high-price tag for businesses.
According to the KFF 2024 Employer Health Benefits Survey, the annual premium for family coverage now stands at $25,572 – rising 7 percent for the second consecutive year.
“Employers are shelling out the equivalent of buying an economy car for every worker every year to pay for family coverage,” KFF President and CEO Drew Altman said. “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.”
While family premiums for employer coverage have increased 24 percent since 2019, employees have only seen their share increase by just 5 percent or less than $300 with employers bearing the brunt of the cost, contributing an average of $19,276 towards family coverage, while employees contribute $6,296.
“This stark reality highlights the critical role that insurance brokers play in helping businesses navigate this increasingly complex world of employee benefits,” says Kyle Dean, President and CEO of Dean & Draper. “As costs continue to rise, it's more important than ever for companies to work with experienced professionals to ensure that their employee insurance not only meets the needs of their workforce but also remains cost-effective and makes business sense.”
The Importance of Strategic Benefits Planning
For businesses, especially small and medium-sized enterprises, the rising cost of health insurance presents a significant challenge.
It's crucial to strike a balance between providing comprehensive coverage and managing expenses. This is where the expertise of insurance brokers becomes invaluable.
Insurance brokers can help businesses:
By partnering with an experienced insurance broker, businesses can develop a strategic approach to employee benefits that not only attracts and retains top talent but also aligns with their financial goals.
This comes at a time when employees are expecting even more financial contributions from employers.
The Shifting Landscape of Employee Benefits
Recent studies highlight the evolving preferences of the modern workforce. According to the 2024 EBRI Workplace Wellness Survey, over 4 in 10 are extremely or very satisfied with the employee benefits package offered by their employer, leaving a lot of room for employer improvement.
“Top improvements to benefits plans would be larger employer contributions and more financial well-being benefits,” concluded the survey.
When asked which of the following would be the most valuable improvement to your employee benefits programs and offerings, those survey said:
Quality Health Care Coverage is an Employee Priority
The 2024 EBRI Workplace Wellness Survey found that health insurance continues to be a priority, trailing only work-life balance and flexibility in work schedule in what they value most from an employer aside from income and compensation.
The changes from 2022 to 2024:
For those surveyed, 83 percent were offered employer health insurance, the highest benefit offered followed by retirement savings plan (79 percent), dental insurance (75 percent), vision insurance (72 percent), life insurance (62 percent), short-term disability (60 percent), health savings account (55 percent), and long-term disability (54 percent).
Less than half of employers offered health wellness programs (45 percent), flexible spending accounts (45 percent), accident, critical illness or cancer insurance (40 percent), long-term care insurance (36 percent), traditional pension, defined benefit, or cash balance plan (35 percent), supplemental health insurance for workers (35 percent), stock options (20 percent), and emergency savings account (15 percent).
The Business Case for Comprehensive Employee Insurance
The implementation of comprehensive employee insurance offers significant advantages for both employers and employees, creating a strong business case for its adoption.
Health care trade association AHIP says that employer-provided health plans generate major ROI (47 percent) for companies and employees alike.
“That ROI came in the form of increased recruitment and retention, better employee productivity, reductions in medical costs and disability claims, and tax benefits. That ROI is expected to jump to 52% by 2026, according to estimates from Avalere,” said AHIP. “Employers should see a return of $346.6 billion in 2026, including $108 billion in direct medical cost reductions, and $139.70 billion in tax benefits according to Avalere.”
The business case for comprehensive employee insurance includes:
As healthcare costs continue to rise, the value of employer-provided comprehensive insurance is likely to become even more significant in the coming years.
Best Practices for Choosing the Right Insurance
Selecting the right insurance options for your workforce can be challenging. Here are some best practices to consider:
Let Dean & Draper help you navigate the complex world of insurance options. Contact us today to schedule a consultation to find a customized benefits solution that meets your employees’ needs while aligning with your business goals.