Annual cost of insuring a family tops $35,000

The cost of covering a family of four through workplace insurance now exceeds $35,000 — nearly triple what it cost 20 years ago as annual growth in health costs have far outpaced wages.

The big picture: Growing pharmacy and outpatient facility costs drove most of the increase, which includes employee and employer shares, according to the 2025 Milliman Medical Index.

• Employers have been wary of passing health cost increases to workers in a tight labor market, but the rising demand for costly care may force a reckoning.

State of play: The $35,119 annual cost to cover a hypothetical family of four this year factors in drug costs, inpatient and outpatient care, and professional services, along with an “other” category that includes home health, ambulance transport, medical equipment and prosthetics.

• A year of health care cost a family of four $12,214 in 2005 — the year Milliman launched the index. The 20-year cumulative gain of 188% outpaced the 84% growth in wages over the same time.
• Health costs have increased about 6% per year on average over the past two decades, according to Milliman’s report. That’s compared with an average inflation rate of 2.5% over that time.
• Health care for the average person with private coverage this year costs $7,871, including pharmacy rebates — an almost 7% increase from 2024.

Zoom in: Annual family outpatient care costs have increased 286% over the past 20 years, landing at about $7,170 this year. Milliman attributed some of the increase to the expanded availability of radioactive drugs used for imaging tests and targeted therapies.

• New technology has made care more complex and costly. Reimbursement systems that tie payments to a percentage of billed charges have also helped drive the increase, per the report.

Between the lines: Employers in 2025 still shoulder 58% of employees’ health care costs, but their share has shrunk since 2005, when it was more than 60%.

• Employee premiums have increased from 21% to 27% of the total cost of care, while out-of-pocket costs have decreased from 18% to 15%.

Reality check: Health care costs vary significantly by age, geography and pharmacy rebate arrangements.

• Milliman calculates family cost based on a family with a 47-year-old male, 37-year-old female, and children ages 4 and under 1.
• This was a “mathematically average” family in 2005, and Milliman continues to use that formula to keep data comparable year-to-year.
• The firm has an online tool that allows readers to input other family configurations to see their estimated 2025 health care costs.

The analysis is based on Milliman’s proprietary research tools and analyzes commercial claims data. The family cost figure reflects nationwide average negotiated provider fees and average PPO benefit levels.

What we’re watching: How increasing use of newer pharmaceuticals like GLP-1s and innovative cancer therapies affect costs in the long run.

• “We have so much innovation that we’re paying for up front,” said Deana Bell, a principal and consulting actuary at Milliman and author of the report. “It would be amazing to see that through the data — how much health care is being utilized and, hopefully, people living longer, more healthy lives.”
• Bell said she’s also starting to think about the impact of climate change on health care utilization and cost.