Small businesses are getting clobbered by health insurance costs for their employees

Small businesses are grappling with soaring healthcare expenses for their employees, according to a recent survey by KFF. Lindsey Nicholson/UCG/Universal Images Group via Getty Images Workers at small firms pay higher premiums and bear a greater share of family health coverage costs compared to those at larger corporations. In the past year, the annual contribution for family coverage at firms with 10 to 199 employees surged by 9% to $9,687, while larger firms still incurred a steeper increase, with employer contributions dropping nearly $3,000.

Over one-third of workers at small businesses have plans requiring an employee contribution exceeding $12,000 annually, more than double the rate at larger firms. Despite health benefits being available to 66% of small firms, this figure represents a decrease from 59% in 2025, but still falls short of the 72% observed five years ago.

Small businesses often face higher deductibles and less bargaining power with insurers, as they typically contribute 37% of the family premium compared to 25% for larger firms. Consequently, a significant portion of small-firm workers must contend with deductibles surpassing $2,000, a stark contrast to the average deductible at larger firms.

Small businesses often have limited options and are more reliant on insurers, which may result in higher premium increases. Additionally, small businesses are less likely to self-fund and are therefore more vulnerable to rate hikes. As affordability and healthcare costs loom large in the minds of voters preparing for the midterms, small businesses face mounting challenges in navigating the complexities of health insurance for their employees.