Workplace Health Insurance Costs Expected to Surge in 2025: A Growing Concern for Employers and Employees Alike
Table of Contents
Inflation Subsiding, But Out-of-Pocket Health Insurance Costs May Rise
Even though inflation is subsiding, your out-of-pocket health insurance costs could spike in 2025.
Employers Bracing for Higher Health Plan Costs
Employers, which provide health coverage to over 150 million Americans, are bracing for yet another year of steep price increases for workplace health plans, according to preliminary results from Mercer’s annual private health insurance survey.
Predictions for Health Plan Costs
On average, companies told the consulting firm that they expect health plan costs to surge between 5.8% and 7% in 2025. The lower estimate is based on price increases if the employer implements cost-cutting strategies, while the upper figure is how high prices are set to surge if they don’t.
Why Health Insurance Inflation Remains High
In both cases, the price increases for private workplace insurance are running much hotter than overall inflation, which was 2.5% in August. Specifically, health insurance inflation clocked in at 3.3%, though that includes coverage through the Affordable Care Act, or Obamacare, as well as other federally run health plans (not just workplace plans).
Cost-Cutting Measures Not Likely to Help Workers
To offset some of the impending price increases, most employers (53%) reported that they do plan to take cost-cutting measures, a notable increase from 44% this year. But those efforts are meant to save the companies money, not the workers.
Shifting the Burden to Workers
“Generally, these changes involve raising deductibles and other cost-sharing provisions and result in higher out-of-pocket costs,” Mercer said in commentary shared with Money.
A Long-Term Trend of Higher Health Insurance Costs
2025 would be the third consecutive year of unusually high health insurance cost increases, according to the firm, following a decade of cost increases averaging around 3%.
Initial Results from the Mercer Survey
Again, these are just initial results and are based on survey responses from over 1,800 U.S. employers. The full report will be released later this year.
Average Out-of-Pocket Health Insurance Costs in 2025
The average deductible for single workers is $1,735, according to the latest KFF data. Deductibles for family plans are often double that amount, running between roughly $3,000 and $4,900.
Costs and Savings
Premiums are another major out-of-pocket expense for employees. Simply put, this is the cost of the health care plan, usually broken down monthly or annually. Based on a 5.8% price increase, annual premiums in 2025 are projected to cost about $17,600 per worker, according to a Money analysis of Mercer survey data.
Underlying Factors for Rising Costs
Some key reasons for the continued price surges for health insurance — even as inflation abates — are the health care worker shortage, Mercer says, as well as prescription drug costs.
