• Small-business workers are facing higher costs for family health coverage than those at larger firms.
• Affordability and healthcare costs are key concerns for American workers and voters in the midterms.
• Small firms struggle with health benefit options due to less bargaining power and higher costs.

Health insurance costs are going up, and it's especially rough for workers at small businesses.

A new annual survey of employers and their health benefits from KFF found that small-business workers pay more for family coverage than workers at firms of every other size. At the same time, many of these workers have fewer plan choices than at larger firms, meaning they're often stuck with whatever option their employer selected.

From 2025 to 2026, annual worker contributions for family coverage at firms with 10 to 199 workers increased from $8,889 to $9,687, a 9% increase. While the largest firms saw a sharper increase, workers' contributions at employers with 5,000 or more employees were nearly $3,000 less. For all firms, contributions rose about 9% to $7,471.

Of covered workers at small firms, nearly one in three has a plan requiring an employee contribution of over $12,000 annually, more than double the rate at large firms.

According to the survey, 66% of small firms offer health benefits, compared with 98% of firms with 200 or more workers. That's up from 59% in 2025 but remains below the 72% level of five years ago.

Workers at small firms pay an average 37% of the family premium, compared with 25% at larger firms.

While premiums for health insurance plans that cover only a worker and not their family are similar for small and large businesses, the average deductible at small firms is nearly $1,000 higher than at large firms. More than half of small-firm workers face a deductible of at least $2,000, compared to just a third of large-firm workers.

Though the report doesn't get into the discrepancy for family plans in depth, small businesses often have less bargaining power with insurers. Because small businesses operate on smaller margins, they often don't have the money to subsidize spouses and children at the same level as larger businesses. Risk is also more concentrated among smaller businesses, meaning that future premiums and claims may be heightened by a single employee with costly medical needs.

Additionally, because small firms are much less likely to self-fund, they're often more dependent on insurers and therefore pass along rate increases to their workers. Average annual premiums rose 5% in 2026, with employers citing projected cost increases, while the survey separately found that GLP-1 coverage can affect prescription-drug spending. Workers at small employers are more likely to have weaker coverage for specialty drugs.

Affordability is top of mind for Americans gearing up to vote in the midterms. Healthcare costs remain a top financial concern. Millions of Americans have lost health coverage as ACA marketplace subsidies expired and Medicaid enrollment protections ended.

Small businesses have been hit hard over the past few years by inflation, higher interest rates, and tariffs. Small businesses have been embracing AI as a cost-saving measure, though many face unexpected costs due to token overuse or subscription price increases.

Dozens of workers have told Business Insider that preparing for retirement has been a significant source of stress as they navigate a tight job market. However, among employers that offer health benefits, 23% of firms with 200-999 workers offer retiree health benefits, versus 35% of firms with 5,000 or more workers.

There are some silver linings for workers. Premiums for single workers are slightly lower at smaller firms than at larger ones overall. Employees at small firms on single health insurance plans were much more likely to have their entire premium paid by their employer, though they're also much more likely to pay more than half of the family premium. Among small firms offering coverage, nearly all offer family coverage.

• Kathy Davidson, 61, is raising her two grandsons, ages 8 and 11, in North Carolina.
• She receives $997 a month in disability benefits, while her husband works as an electrician.
• She works hard to give both grandchildren a stable, loving home despite financial strain.

This as-told-to essay is based on a conversation with Kathy Davidson, 61, who has raised two of her grandsons in North Carolina since they were born. This interview has been edited for length and clarity.

I raised three children, two girls and a boy. My son and older daughter have been doing well and are working hard. I left my ex, and then I met the man I'm married to now. We've been married for 26 years.

I worked in construction and hotel housekeeping. You name it, I've done it. I used to work with my uncle laying bricks and painting houses. I hurt my back and shoulder at work one day in 2015, and now I'm on disability. I've been on a limited income since, earning $997 a month, and it's been very hard.

My husband works as an electrician, and he's 66. He earns $18 an hour, which works out to about $615 a week after taxes.

I have custody of my 2 grandsons

My younger daughter was born three months early. She got into modeling, and at a competition with 4,000 women, she came in the top 10. She was doing well until my husband lost his daughter to cancer. She left my house by the time she was 18.

She had two boys, who are 11 and 8, and they were both born with medical issues. I started taking care of the older boy when he was 5 months old. He was found in unsafe conditions and wasn't healthy at all. His mom went to jail and wrote out a paper saying that she gave me custody and had it notarized, but it took forever because she was still reluctant to give him up. At 3, the court decided to give me custody of him. I got the younger one straight out of the hospital.

When I finally got custody, the judge decided that their mom would have no visitation.

We didn't even think about foster care when we got them. My husband decided that we would take them in because he raised two of his kids by himself. He helped me raise my soul.

We can't do whatever we want anymore

We used to go wherever we wanted to, and now we can't. We look for things that we can do without breaking the budget. We have taken the boys hiking and camping, the stuff that I grew up doing, and they love it. Their grandpa has definitely spoiled them in whatever way he can.

We didn't get child support until six months ago, and we get $236 a month now for each boy through the state. It's not much, but it helps pay for a few things that they need, and we set aside some of it in their savings accounts for college. My parents and my aunt would help me out with birthdays and holidays. My mom gives each of them $20 a month, and I don't let them spend it. They put it in their piggy banks.

We pay $1,050 a month in rent, and the power is included, but it took everything to come up with that amount. I would do some housekeeping for a friend's mom to make extra money to buy clothes, and the church we go to has a clothing bank. One of their mom's past boyfriends is still around and will help the boys out and spend time with them.

I've tried to raise them as well as I can. I told them that, first of all, you do not lie. I put this into their head. I put them in timeout and take their phones a lot. My husband is a lot more lenient on them, but I've decided to be tougher. It's important to discipline them while they're young. I've also encouraged them to work for everything they want.

I've also learned to listen to them. The boys will sometimes stand their ground, but other times they'll tell on themselves. It's important to work with them and hear them out.

I'm very proud of my grandchildren

I'm very proud of the boys, and they know it. They both are on the autism spectrum, and the older one has Tourette's and ADHD. Both made it onto the honor roll. The older one is getting ready for middle school and gets some extra help at school. He's very quiet, and it took him until last year to start making friends. I am scared of what will happen when he gets to middle school.

It took some time for him to get more confident. He believes he isn't smart because kids in his class say so. I told him he's capable of going to college and having a future. I need him to believe that he can do whatever he wants, but he has to really want to do it. He has a journal where he writes down what he wants to do and the steps he has to take to get there.

My husband and I try to set aside as much as possible to get them what they want, like gaming systems, even though they know it's hard for us. We don't lie to them about our finances. We know the boys make sacrifices, and they shouldn't have to. They should be able to be children.

It's just as hard on the grandkids as on the grandparents. They feel their parents don't love them. They go through a lot of emotions.