The hike sits close to the pace of inflation and comes with increased employee contributions, a new report shows.

U.S. employers are facing a spike in costs for health care coverage, with insurance premiums increasing 7% in 2023 and worker contributions ticking up as well.

The average annual cost of employer-sponsored health insurance premiums rose from $7,911 in 2022 to $8,435 in 2023 for coverage of single individuals and from $22,463 to $23,968 for family coverage, according to a new analysis by health research organization KFF based on survey results from a sample of U.S. firms.

This year’s higher premiums come after costs rose 1% for family coverage and 2% for individual coverage from 2021 to 2022, and are similar to a 5.2% increase in workers’ wages and a 5.8% rise in inflation year over year, according to KFF.

The analysis also found annual premiums were a bit higher at small companies compared with larger firms. Companies with more than two but fewer than 200 workers had an average cost for single coverage of $8,722 and an average cost for family coverage of $23,621, while larger companies posted comparative costs of $8,321 and $24,104.

The rise in premiums coincides with an increase in the amount that workers are paying themselves for coverage, with annual employee contributions for family coverage up by an average of nearly $500, from $6,106 in 2022 to $6,575 in 2023. Worker contributions for single coverage were up by an average of $74.

Overall, workers with employer-sponsored coverage contribute 17% of the premium for single coverage and close to 30% of the premium for family coverage, on average, according to the report and accompanying data. Workers in smaller firms, however, pay 38% of the premium for family coverage compared with a 25% share among workers at large firms, and contribute $8,334 on average annually compared with $5,889, the report says.

The KFF analysis also found variations in employer-sponsored health insurance coverage for abortion services in the aftermath of the U.S. Supreme Court’s decision in June 2022 to overturn Roe v. Wade, ending the constitutional right to abortion. The survey found 1 in 10 firms with at least 200 workers and health benefit offerings said their largest health plan does not cover legal abortions under any circumstances, while about a third of such firms said their largest plans covered legal abortion in most or all circumstances.