Organizations and employees alike are keeping a close eye on costs—offering customizable benefits offerings is a sound solution.
By Maggie Mancini
Rising costs are impacting the employee benefits landscape in profound ways. Mercer’s latest national survey of employer-sponsored health plans has found that the average employee health benefit rose 6% in 2025 and is projected to rise another 6.7% in 2026, the highest in 15 years. At the same time, organizations are facing sharper spikes in high-cost prescription drugs, including GLP-1 medications for weight loss and diabetes management. Those costs have grown 81% since 2023, according to CBIZ.
“Organizations are grappling with the affordability of benefits because financial pressures are a reality for so many of their employees,” says Laine Thomas Conway, engagement and enablement leader for delivery at Alight. “In fact, according to Alight’s Employee Mindset Study, 42% of people say they are just getting by financially and 28% report they rarely or never have money left over at the end of the month.”
When it comes to employee health and well-being, finances have a significant impact, she says. Over half (53%) of employees say that living a truly healthy lifestyle requires more money than they are willing to spend. Even more, a quarter of workers cite cost as the biggest obstacle to improving their physical or financial well-being.
56% of workers report needing some type of healthcare service in the prior year but not receiving it. The number one reason? High costs.
Additionally, 56% of workers report needing some type of healthcare service in the prior year but not receiving it. The number one reason? High costs. Coming in at a distant second is wait times that are too long, cited by just over half as many people.
“Employers are really trying to balance these pressures while still meeting heightened employee expectations,” says Stephanie Shields, head of employee benefits at Equitable. “Layer onto this the widespread anxiety Americans feel about the rising cost of everyday life, and it becomes clear to employers that their workforce is navigating financial uncertainty on all fronts.”
Research from Equitable finds that 80% of Americans—regardless of their income level—are worried about the affordability of everyday living costs, and four in five Americans worry that an unexpected medical expense could derail their financial goals, with more than a quarter of this group indicating that a bill under $1,000 would cause financial hardship.
Rising costs threaten business sustainability, but they also impact the livelihood of employees and their families, shares Shira Wilensky, strategic engagement and innovation director at OneDigital. Employers are increasingly scrutinizing their benefits package to eliminate wasteful spending and ensure that their benefit offerings are yielding value to both employers and employees.
“Refining benefit packages to cater to the unique needs of employers is critical to gain the most value on investment for employers,” Wilensky says. “Companies are also focused on measurable cost-saving solutions that yield more immediate results. Modifying healthcare utilization through targeted communication campaigns to educate employees on making more informed choices about their healthcare requires a small investment but can yield big results.”
Improving Flexibility Via Personalization
Amid rising costs of benefits for employers and employees alike, personalized benefits have become a gamechanger. In fact, 70% of employees say customizable benefits increase loyalty, putting pressure on employers to deliver more flexible, tailored total rewards to stay competitive, according to research from CBIZ.
“With a heavy emphasis on money-saving solutions, employers might be inclined to cut benefits that in the past have been considered ‘nice to have,’ such as family planning benefits, caregiving, and mental health,” Wilensky says. “Instead, employers should look to evaluate whether they have the right programs in place to support their diverse workforce.”
Employee needs, and their value perception of benefits, changes through their life stage, Wilensky explains. A recent review of OneDigital’s Employee Value Perception study found that employers with a high number of employees who are married with children value their health insurance higher than the benchmark.
“Even with traditional plans, helping employees with enrollment guidance and ongoing navigation can play a big role in helping them understand what is relevant and how specific benefits can apply to them,” Conway says. “The good news is that two-thirds of workers are interested in receiving personalized messaging from their employer around certain benefits and programs based on their personal health and financial information, and 77% are comfortable sharing health information in exchange for that personal guidance.”
It’s clear that employees want benefits that reflect their real needs, not generic coverage, Shields says. The good news is that personalization doesn’t always mean adding cost. In fact, the most effective strategies often involve reallocating spending toward what employees value most, she adds.
“Employees can personalize benefits by expanding or enhancing their non-medical offerings, such as voluntary benefits,” Shields says. “For example, many employers are adding childhood illness riders to their critical illness offerings to cover conditions like autism, type 1 diabetes, cerebral palsy, and Down’s Syndrome, while others are adding maternity and newborn riders to their hospital indemnity insurance plans.”
Offering these benefits won’t strain an employer’s health budget because the products are typically paid 100% by the employee, Shields explains. For employers looking to improve the personalization of their benefit offerings, Shields suggests that they start by gathering data, including:
- what people are using;
- what people are ignoring; and
- where possible gaps may appear across generations.
“When you modernize your plan design with that level of insight, you can create choice without inflating budgets,” Shields says. “At the end of the day, employees simply want to feel seen. When benefits are personalized via flexible spending, smart decision tools, or meaningful voluntary offerings, employees stick around because those offerings matter to them.”
An Essential Element: Voluntary Benefits
Nearly one-third of employees consider pay to be the primary reason they would consider leaving a job, according to Alight’s 2025 Mindset Study. However, better benefits come in as the second most common reason. Notably, the value of any benefit offering goes up by more than 20 percentage points if an employee actually uses it. With this in mind, Conway explains that it’s crucial for HR to ensure they’re not only offering a variety of benefits that feel relevant to their workforce, but also that employees are guided to make use of those benefits.
“Voluntary benefits have become essential in attracting and retaining talent because they directly reflect employees’ diverse and evolving needs,” Shields says. And the data backs this up.
98% of survey respondents indicate that voluntary benefits are key to attracting and retaining employees and 73% believe that they send a clear message of care and commitment.
According to an Equitable survey of more than 500 small- to mid-sized businesses, 98% of respondents indicate that voluntary benefits are key to attracting and retaining employees. More than 60% report they make their overall package feel more competitive without raising pay, and nearly three-quarters (73%) believe that offering voluntary benefits sends a clear message of care and commitment.
“When it comes to perks and benefits beyond traditional employer-sponsored offerings, companies can be very intentional about how they package and position these to existing and prospective employees,” Wilensky says. “If an employer has a large proportion of employees with children and families, they might choose to invest in benefits to support them, such as childcare, family planning, financial planning, and caregiving benefits. They might also review their leave policies and evaluate remote and flexible work options.”
These benefits are powerful because they meet people where they are, Shields says. They also allow employers to expand choice without adding significant costs, since employees can select what fits their lives.
“From a talent standpoint, voluntary benefits send a simple, compelling message: We understand that benefits are personal and your needs are unique, and we’ve built a system that supports that,” she says.
Balancing Benefit Costs and Quality
Employers seeking to improve benefit offerings and administration while managing costs should focus on three core pillars, Shields says: smarter spending, better experience, and stronger data. While there’s no magic formula to address affordability, there are a few things to consider.
- Spend where it matters most. “Employers should look to eliminate benefits that do not align with employee needs and interests,” Wilensky says. Shields adds that many employers are moving away from broad benefit expansion and instead focusing on enhancing the value within their current offerings: improving vendor performance, tackling high-cost medical conditions, and steering employees toward high-quality care.
- Simplify the employee experience. “Simplifying decision-making through clear communication, integrated platforms, or navigation support, particularly ahead of and during the open enrollment period, helps employees maximize the benefits you already provide,” Shields says.
- Ensure workers have benefits communication that hits the mark. While 77% of senior management feel their benefits communication is effective, only 48% of individual contributors agree, pointing to the need to ensure that employers are reaching the right audience, Conway explains. Wilensky adds that it’s important to connect the right employees with the right benefits at the right time.
“Employers that move beyond broad, feel-good initiatives and instead prioritize solutions that deliver measurable value, guide smarter healthcare decisions, and maximize the return on existing investments will thrive,” Wilensky says.
At the same time, controlling costs does not mean compromising the employee experience, she says. Benefits that are aligned with workforce needs, clearly communicated, and supported by flexible policies, can help employers manage spend while strengthening engagement, productivity, and retention.
Rising costs and shifting expectations are forcing employers to rethink what employee well-being really means. “The future of benefits will be defined by choice, connection, and clarity,” Shields says. “Employees want benefits that feel personal. They want employers to help them navigate complexity. And they want to feel cared for during moments that matter.”
