Amid cost pressures, US employers are shifting their benefit strategy, WTW survey finds

Rhea-AI Summary

WTW's 2025 Benefits Trends Survey reveals U.S. employers are strategically shifting their benefits approach amid economic pressures. Rising benefit costs have become the primary concern for 90% of employers in 2025, up from 67% in 2023. Other major challenges include talent competition (52%), employee experience expectations (43%), and cost of living (39%). In response, 63% of companies plan to reallocate benefit spending over the next three years, compared to just 8% previously. 73% aim to enhance value or switch to better-value vendors, while 44% plan to address high-cost medical conditions. Companies are focusing on maximizing value, mental health support, health benefits, financial wellbeing, and family support, with increased emphasis on communication and navigation solutions to improve employee experience.

Positive

• 73% of employers plan to enhance value or switch to better-value vendors across benefits
• 63% of companies plan to reallocate benefit spending in next three years, showing proactive management
• Companies are focusing on strategic areas including mental health, financial wellbeing, and family support
• Employers are implementing navigation solutions and communication improvements to enhance employee experience

Negative

• Rising benefit costs affecting 90% of employers, up significantly from 67% in 2023
• Double-digit growth in medical care costs creating significant challenges
• 44% of employers facing difficulties delivering health benefits strategy
• Companies reducing benefit portfolio expansion due to cost pressures

More companies expanding choice, tackling high cost and reallocating benefit spend

NEW YORK, June 10, 2025 (GLOBE NEWSWIRE) -- 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 (NASDAQ: WTW), a leading 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 sector.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

Media contact
Ileana Feoli: +1 212 309 5504
Ileana.feoli@wtwco.com

FAQ

What are the top concerns affecting WTW employer benefit strategies in 2025?

According to WTW's survey, the top concerns are rising benefit costs (90%), competition for talent (52%), enhanced employee experience expectations (43%), cost of living (39%), and rising mental health issues (32%).

How many employers plan to reallocate their benefit spending according to WTW's 2025 survey?

63% of employers plan to reallocate or rebalance their benefit spending in the next three years, compared to just 8% in the previous year.

What percentage of employers are planning to tackle high-cost medical conditions?

44% of employers plan to tackle high-cost medical conditions, while 37% plan to adopt a network of preferred medical providers.

What are the main priority areas employers are focusing on for the next three years?

Companies are focusing on maximizing value, mental health, health benefits, financial wellbeing, and family support as priority areas over the next three years.

How many employers are planning to enhance value or switch vendors for benefits?

73% of employers plan to tackle high costs by enhancing value or switching to better-value vendors across health, retirement and risk benefits.