Dive Brief:
Rising benefit costs is the top concern influencing employers’ benefit strategies in 2025, according to a new survey from consultancy WTW.
Forty-four percent of survey respondents said they faced challenges delivering health benefits due to rising costs. Additionally, 44% said financial challenges created barriers to delivering wellness programs and 36% said costs challenged their leave offerings.
In light of financial concerns, few employers plan to expand benefit offerings this year, WTW said. Instead, employers are focused on “extracting value” from current plans, improving financing or switching to new partners that can deliver a better user experience.
Dive Insight:
Rising costs are weighing on the majority of employers, according to the survey. Ninety percent of the 696 employers surveyed said rising costs was the top concern influencing their benefit strategy this year, up from 67% in 2023.
As a result, a majority of the surveyed employers are looking to rebalance their spending over the next several years, with 63% saying they will reallocate spending in the next three years. That’s a huge jump from the 8% that reported the same just last year.
Nearly three-quarters of respondents are considering switching to new benefit vendors in an effort to save, according to the survey. Meanwhile, 44% of surveyed employers plan to address high-cost medical conditions and 37% plan to adopt a network of preferred medical providers.
“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 for North America, health & benefits, at WTW, said in a press release.
Employers are also trying to increase employee use of offerings that might benefit them over the next three years, especially in areas like mental health, according to the survey. Employers will increasingly use communication and “nudges” to increase behaviors and enhance the employee experience, WTW said.
Concerns about rising costs are nothing new. WTW predicted last year that U.S. employers would see healthcare costs rise by 7.7% in 2025, compared to 6.9% in 2024 and 6.5% in 2023.
At the time the consultancy sounded the alarm about the importance of managing rising costs, noting that nearly half of employers they surveyed said projected costs were expected to exceed employers’ budgets.
Employers have already begun pulling some levers to cut costs. Last year, employers began promoting drug discount cards and direct-to-consumer prescription delivery, the consultancy said.
