General information only, not insurance or medical advice. Consult a licensed broker or visit HealthCare.gov for plan-specific guidance.
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Employer coverage

Employer health insurance in 2026

Employers pay $7,885 a year for an average individual plan. Employees pay $1,440. Below: the full breakdown, the affordability test, and when the marketplace can beat employer.

The 2026 split

Numbers below are from the KFF Employer Health Benefits Survey 2025, the latest annual survey.

Individual coverage
Annual breakdown
Total annual premium$9,325
Employer share (84%)$7,885
Employee share (16%)$1,440
Employee monthly$120
Family coverage
Annual breakdown
Total annual premium$26,993
Employer share (75%)$20,143
Employee share (25%)$6,850
Employee monthly$571

Employer vs marketplace: side by side

FactorEmployer planMarketplace
Monthly cost (individual)$120 employee share$625 benchmark, less subsidy
Monthly cost (family)$571 employee share$1,998 benchmark, less subsidy
Average deductible~$1,790 individual$5,000 (Silver) before CSR
Tax treatmentPremium pre-tax via Section 125Self-employed deduction or after-tax
Plan choiceWhatever employer offersBronze/Silver/Gold/Platinum + carriers
SubsidiesNone directlyYes, below 400% FPL
Best forMost full-time employeesSelf-employed, low income, gap coverage

The ACA affordability test (2026)

Employer coverage is "affordable" only if the employee-only contribution does not exceed 9.96 percent of household income. If it exceeds that threshold, the employee can decline employer coverage and qualify for marketplace subsidies.

Worked example: household income $50,000. The 9.96 percent ceiling is $4,980 a year, or $415 a month. If the employer charges $450 a month for employee-only coverage, the test fails and the employee qualifies for marketplace subsidies.

The 2023 family glitch fix added a separate family-tier affordability test, opening marketplace subsidies to roughly 1 million additional family members.

COBRA continuation costs

After job loss you can continue employer coverage via COBRA for 18 months (36 in certain cases). You pay the full premium plus a 2 percent admin fee:

  • Individual: ~$793 a month all-in
  • Family: ~$2,294 a month all-in
  • 60-day election window from coverage end
  • Coverage is retroactive if elected within window

Marketplace coverage with subsidies often beats COBRA dollar-for-dollar. Job loss is a qualifying life event that triggers a 60-day Special Enrollment Period.

Small business and solo options

SHOP marketplace

Small Business Health Options Program. Up to 50 employees. Tax credit available for under 25 employees with average wage below $66,600.

QSEHRA

Tax-free reimbursement of employees' marketplace premiums. 2026 cap: $6,450 individual, $13,100 family per employee (IRS Rev. Proc. 2025-32).

ICHRA

Individual Coverage HRA. No size cap, no contribution limit. Reimburses employees for marketplace plans they buy themselves.

Association health plans

Multi-employer plans through trade groups. Coverage quality varies. Often cheaper but less comprehensive.

Common questions

How much do employers pay for health insurance per employee?

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The average total premium for an individual employer plan is $9,325 a year, with the employer covering roughly 84 percent ($7,885) and the employee paying $1,440. For family coverage the total premium averages $26,993, with the employer covering about 75 percent ($20,143) and the employee paying $6,850. Source: KFF Employer Health Benefits Survey 2025 (the latest annual survey).

Is employer health insurance always cheaper than the marketplace?

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Almost always for individual coverage. The employer typically covers 80 to 85 percent of the premium, while marketplace shoppers pay full price minus any subsidy. The exceptions: low-income employees who would qualify for substantial marketplace subsidies plus a CSR Silver plan, or those whose employer plan fails the ACA affordability test (employee-only premium above 9.96 percent of household income for 2026).

What is the ACA affordability test for 2026?

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Employer coverage is considered affordable if the employee-only premium does not exceed 9.96 percent of household income for 2026 (up from 9.02 percent in 2025, per IRS Rev. Proc. 2025-25). If it does, the employee can shop the marketplace and qualify for premium tax credits even though employer coverage is offered. The 2023 family glitch fix extended this test to family coverage as well.

How much does COBRA cost?

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COBRA lets you continue your employer plan after job loss for up to 18 months (36 in some cases). You pay the full premium plus a 2 percent administrative fee. For an individual plan averaging $9,325 a year, that means roughly $793 a month all-in. Most people who lose employer coverage and qualify for marketplace subsidies are better off shopping the marketplace, where the same coverage might cost half as much after subsidy.

Why are employer premiums rising 6 to 10 percent in 2026?

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Three drivers: GLP-1 weight-loss drug spending (Wegovy, Zepbound, Ozempic for weight management is now estimated at 2 to 4 percent of plan spend), elevated cancer treatment costs, and continued mental health utilisation growth. Mercer projects an average 6.7 percent increase for 2026, with self-funded employer plans rising slightly slower than fully insured.

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