NEW YORK (MONEY Magazine) - Without a doubt, the rising cost of health insurance is the single biggest challenge facing employers today.

The monthly premiums for employer-sponsored health plans for the average American family of four rose 16 percent from spring 2001 to spring 2002, according to a recent survey by the Kaiser Family Foundation.

Similarly, we found that our Everyfamily (married, 50-years old, two kids, earnings $100,000 a year) experienced significant out-of-pocket increases since 2001: 28 percent for health maintenance organizations (HMOs); 23 percent for traditional fee-for-service plans and 21 percent for preferred-provider network (PPO) coverage, which lets employees seek care outside of the network for an additional fee.

And only 88 percent of this year's companies provided subsidized dental coverage, down from 95 percent last year.

Rising health-care costs are the problem. Prescription drugs are the fastest-growing category of health spending; factor in medical breakthroughs, federal government mandates, litigation and an aging population, and you've got "a perfect storm of rising costs that may not abate any time soon," according to Peggy Pearson, of Milliman USA, which administered the best benefits survey for MONEY.

Anheuser-Busch was a standout in this category, earning points for low monthly employee contributions, low family deductibles and picking up the full dental premium.

Also hit hard: retiree medical coverage. Only 57 percent of our respondents subsidized this benefit, down from 72 percent in 2001. In the past five years, 16 companies have eliminated retiree medical coverage for new hires.

An unfortunate and complex set of realities has the largest corporations feeling a serious fiscal squeeze. Now and for the foreseeable future, our wallets will be feeling one too.