With economic uncertainty seemingly entrenched for the time being, companies are looking hard at the increasing cost of employee health benefits.
Among 696 U.S. employers that participated in Willis Towers Watson’s 2025 Benefits Trends Survey, 90% identified the pressure on costs as a key business issue shaping benefits strategy.
That was a leap from 67% of American employers who said the same in WTW’s previous global benefits survey in 2023. As recently as 2021, cost was only their sixth-greatest benefits concern. WTW has projected that U.S. employers’ costs for medical care will increase by 10.2% this year.
Additionally, compared with just 8% of U.S. employers that reallocated or rebalanced their benefits spending over the prior 12 months, 63% of survey respondents — who were polled in March and April — said they planned to do so within the next three years.
Competition for talent, always a key issue because benefits programs are designed in large part to attract and retain valued workers, was this year’s #2 concern after leading the pack in 2023, with 52% of U.S. employers characterizing it as a key business issue.
Next came employees’ expectations for an enhanced benefits experience. Employees no longer want a single benefits package, WTW wrote in its survey report. Rather, they want the flexibility to address their personal circumstances and for benefits “to be as individual as their needs.”
“The old rules of employee benefits are fundamentally changing,” WTW said. “With rising costs, economic instability and employees demanding more support and personalization, organizations must transform how they think about benefits.”
WTW counseled companies to renegotiate contracts with benefits vendors, use provider networks, explore new pricing models, push for transparency and seek partners that deliver measurable outcomes.
A notable majority (73%) of U.S. survey participants said they plan to address high costs by enhancing value or switching to better-value vendors across health, retirement and risk benefits. More than a third (37%) are looking to adopt a network of preferred medical providers.
Secondly, companies should address the most expensive health conditions “through targeted programs that prevent avoidable claims and improve health outcomes,” WTW said. Mental health, cardiovascular issues, and cancer should be particular areas of focus.
Almost half (44%) of those polled said they plan to tackle high-cost medical conditions, while 66% identified mental health as a top benefits priority.
Meanwhile, 42% of U.S. employers said they’re asking their benefits teams to enhance their skills in areas such as analytics, data and legislation.
