Inside the rapidly changing world of employee benefits

Increasing financial pressures on workers — rising healthcare costs, inflation and a higher cost of living — are forcing them to make tough choices. Some are delaying healthcare, others are taking on second jobs and some are even putting off retirement. 

As employees look for ways to shore up their finances, where does that leave voluntary benefits? 

So far, uptake remains about the same, Melanie Cannon, vice president of worksite voluntary benefits sales and marketing at Amalgamated Life Insurance Co., told HR Dive.

In particular, as employers shift more healthcare costs onto workers, voluntary benefits — things like disability, accident or permanent life insurance — can serve as a safety net, Cannon explained.

“Employers are changing their health plans, and they’re making them either more expensive, or they’re increasing the copays and the deductibles. So folks are looking for voluntary benefits to fill those gaps,” Cannon said. 

For example, accident insurance can help workers when they or their families are injured, she said, and is likely so popular because of high-deductible health plans. 

Accident insurance provides those insured directly with a cash benefit that can be used at the worker’s discretion to help cover costs incurred around the injury, such as missed work, transportation expenses or child care.

“I believe what’s happening is they’re finding other avenues to cut, as opposed to the voluntary benefits,” Cannon said, noting that many offerings cost a few dollars a week. 

Among their clients, many of whom are blue-collar workers, one way workers have cut costs is by canceling their supplemental life insurance policies, she said. Many workers have life insurance policies through their employer and may not see the supplemental insurance as a priority.

It’s important to remember that voluntary benefits are not a replacement for healthcare, Cannon warned. 

“If [you]’re going to cut anything, leave your fully insured medical plan alone,” she said. 

Yet ADP found that “premium cost is now the top reason employees waive coverage, choose alternate insurance, or do not cover dependents,” according to the results of a recent employee benefits survey. 

That report also found a few workers may already be starting to forgo voluntary benefits like vision and dental coverage; 15% of those surveyed said they declined vision or dental insurance to afford medical insurance.

Nearly three-quarters of U.S. finance leaders rank healthcare among their companies’ five biggest operating expense concerns, consulting firm Mercer found in a recent survey.

The research comes as the rapid rise of GLP-1 weight-loss medications — like Wegovy and Ozempic — is adding to volatility in employer health costs.

“The survey results make clear the far-reaching impacts of rising health benefit costs for individual organizations,” Susan Potter, president of Mercer U.S. and Canada, said in an emailed statement. “Only about one in four CFOs said that their organization was able to absorb the cost increases over the past two years without any business impacts, such as slower wage growth, reduced hiring, or higher prices.”

Employer-sponsored health insurance costs are projected to rise 6.7% in 2026, the highest increase in 15 years, pushing the average expense per employee above $18,500, according to Mercer, a Marsh McLennan subsidiary that advises companies on workforce issues. 

The 6.7% figure, which comes from Mercer’s 2025 National Survey of Employer Sponsored Health Plans, represents the expected average increase after cost-saving changes employers planned to make, the consulting firm said. Before changes, employers anticipated an average increase of over 9%, which would be 5 to 6 points above the Consumer Price Index.

“The current elevated cost trend, which began in 2023 following a decade of growth averaging only about 3% annually, is putting mounting pressure on benefit budgets and, in some organizations, beginning to affect broader business operations,” the report said.

The share of finance leaders identifying healthcare as a top three concern has risen from 19% in 2024 to 33% in 2026, reflecting a growing CFO challenge, according to Beth Umland, director of health research at Mercer US.

“While inflation related to other goods and services has cooled over this timeframe, the healthcare trend is accelerating, which is a red flag for CFOs,” Umland said in an email response to questions. “In addition, health care claims cost has been increasingly volatile, making it harder for organizations with self-funded plans to manage their budgets.”

Nearly half of those surveyed said they favor changes to plan design such as higher deductibles or modified cost-sharing structures. Fewer CFOs supported increasing employee premium contributions.

GLP-1 drugs typically cost between $1,000 and $1,500 per month for consumers, with employers often covering 70% to 100% of that cost, according to a January SHRM article.

Medicare spending on GLP-1 drugs reached about $27.5 billion in 2024, more than five times higher than in 2019, according to a Kaiser Family Foundation analysis of claims data.

About half of large employers — those with 500 or more employees — currently cover GLP-1s for weight management, Mercer found.

“While more employers have offered this coverage each year for the past three years, we may see that trend slow or stop in 2026 as employers sought to curb high cost increases,” Umland said.

“Those that currently provide this coverage are evaluating all methods for managing utilization, from eligibility controls that help ensure the medications are used by those who will benefit most, to requiring participation in a support program that will help ensure members who do use these medications are positioned to get the maximum benefits.”  

Mercer surveyed 161 CFOs and other finance professionals in February.

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By Hinge Health

The economics of MSK pain: why “wait and see” is the most expensive strategy for 2026

If you’re an HR or Benefits leader, you already feel the pressure: healthcare costs are rising fast, and musculoskeletal (MSK) pain is a top driver year after year. The cost of inaction is no longer neutral—it compounds. MSK conditions now cost the U.S. healthcare system an estimated $661B annually [1]. That spend isn’t just big—it’s growing.

Below, we break down three realities shaping your 2026 benefits strategy—and the practical moves that keep members healthier and budgets in check.

The inflation multiplier: Status quo is the most expensive option

Doing nothing about MSK isn’t neutral—it’s letting your costs compound. In a recent analysis by Aon published in the Wall Street Journal, Healthcare costs are expected to rise 9.5% per employee in 2026 [2].

Even more telling: a small cohort (about the top 6% of members) drives roughly 85% of MSK costs, which means precision targeting isn’t a nice-to-have, it’s the strategy. Traditional approaches wait for a claim to appear; a modern MSK model flags risk sooner and engages proactively—before the cost curve spikes.

The P&L impact: Delaying care doesn’t defer cost

Delaying care doesn’t defer cost—it transforms manageable pain into high-cost utilization (imaging, injections, surgery). Early, high-value MSK care shifts members to conservative pathways and away from avoidable procedures.

• Across independent, claims-based analyses, Hinge Health delivers a 2.4x hard-dollar ROI by reducing MSK medical claims—especially surgery and imaging [3].
• In peer-reviewed and claims studies of spine and joint populations, Hinge Health members saw fewer high-cost interventions, including a documented reduction in spinal fusions and joint replacements.

Most utilization management touches the case when it’s too late—after costly interventions have already started. Hinge Health’s proactive engagement flags risk before it reaches the surgical table (e.g., via targeted enrollment informed by claims, authorizations, and high-risk signals).

What this means for your plan:

• Early digital physical therapy is not a “nice-to-have”—it’s the single most effective hedge against downstream MSK claims this year.
• If you don’t intervene upstream, you’re effectively financing tomorrow’s surgery pipeline today.

3) The hidden cost: Pain costs more than just medical claims

Pain erodes productivity (absenteeism and presenteeism), amplifies mental health comorbidities, and drives medication reliance that can introduce additional costs. Addressing pain holistically is a workforce resilience strategy as much as a medical one.

• Among Hinge Health participants, 59% report taking less pain medication after one year, and participants use prescription opioids 62% less than non-participants [4].
• Hinge Health’s whole-person model—combining exercise therapy, clinical expertise, and behavioral support—has been associated with meaningful improvements in pain, function, and mental health in large-scale studies.

Integrating exercise therapy, clinical guidance, and behavioral support—across digital and in-person settings—addresses the real drivers that prolong pain and drive indirect costs. 

What leading teams are doing now

1) Target the few who drive the most.
Use claims- and auth-informed “targeted enrollment” to identify high-risk members early (the 5–6% driving ~85% of spend) and redirect them into conservative care before costs escalate.

2) Make high-value, conservative care the default.
Stand up digital physical therapy as the first line for back, knee, hip, shoulder, and neck—supported by rapid access to MSK specialists or in-person physical therapy when needed. Expect fewer surgeries and lower imaging.

3) Measure both ROI and VOI (value on investment).
Account for claims savings plus improvements in productivity and employee retention—they reflect real dollars and real risk.

Bottom line: “Do nothing” is not neutral

“Do nothing” is not neutral—it’s a decision to absorb accelerating MSK claims and all the hidden costs that come with them. A proactive MSK strategy is one of the rare levers that can reduce claims in-year while improving care. Learn more by reading the largest-ever medical claims analysis of a digital MSK solution demonstrated that Hinge Health reduces medical claims by $2,387 per participant compared to a control group.

Let’s turn MSK from an inflation engine into a savings strategy—while helping your people move beyond pain.

As the private sector continues to shift from defined benefit retirement plans to defined contribution ones, overall participation in employer-sponsored retirement plans continues to hover around the 50% mark, according to a report from the National Institute on Retirement Security.

An analysis of the U.S. Census Bureau’s Survey of Income and Program Participation data showed that 51% of workers had a DC plan through their main employer. Of workers with a positive DC plan balance, 80% had a DC plan through their main employer, NIRS said. 

“If workers are saving for retirement in a DC plan, it is almost certainly because they have a plan at their job,” NIRS said. “This suggests that working Americans have struggled to save adequately for retirement largely because they are not offered any retirement savings plan at work.”

Among workers with positive DC plans, median balances were $40,000 in December 2022, the report found. However, when looking at all workers, including those without any retirement savings, the median amount saved was only $955.

“The bottom line is that if Americans are not saving for retirement through their employer, then they are probably not saving at all,” NIRS said. 

NIRS Executive Director Dan Doonan said that as Americans face “a growing affordability crisis,” retirement needs to be a part of the conversation.

“Most retirement programs today rely on workers saving voluntarily, with the tension between saving and the cost of buying a home, daycare, and college creating enormous challenges for the middle class,” Doonan said in a news release. “This research shows the fragility of both the nation’s retirement infrastructure and retirement preparedness for the typical U.S. household.”

Doonan highlighted data on the retirement savings of those ages 55-64; among that age group, the median saved for retirement is $30,000. 

“Even among those with savings, balances often are far too low to support a secure retirement,” Doonan said. “Strengthening access to reliable retirement plans is essential if we want Americans to retire with dignity rather than anxiety.”

The amount workers have saved is in stark contrast to how much they expect to need in retirement. Just shy of 50% of U.S. workers said they’ll need at least $1 million in savings to retire comfortably, according to a December 2025 report from Betterment at Work, a provider of 401(k) plans. 

Part of the problem may be that employers are unaware of their workers’ reality. While more than three-quarters of employers think their employees are prepared for retirement, less than half of workers think so, per an August 2025 PNC Bank report.

The U.S. Department of Labor’s Employee Benefits Security Administration said it will focus its efforts on criminal cases “to address the most significant harm” to the employee benefits system, according to a field assistance bulletin. 

The agency, which serves as a regulator of voluntary employee benefits, identified four guiding principles:

• Targeting enforcement on “the most egregious conduct and significant harm;”
• Ensuring the agency is not regulating “by enforcement” and is providing clarity to the regulated community;
• Committing to a proper review of all critical enforcement efforts by senior agency officials; and 
• Ensuring enforcement is timely and responsive.

“This update to our enforcement program makes it clear that our focus is on true bad actors whose actions harm the benefits American workers and retirees have earned for themselves and their families,” Assistant Secretary of Labor for Employee Benefits Security Daniel Aronowitz said in a news release. “We will no longer be second-guessing the prudent discretionary judgement of fiduciaries but instead will have even-handed and fair enforcement with a close relationship to the language of the law, guidance issued by the Department of Labor, or clearly established case law.”

Nevin Adams, a retirement industry expert, characterized the shift in EBSA’s priorities as “an emphasis on violations of loyalty, rather than prudence,” in a post for the American Society of Pension Professionals & Actuaries.

“At a high level, this suggests a lowered focus on technical mistakes, good-faith process errors, and ‘gray-area’ interpretations — and a heightened emphasis on self-dealing, hidden conflicts of interest, misuse of plan assets, and acting for reasons other than participants’ benefit,” Adams wrote. 

The bulletin follows a Jan. 15 announcement by the agency of an “overhaul of its national enforcement projects for fiscal year 2026 to ensure an even-handed, responsive approach to investigations.” 

The January announcement said EBSA would target cybersecurity, barriers to mental health and substance use disorder benefits, protection of benefit distributions, retirement asset management, surprise billing and criminal abuse of contributory benefit plans. 

At the time, Deputy Secretary of Labor Keith Sonderling said, “By recalibrating the areas our investigators focus on, EBSA investigations will be more efficient, responsive, and prioritize serious misconduct rather than minor foot faults.”

Employment-based health insurance coverage remains the most common source of coverage among the nonelderly population, at roughly 60%, according to a recent report from the Employee Benefit Research Institute.

Meanwhile, the share of employers providing coverage inched upward to 49% in 2024, from a near record low of 46.3% the year before, EBRI found.  

Gains in coverage offerings were limited to large employers, the research found. Those with more than 100 employees showed steady increases, while coverage among smaller employers deceased.

“The overall percentage of employers offering coverage is heavily influenced by the fact that small employers are in large part responsible for the decline in coverage, and most employers in the U.S. are small,” EBRI found. 

Paul Fronstin, director of health benefits research at EBRI, warned that the pressures facing small businesses could further exacerbate the problem.

“If health insurance premiums rise faster than wages and general inflation, small employers are likely to face intensified financial strain, which could accelerate the erosion of health plan sponsorship among firms with fewer than 100 workers,” Fronstin said in a statement.

Large employers, meanwhile, might shift costs to workers through higher deductibles, coinsurance or restricted networks, Fronstin said.

“That could preserve offer rates but reduce the value of coverage, potentially lowering take-up. For workers, the impact could be significant, meaning higher out-of-pocket costs, greater reliance on public programs and increased financial insecurity tied to health care expenses,” per Fronstin. 

The average cost of employer-sponsored health insurance rose to $17,496 in 2025, up 6% from a year earlier and greater than rates of inflation and wage growth, according to a November report by Mercer. Meanwhile, costs are expected to climb another 6.7% in 2026.

Increasing workers’ paid time off allotment by just a few days can make a big difference, recent research from Florida Atlantic University and Cleveland State University has shown.

Giving workers 6 to 10 days of PTO, not just 1 to 5 days of PTO, significantly reduced resignations — especially for men, a joint study by researchers from FAU and CSU suggested.

The gold standard, it seems, is 11 or more days of PTO. At that rate, both men and women were less likely to quit, research showed.

The report, “Does one week now prevent two weeks notice later? A longitudinal study of paid time off and employee retention,” published in the Journal of Strategy and Management, and is the result of researchers analyzing 18 years of data. 

Why HR wins with PTO

Given the Great Resignation of 2021, strategies to reduce turnover will be crucial to keep in the HR toolbox, researchers implied.

“Moving forward, it will be crucial to carefully weigh the costs of offering PTO against the far greater costs of losing employees, so organizations can make benefits decisions that truly support both their workforce and their bottom line,” Candice Vander Weerdt, a corresponding author and a professor at CSU’s College of Business, said on Thursday.

The release of these findings coincides with another recent report by WTW, which suggests the majority of employers will invest in leave over the next two years. More than half of leaders said they’re prioritizing leave in hopes of attracting new employees and keeping current ones. 

“Leave programs have become a strategic differentiator for employers competing for talent,” Alex Henry, group benefits leader at WTW, said on Monday. “Enhancing leave programs can be a cost-effective way to improve well-being, strengthen culture and meet the evolving expectations of a modern workforce.”

How private employers fill in public policy gaps

Global workplace experts have long suggested that the U.S. is behind in its approach to paid leave. While this conversation tends to highlight the lack of resources for working parents and caregivers, these observations have been applied to PTO in general.

Out of the nearly 40 high-income nations in the Organisation for Economic Co-operation and Development, the U.S. is the only one that doesn’t ensure PTO or paid parental leave for its people, FAU researchers pointed out.

Some states require five days as the minimum amount of PTO and no state mandates more than eight days, LeaAnne DeRigne, the study’s co-author and a professor at FAU’s Phyllis and Harvey Sandler School of Social Work, observed in a statement released Thursday. 

But FAU and CSU’s findings show “that the strongest retention benefits occur well above those limits,” DeRigne said. “If policymakers and employers want to keep workers, they need to recognize that meaningful time away from work isn’t a luxury — it’s a proven strategy for stability.”

Nearly three-quarters of U.S. companies plan to expand their leave programs in the next two years, according to research from WTW, a global advisory, broking and solutions company.

These investments are driven by a focus on improving employee experience (67%) and upping attraction and retention (60%), WTW found. 

The investments are in multiple forms of leave, including parental, bereavement and caregiver leave, the report found.

“Leave programs have become a strategic differentiator for employers competing for talent,” Alex Henry, group benefits leader at WTW, said in a statement. “Enhancing leave programs can be a cost-effective way to improve well-being, strengthen culture and meet the evolving expectations of a modern workforce.”

Of the 585 employers surveyed, more than 4 in 5 provide parental leave, and 16% plan to enhance those programs, WTW said, while 18% of employers expect to either increase the duration or broaden the eligibility requirements of their bereavement leave. Caregiver leave is predicted to nearly double over the next two years, growing from 22% to 39%, the report found. 

Investment in unlimited paid time off also is climbing; 15% of companies provide the benefit to exempt employees now, an increase from 12% two years ago, and 18% plan to in the next two years, WTW said. 

Paid time off policies reduce turnover for all workers, regardless of how much job satisfaction they have or whether they have flexible schedules, according to a joint Florida Atlantic University and Cleveland State University study published in March 2025. 

Employers identify program administration as their greatest challenge (49%) in implementing these changes, however, followed by integration of leave systems (39%) and coordinating workforce availability as leave use rises (38%).