From Cost to Choice: 6 Benefits Trends You Need to Know This Year

As healthcare costs continue to put pressure on organizational budgets, finance pros need to be more involved in decisions around benefits and open enrollment.

So you want to know what benefits trends are driving prices, choices and adoption. It’s not strictly about the line-item costs: The options employees have, the choices they make and the level of adoption affect their health and your bottom line.

Finance pros — along with their HR leaders and benefits providers — will want to consider financial challenges and strategic trade-offs as open enrollment season bears down on us. You want to maintain that delicate balance between managing healthcare costs, employee expectations and the need to remain competitive for talent.

Benefits Trends for All Employers

We’ve gathered the benefits trends that are impacting organizations and their employees. Here, we’ll also address what they’ll mean for finance pros across industries and company sizes.

1. Employers Lead the Way to Good Choices

Employees don’t just rely on you to provide their benefits; they trust you to steer them toward the benefits that are right for them, right now. They anticipate that you can help them choose the benefits that provide the best coverage at the most reasonable cost (much like you choose the benefits those you’ll offer to employees).

Nearly three-quarters of employees are confident they will have employer-sponsored benefits that fit their needs, despite legislative uncertainty, according to ADP’s TotalSource Employee Benefits Survey.

“As external confidence in the healthcare system weakens, employees increasingly look inward to their employers for stability and reassurance,” the researchers noted.

What employees say they value most is not too surprising:

• Medical insurance (93%)
• 401(k) retirement savings plans (63%), and
• Dental insurance (60%).

Tip: You likely have an obligation to keep organizational priorities in focus when building and approving a benefits plan. But you likely still want HR to get employee feedback on their needs so you can plan packages that will be used.

2. Employers Help Employees Navigate

While employees believe you will provide them with the benefits options that fit their needs, they also hope you’ll help them navigate it all.

Almost 80% of employees say they want personalized guidance on benefit choices, according to Voya’s most recent State of the Employee Benefits.

“Feeling confident about benefits starts with being informed, educated, and connected—not just during open enrollment, but year‑round,” says Pat Tupper, Head of Benefitfocus at Voya.

Tip: Both ADP and Voya studies emphasized personal guidance during enrollment. HR usually spearheads those efforts. But employees will likely feel more confident if they hear and see support from finance. One of the best ways: Start education outreach before the actual enrollment process begins. If you communicate with employees early, you might head off costly election decisions or last-minute mistakes.

3. Everyone is Focused on Preventive Healthcare to Cut Costs

The total health benefit cost per employee increased by 8% in the past year, the Voya researchers found. The causes include:

• Sub-optimal health care usage. For instance, nearly two-thirds of emergency room visits are non-emergent or are treatable in lower-cost settings such as primary care, telehealth and urgent care centers.
• Chronic conditions management. This spend increased 2% year-over-year primarily due to a 12% jump in prescription costs
• Rising pharmacy spend. Bottom line: Pharmacy costs are the largest portion of total benefits spending at nearly 30%. Nearly 60% of the prescription spend is for brand drugs, 35% is for specialty prescriptions and 7% is for generics.

Tip: Voya researchers emphasized two strategies that help keep employees health and control costs: 1) Streamlining processes and access to care so employees can quickly get the proper level of healthcare they need when they need it, and 2) Communicating often and clearly how employees can access preventative healthcare and the importance of pursuing it.

4. Employees May Make Dangerous Trade-Offs

More than 25% of employees have skipped medical care for themselves or a family member because of out-of-pocket costs, the ADP study found. Twenty-two percent have stopped taking or have taken less medication to save money.

“Cost is not just shaping preferences; it’s influencing real decisions and pushing employees to make decisions that can affect their health care,” the researchers said.

When employees make dangerous, delayed healthcare decisions, they become less effective at work: They’re often not well enough to work or handle their work at 100% or they’re concerned about family members who skipped medical care.

Tip: Employees weary of their healthcare costs would benefit from simpler plan design, clearer education, and flexible healthcare and cost options. When they fully understand their benefits, they make cost-conscious choices without sacrificing care and safety.

5. HSAs and FSAs Become More Important

Despite pulling back on receiving healthcare, employees are more prepared to handle unexpected costs. But they may need the confidence you have in finance to handle the unexpected.

On average, employees have more than $2,300 set aside for unexpected care. But nearly 40% of employees feel unprepared to handle out-of-pocket expenses, the ADP study found.

“Higher savings have not translated into greater peace of mind for employees navigating healthcare costs,” the researchers noted.

Tip: If you don’t offer Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs), consider instituting them. They can help employees save with confidence for healthcare expenses. If you already offer HSAs and FSAs, work with HR to increase education so they understand how to manage them and decide to enroll.

6. Employees More Anxious about Retirement than Healthcare

Medical insurance may be the most valued benefit, but financial security — specifically, retirement savings — is what keeps employees up at night.

For the first time in the history of the ADP study, retirement savings surpassed dental insurance as a top priority for employees.

“Retirement savings is quickly moving to the center of employee priorities, reflecting
growing awareness of longevity risk, economic uncertainty and the need for stability beyond today’s health care needs,” the researchers said.

Tip: Just like you practice financial balance in your department, you’ll want to help employees prioritize financial wellness through accessible, well-communicated retirement benefits programming. Better yet, make financial education — which would cover all areas of employee financial planning — part of your benefits education and enrollment.