Employers shifting their benefit strategy amid cost pressures

NEW YORK, June 10, 2025 – As U.S. employers grapple with heightened economic uncertainty and greater financial pressures on budgets, steering the right course on benefit strategy is more challenging than ever. This is according to a survey by WTW, a global advisory, broking and solutions company. As a result, companies are turning to smarter spending, sharper focus and using benefits as a strategic tool to drive engagement, retention and purpose.

The 2025 Benefits Trends Survey found rising benefit costs to be the top issue (90%) influencing U.S. employers’ benefit strategies in 2025, up from 67% in 2023. Other top concerns include competition for talent (52%), expectations for an enhanced employee experience (43%), cost of living (39%) and rising mental health issues (32%).

“After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives 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,” said Jeff Levin-Scherz, Population Health Leader, North America, Health & Benefits.

As the cost of medical care continues to show double digit growth in the U.S., employers face greater challenges in delivering their strategy in key areas such as health benefits (44%), wellbeing programs (44%) and leave benefits (36%).

To address these concerns, employers are shifting their strategy. Few are expanding their benefit portfolio, choosing to instead focus on extracting value from their current offerings and improve financing, employee experience, analytics and administration.

Compared to just 8% in the past year, 63% of employers plan to reallocate or rebalance spend in the next three years. A majority (73%) plan to tackle high costs by enhancing value or switch to better-value vendors across health, retirement and risk benefits. Just under half (44%) plan to tackle high-cost medical conditions and 37% plan to adopt a network of preferred medical providers.

Eager to address employee pressure points, companies are also looking to improve the following priority areas over the next three years: maximizing value, mental health, health benefits, financial wellbeing and family support. Many plan to increase their use of communication and use nudges and navigation solutions to influence behaviors and enhance the employee experience. Regularly reviewing vendor performance, including employee feedback, is also a key action employers are taking.

“Organizations are facing more pressure than ever to deliver the right benefits strategy. Finding innovative solutions for old and new challenges and reallocating spend on benefits that deliver true value is a good start. There is still a long way to go to address these pressure points, but employers are headed in the right direction by focusing on what matters most to their employees,” said Levin-Scherz.

About the survey

The 2025 Benefit Trends Survey was conducted from early March to mid-April. Respondents include 696 U.S. employers, representing a broad range of industries in both the private and public sectors.