Small-Firm Workers Pay $9,687 for Family Coverage, $2,847 More Than at Large Employers

The headline from this year's employer health benefits benchmark is a family premium that crossed $28,000. The more useful number for HR leaders at smaller organizations is buried a few tables down. A worker at a small firm and a worker at a large one are buying coverage that costs roughly the same. The small-firm worker pays $2,847 more a year for it, and that difference is landing in the same season that 2027 raise budgets are being finalized.

The Premium Is Similar. The Bill Is Not

KFF's 2026 Employer Health Benefits Survey, released October 22 and based on 1,937 firms with 10 or more workers, puts the average annual family premium at $28,303, up 5% from 2025 and 28% over five years. Single coverage averages $9,804, also up 5%. Both increases outpaced wages, which rose 3.7%, and inflation, which rose 2.7%.

Split by employer size, the premiums barely differ. Small firms (10 to 199 workers) average $27,288 for family coverage, slightly less than the $28,592 at large firms. Single premiums are close to identical at $9,593 and $9,865. What diverges is who pays. Workers at small firms contribute an average of $9,687 toward family coverage, or 37% of the premium. At large firms, the worker contribution is $6,840, or 25%. On the employer side of the same plans, that works out to about $17,600 paid by the small firm against about $21,750 at the large one.

The deductible tells the same story. Among covered workers in plans with a general deductible, the average for single coverage is $2,624 at small firms and $1,772 at large ones. KFF found 55% of covered workers at small firms are in a plan with a single deductible of $2,000 or more, compared with 33% at large firms. A small-firm employee pays more every pay period and more again at the point of care.

The Worker's Share Is Rising Faster Than the Premium

Across all firms, the average worker contribution for family coverage rose 9%, or $621, to $7,471, according to NewsNation's report on the survey. That is nearly twice the 5% increase in the premium itself, which means employers are passing a growing slice of the increase down. KFF found 18% of all firms raised workers' share of premiums in response to projected cost increases, a figure that climbs to two-thirds among employers with 5,000 or more workers.

Deductibles are moving too. The American Hospital Association's summary of the findings notes the average single deductible rose to $1,955 from $1,886 in 2025, and employers reported cost strategies ranging from direct contracting with providers to changing insurers and reducing eligibility for some benefits. There is one bright spot for access: 67% of firms with 10 or more workers now offer health benefits, up from 61% last year. Many of those new offerers are small firms, which means more small-business workers are entering exactly the cost-share structure described above.

Why a Benefits Gap Becomes a Pay Gap

Employees do not experience premium contributions as a benefits line. They experience them as a smaller paycheck. A worker with family coverage at a small firm hands back more than $800 a month. This year's average $621 rise in the family contribution alone equals more than a third of a 3.5% raise on a $50,000 salary. When HR presents a 3.5% raise without showing the contribution change next to it, the employee does the math on their own and concludes the raise was smaller.

That matters for retention because workers weigh health coverage heavily. The EBRI and Greenwald Research Workplace Wellness Survey of 1,401 workers found 72% name health insurance as a top factor in deciding whether to stay at or leave a job, ahead of the 62% who name a retirement plan. Eighty-seven percent list the cost of health care as a top concern, and when asked how their employer could improve benefits, the most common answer, at 48%, was a bigger employer contribution. A small employer that loses a candidate or an employee to a larger competitor may be losing on take-home pay it never put in the offer letter.

None of this means small employers can simply match large-firm contributions. Their own costs are real and their risk pools are thinner. It does mean the contribution strategy deserves the same scrutiny as the salary structure, because to the employee they are the same number.

For HR and total rewards leaders at smaller organizations heading into renewal and merit season, the practical response looks like this:

• Calculate net pay change, not just the raise. For each coverage tier, subtract next year's contribution increase from the planned merit increase and see which employees end up behind. Those are your real retention risks.
• Benchmark your contribution split, not just your premium. A premium in line with the market can still sit on a contribution share well above the 25% large firms ask of families. Know where you stand on both before renewal closes.
• Protect the family tier first. The gap is widest for family coverage. Shifting a modest amount of employer spend toward the dependent tier can narrow it more than an across-the-board adjustment.
• Price benefits into the offer. When competing with larger employers, show candidates the annual value of your contribution so a lower base is not compared against a larger firm's richer subsidy.
• Track contribution as a workforce metric. Monitor benefits cost per employee and the employee share alongside turnover so a rising cost burden shows up before resignations do.
• Explore pooled purchasing. Small firms carry higher deductibles and contribution shares partly because of how they buy. Compare options such as a PEO or association plan against your renewal quote, before the quote is final.

The 2026 survey shows small employers are not paying more for health coverage. They are asking their people to pay more of it. For organizations that compete for the same talent as larger firms, that $2,847 is a line item in every offer they make, whether or not it appears on the page.