In response to increasing cost pressures, the majority of U.S. employers intend to shift their benefit strategy in the next three years, according to a June 10 report from WTW.
Employers said rising medical care costs, in particular, have created greater challenges for delivering their health benefits (44%), well-being programs (44%) and leave benefits (36%).
“After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives real value for employees and the business,” said Jeff Levin-Scherz, population health leader of the health and benefits practice for North America at WTW. “That means targeting support and spending on the benefits that matter most, enabling personalization and helping employees make better decisions.”
In a survey of 696 U.S. employers, 90% cited rising benefit costs as the top issue influencing their benefit strategies in 2025, up from 67% in 2023. They also pointed to concerns around competition for talent (52%), expectations for an enhanced employee experience (43%), cost of living (39%) and rising mental health issues (32%).
In response, 63% of employers said they plan to reallocate or rebalance spending in the next three years, compared to only 8% in the previous year. While 73% plan to address high costs by enhancing value or switching to better-value vendors for health, retirement and risk benefits, 44% plan to tackle high-cost medical conditions, and 37% plan to adopt a network of preferred medical providers.
In addition, employers said they plan to prioritize mental health, health benefits, financial well-being and family support during the next three years to address employee concerns. Employers also intend to increase their use of communication, navigation tools and employee feedback to enhance the employee experience, the report found.
With ongoing increases in healthcare costs, many employers feel compelled to rethink their healthcare benefits in 2025, according to another WTW survey. Companies can evaluate vendor and digital health solutions that expand well-being resources and reduce unnecessary utilization, as well as review their markets to ensure efficient sourcing of private coverage, a WTW leader said.
Among healthcare costs, autoimmune diseases have driven major increases due to healthcare utilization, lost work time, turnover and presenteeism, according to a report from WellTheory and the Integrated Benefits Institute. Employers can support workers with autoimmune diseases through flexible work arrangements, ergonomic accommodations, environmental adjustments, job modifications, task reassignments, manager training, co-worker education programs and well-being programs, the report found.
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Companies are making changes as a strategic tool to reduce costs and drive engagement, retention and purpose.