Heightened economic uncertainty combined with increased financial pressures on budgets are transforming how HR and benefits leaders design employee benefit strategies, according to a recent survey.
The 2025 WTW Benefit Trends Survey from the global advisory, broking and solutions company found that employers are looking to spend smarter, sharpen focus and utilize benefits while continuing to drive engagement, retention and purpose. The survey was conducted this spring and included 696 U.S. employers, representing a broad range of industries in both the private and public sectors.
When asked what’s influencing changes to their employee benefits strategies, 90% of respondents cited costs, a significant jump from 67% in 2023. Other key issues include:
- competition for talent (52%);
- expectations for an enhanced employee experience (43%);
- cost of living (39%);
- and rising mental health issues (32%).
According to Jeff Levin-Scherz, population health leader, North America, Health & Benefits, employers are taking a step back and looking to focus on employee benefits strategies that drive real value for employees and the business.
“That means targeting support and spending on the benefits that matter most, enabling personalization and helping employees make better decisions,” he says.
Rising healthcare costs, however, are an increasing obstacle. Survey respondents cite challenges in delivering their employee benefits strategy in key areas such as health benefits (44%), wellbeing programs (44%) and leave benefits (36%).
Cost control, not enhancement
To address these concerns, Levin-Scherz says employers are adapting. For example, few are expanding their benefits portfolio, instead focusing on extracting value from their current offerings and improving financing, employee experience, analytics and administration.
A majority (73%) plan to tackle high costs by enhancing value or switching to better-value vendors across health, retirement and risk benefits. Just under half (44%) will use their strategy to tackle high-cost medical conditions and 37% intend to adopt a network of preferred medical providers.
“Medical inflation remains dramatically higher than it’s been for the last two decades. As a result, employer health plan purchasers are more focused on cost control than benefit enhancement,” Levin-Scherz says.
Improving personalization, access
Eager to address employee pressure points, Levin-Scherz notes that companies are looking to maximize value and focus on what employees most need: support for mental health, healthcare benefits, financial wellbeing resources and family support. Employers continue to be concerned about access to substance abuse supports and care needs for female plan members, as well as the challenge of improving behavioral health to drive productivity.
When it comes to connecting employees to benefits, many plan to increase their use of communication and use “nudges and navigation” solutions to influence behaviors and enhance the employee experience.
To that end, “regularly reviewing vendor performance, including employee feedback, is also a key action employers are taking,” Levin-Scherz says. Over the next year, he adds, as employers look to increase the value they are obtaining from existing programs, they may revisit health plans, PBM contracts and vendor agreements.
“This could also include audits and new attention to performance guarantees. Some employers are also seeking to consolidate programs where possible,” he says.
Prioritize ‘what matters most’ to employees
As organizations face “more pressure than ever to deliver the right” employee benefits strategy, he says, they will be tasked with finding innovative solutions for old and new challenges. Reallocating spend on benefits that deliver true value is a good start, he says.
“There is still a long way to go to address these pressure points,” Levin-Scherz says, “but employers are headed in the right direction by focusing on what matters most to their employees.”
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