For years, employee benefits packages typically worked the same way. Employees would get a choice of health insurance plan, maybe vision and dental, maybe a pension and maybe a discount on a gym membership, if they were lucky.
But times are changing. It’s getting harder to offer the usual options. In a recent survey, 73 per cent of benefits managers said they’re feeling pressure around rising healthcare costs, and a third (34 per cent) believe they’ll need to make changes in the next three years.
The days of cookie-cutter employee benefits are dwindling fast, and rising costs are just one of the reasons. There’s never been a more important time to rethink how your organisation approaches benefits. Here’s what to expect in the coming years, as well as some solutions for meeting these changes that can work for both your employees and your organisation.
Healthcare benefits costs are climbing worldwide
While U.S. tariffs and subsidies may have put American employers in the news over health insurance costs recently, they’re not the only ones wrestling with skyrocketing health insurance bills. Globally, health insurance costs are expected to increase by 10.3 per cent on average, and some regions will see as much as 14 per cent higher costs.
Insurance companies say it’s for the usual reasons: new drugs and new technology add costs, the world’s healthcare infrastructure is deeply strained, and chronic illnesses are becoming more and more common.
Employers who offer group benefits will feel this pain, especially small business owners. Pharmacy benefits are getting expensive, with pricey new categories like GLP-1s making some employers rethink what, and how much, they want to cover.
One way to offset costs like these is through offerings that stress preventive healthcare, not just emergency intervention. We know that investing in comprehensive employee support can be directly linked to greater productivity, lower absenteeism, lower healthcare costs and stronger engagement and retention. Diversifying the kinds of support you offer employees can help reduce the cost of offering benefits overall, as different options early on can help relieve some of the burden of health insurance costs later.
Employee priorities vary more widely than ever
With older workers waiting to retire and younger workers continuing to start their careers, the current workforce is more multigenerational than ever. And that means that what your workers consider an excellent employee benefits package has become more diverse than ever, too.
For Gen Z, for example, retirement is all but off the radar. Per one survey by American insurer TIAA, the benefits they care most about are education and training, PTO and health insurance. Meanwhile, Baby Boomers — the generation born between 1946 and 1965, now aged 60 to 79 — value security in the form of preventive health screenings and critical illness and accident insurance. Employees approaching retirement may also be particularly interested in financial education and advice as part of an employee assistance program (EAP).
Age is just one way to break it down; priorities vary across other lines, as well. Non-white employees in the TIAA survey, for example, were 70 per cent more likely than white employees to rank education and training benefits as a top priority. Another survey found that women prioritise the kinds of benefits that help them navigate challenges brought on by gender norms, like hours flexibility and caregiving. And half of employees surveyed in both the U.S. and Canada express interest in pet-friendly benefits, from pet insurance to flexible working.
Employees do have one thing in common across demographic lines: growth opportunities. High performers worldwide are leaving their jobs faster than ever, regardless of industry. Fifty seven per cent say they feel stuck at work, and attrition rates are up 14 per cent from last year. The impact of supporting these workers with programs and benefits they value can’t be overstated.
Benefits packages that work for your employees, not someone else’s
Whatever overall trends in benefits offerings may be in the forecasts, the most important takeaway for any decisionmaker in this new era is that “personalisation and flexibility” is just a buzz-phrase if you’re not personalising and flexing for the people who make up your unique team. As employee benefits options wax and wane in popularity, your ability to make your investments based on what your workers value can be the difference between an expensive, trendy benefits bill and a truly affordable one that cuts costs and makes people happy.
As one healthcare expert at McKinsey put it: “The advantage of tailoring benefits to specific employee segments is that you can then really optimise plans to address what each group cares about most, and you can minimise offerings that they care about less.”
In other words, it’s better to offer smaller, more bespoke benefits that more people can use than a flashy policy that’s hard to access. If you have a remote workforce, for example, can you offer a cash stipend for gym memberships across the board, instead of a big chain gym deal, which might not be close by for some? Or if you have a younger workforce, maybe an enterprise subscription to a commercial learning platform would work better than reimbursing employees for individual management classes.
This strategy is one that stands the test of time, too — you can tailor offerings as you go, picking up new benefits that get asked for and dropping ones people don’t use.
When in doubt, listen to your workers
If you’re not sure where to begin with these ideas, try surveying your workers to learn what’s important to them — what they value, what they can take or leave. The closer you get to fitting their bill, the more they’ll use their benefits, and the more you can reduce costs on unnecessary employee benefits options. Plus, when they have benefits they can use, they (and you, their employer) will be investing in preventative practices that keep healthcare costs low for everyone in the long term.
Then, once you’ve decided on your offerings, make sure your employees not only know about them, but also know how to access them. No matter what future trends in employee benefits may hold, communicating what you’re offering — via multiple channels, digital and in-person, to help ensure everyone on the team sees it — will always be just as important as what you offer.
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