Employer-sponsored plans remain the primary source of health insurance for most Americans under 65 and their families, covering nearly 165 million people in 2023. However, the cost of providing these benefits is becoming increasingly difficult for both employees and employers. Researchers calculated the employee and employer contribution amounts to employer-sponsored health plans, and ranked U.S. metros and states accordingly.
The Cost of Health Insurance for Employees and Employers by State
Photo Credit: Andrey Popov / Shutterstock
Health insurance is a crucial component of employee compensation, typically representing the largest benefit expense for companies outside of wages. As  in the United States, access to competitive health insurance is vital for employees, who rely on these benefits to mitigate the growing costs of care. For employers, offering comprehensive health insurance packages is an essential tool not only for attracting talent, but also for retaining workers who might otherwise seek positions offering better coverage.
Employer-sponsored plans remain the primary source of health insurance for most Americans under 65 and their families, covering nearly . However, the cost of providing these benefits is becoming increasingly difficult for both employees and employers. Projections for 2025 indicate that healthcare costs , reflecting the continued pressure of rising prices.
This analysis explores the cost of health insurance over time, by firm type, and by location, shedding light on the financial implications for employers and employees nationwide.
How Fast Are Health Insurance Premiums Rising?
Over the past two decades, health insurance premiums have risen far faster than the rate of inflation
Take Command analysis of U.S. Department of Health & Human Services data | Image Credit: Take Command
Rising premiums for employer-sponsored insurance have increasingly outpaced inflation and wage growth, driving up costs for firms and employers across the economy. In 2000, the average premium for single coverage (combined employer and employee contributions) was $4,698 in 2023 dollars, with employees contributing $796 and employers covering the remaining $3,902. By 2023, average premiums had risen to $8,182, with employees contributing $1,640 on average and employers covering $6,542. This reflects an inflation-adjusted increase of 74% over 23 years.
For family coverage, the rise has been even more pronounced. In 2000, the average inflation-adjusted premium for family coverage was $11,983, with employees contributing $2,856 and employers covering $9,127. By 2023, average family coverage premiums had grown to $23,938, a doubling over two decades. Employees now contribute an average of $6,889 annually for family coverage, while employers cover $17,049.
In addition to rising premiums, the share of health insurance costs covered by employees has also increased over time. In 2000, employees contributed 16.9% of the total premium for single coverage and 23.8% for family coverage. By 2023, these contributions had grown to 20.0% for single coverage and 28.8% for family coverage—a shift that has transferred a larger portion of the healthcare cost burden to employees.
Health Insurance Costs by Firm Size
Midsize employers contribute the least to employee health benefits
Take Command analysis of U.S. Department of Health & Human Services data | Image Credit: Take Command
Employees at midsize companies (25–99 employees) generally pay more for healthcare coverage while receiving less employer support than workers at smaller and larger firms. For single coverage, midsize firm employees contribute an average of $1,810 annually, compared to the 2023 national average of $1,640 across all firms. For family coverage, employees pay an average of $8,839, significantly higher than the national average of $6,889 and higher than that paid by employees in any other firm-size cohort.
In contrast, employer contributions at midsize companies remain lower than average. For single coverage, midsize firms contribute $5,916 on average, compared to the national employer average of $6,542. Similarly, for family coverage, midsize employers contribute $13,662—well below the $17,049 average across all firms.
The trend of employee contributions being lowest at both the smallest and largest firms, in both percentage and dollar terms, is shaped by several factors. Small firms often  that help offset healthcare costs, enabling them to cover a larger share of premiums without significantly increasing their financial burden. Large firms, on the other hand, typically have the resources to invest more heavily in employee benefits, using competitive healthcare coverage as a tool to attract and retain top talent. Midsize firms, however, often fall into a “middle ground,†lacking access to both tax incentives and the financial capacity of larger corporations. As a result, they tend to offer lower employer contributions, which shifts a larger share of healthcare costs onto employees.
Health Insurance Costs by Industry
Professional & financial services employers face the highest health insurance premiums
Take Command analysis of U.S. Department of Health & Human Services data | Image Credit: Take Command
High-paying industries, such as professional services, financial services, and real estate, tend to have some of the highest health insurance premiums. In these sectors, employers often provide more comprehensive coverage to align with competitive compensation packages, leading to higher overall premium costs. For single coverage in professional services, the average total premium is $8,653, and in financial services and real estate, it is $8,569—both well above the national average. Family coverage premiums follow a similar pattern, with both sectors averaging around $24,800 annually.
Despite these higher premiums, employees in these industries contribute amounts similar to national averages. In professional services, employees pay $1,648 for single coverage and $7,091 for family coverage costs, just slightly above national contribution rates. In financial services and real estate, employee contributions are below average. This is possible due to the higher profitability and financial resources in these sectors, allowing employers to absorb more of the premium cost while maintaining attractive benefits for employees.
Regional Differences in Employer Health Plan Costs
Neighboring New Jersey, Massachusetts, and New York face the highest health insurance premiums
Take Command analysis of U.S. Department of Health & Human Services data | Image Credit: Take Command
Health insurance premiums vary widely across the U.S., with the highest costs concentrated in Northeastern states. New Jersey, Massachusetts, and New York report the highest average premiums for both single and family coverage. In 2023, the average premium for single coverage in New Jersey reached $9,662, while family coverage in the state cost an average of $26,870—both well above the national averages of $8,182 for single and $23,938 for family coverage. Neighboring states Massachusetts and New York follow closely behind, with family coverage premiums averaging $26,355 in each.
High premiums in the Northeast reflect the region’s high per capita healthcare spending, which according to the U.S. Centers for Medicare & Medicaid Services is about . Additionally, states in this region often have more comprehensive healthcare mandates and regulations, which can result in .
In contrast, states in the South and parts of the Midwest report some of the lowest average premiums. For instance, in Mississippi, the average premium was $7,243 for single coverage and $21,939 for family coverage in 2023. These lower premiums may reflect lower healthcare spending per capita, less comprehensive plans offered by employers, and fewer mandates that affect plan coverage requirements.
For businesses looking to mitigate the cost of rapidly rising employer-sponsored health insurance premiums, there are a few options to consider. Partnering with a Professional Employer Organization (PEO) allows small and medium-sized businesses to co-employ their staff, granting access to the  with more competitive rates and administrative support. Alternatively, Association Health Plans (AHPs) enable small businesses to band together and leverage their collective purchasing power for better rates and coverage. For an affordable, tax-advantaged solution, Health Reimbursement Arrangements () allow employers to reimburse employees for individual insurance premiums and medical expenses on a pre-tax basis, offering flexibility and significant savings. These strategies help businesses manage costs while providing individualized health benefit options.
Below is a breakdown of health insurance premiums by state and metropolitan area. The analysis was conducted by —a platform that helps companies provide health benefits to employees through Health Reimbursement Arrangements—using data from the U.S. Department of Health and Human Services. For more information, see  on Take Command.
Health Insurance Premiums by State
Health Insurance Premiums by Metro
Methodology
Photo Credit: Andrey Popov / Shutterstock
The data used in this study is from the Agency for Healthcare Research and Quality’s , an initiative under the U.S. Department of Health and Human Services. The current annual survey covered more than 42,000 private sector establishments and was released in July 2024. To determine the cost of employer-sponsored health plans, researchers at Take Command calculated the employee and employer contribution amounts using average premiums across single- and family-coverage plans. Unless otherwise specified, all statistics shown are averages for 2023 and represent private sector firms only. All 50 states and select metropolitan areas tracked by MEPS were included in the analysis. Importantly, certain metropolitan areas that span multiple states are listed more than once, each with the corresponding state, due to significant differences in health insurance costs across state lines.
For complete results, see on Take Command.
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