From GLP-1 Drugs To Catastrophic Claims – Why Employer Health Premiums Are Skyrocketing In 2025

As open enrollment kicks off, employees may find an unpleasant surprise in their 2025 health insurance premiums. Increased adoption of GLP-1 drugs, rising catastrophic claims and other cost pressures are driving employer-sponsored health insurance costs to new heights. Current projections range from 7% to 8% average cost increases, making these changes some of the highest in decades. 

Mercer reports that smaller employers – those with 50-499 employees – are facing increases as high as 9% if they don't take action to lower them. 

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What are the key drivers behind these rising premiums? 

GLP-1 drugs, including popular names like Ozempic and Wegovy, which were initially prescribed for managing diabetes, are now widely used for weight loss. The demand for these drugs has grown, further driving the cost for employers that cover them in health care plans. 

Coverage for these medications varies widely across plans; while many employers cover GLP-1 for diabetes treatment, fewer provide coverage for these drugs as a weight loss treatment. Employees considering these medications should check their 2025 coverage, as some policies may have shifted. 

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Another significant factor is the rise in catastrophic medical claims. These are high-cost claims frequently associated with more serious illnesses and complex treatments. 

According to industry experts, the increasing number of catastrophic claims can largely be attributed to rising costs of advanced medical treatments, longer life expectancies and a shortage of health care workers, which has also increased prices.

How do these drivers impact employee health care coverage? 

With rising premiums, employees may face tough choices during enrollment. Experts recommend carefully reviewing options and considering how much to budget for health care costs. 

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A recent survey from LIMRA, an insurance trade association, shows that workers are willing to spend an average of $233 per month on health care benefits – this has decreased due to inflation. With premiums rising, employees may need to adjust their expectations around health care benefits and associated costs. 

High-deductible health plans (HDHPs) can be a cost-saving option for some employees, as they offer lower monthly premiums in exchange for higher out-of-pocket costs. An HDHP paired with a Health Savings Account (HSA) could balance lower premiums and tax-advantaged savings for future health care expenses for those who don’t expect to need frequent medical services. 

Voya Financial recently conducted a survey in which roughly 75% of working Americans prioritize health benefits over higher salaries. 

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Nate Black, VP of Health Solutions Product at Voya Financial, said, "More than half of employed Americans strongly or somewhat agree they would take a lower salary for employer contributions to health savings and spending accounts (59%) and better access to voluntary benefit offerings such as critical illness, hospital indemnity, disability income and accident insurance (54%)."

As health care premiums increase, employees may face difficult decisions around their employment as they search for better health care coverage options for their families. It's important to take the time to review coverage options fully. Another Voya survey found that almost half of Americans with employer coverage spend less than 20 minutes reviewing their benefits during open enrollment. This short review might not be enough to determine the best plan as premiums continue to rise. 

With the challenges driving higher premiums unlikely to ease soon, these cost pressures are expected to persist into 2026. During open enrollment, employees should be proactive in choosing the coverage that best suits their needs and budget.

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