Inside the rapidly changing world of employee benefits

Nearly half of large U.S. employers — those with 500 or more employees — plan to change their healthcare plan offerings next year in a way that will shift more costs onto workers, according to a press release from Mercer.

In addition to cost-shifting strategies like raising deductibles and copays, many large employers say they will pursue more affordable options for workers by exploring or planning to offer nontraditional plans, like a high-performance network or variable copay plan. 

While healthcare costs for workers may be going up, many large employers don’t plan to cut on benefits that have “become standard,” Mercer said. In vitro fertilization coverage, caregiving support and one-on-one financial counseling have become common among such employers and are likely to remain in place, Mercer found.

Healthcare costs have been on the rise for years, but with workers in the U.S. feeling the tension of a low-hire labor market, potential negative impacts from artificial intelligence and high inflation, it may be a precarious time to add even more stress to their plates.

At present, employees largely blame insurers for the rising costs rather than employers, a survey released in June by the Coalition to Strengthen America’s Healthcare found, with the federal government and drug companies next on the list. But employers are still sensitive to the strain workers are under.

“Employers are under intense pressure to manage another year of elevated health benefit cost growth, but they also know that affordability matters deeply to employees,” Simon Camaj, U.S. health leader at Mercer, said in a statement.

Mercer surveyed 604 U.S. organizations in April and May, including 408 with 500 or more employees and 123 with fewer than 500 employees.

Prescription drug benefits is one area driving high costs, Mercer said, with drug costs rising 9% in 2026. 

Employers have been split on whether to cover GLP-1 prescriptions, particularly for the primary purpose of weight loss, over the past several years. While about half of large employers offered this coverage last year, Mercer’s survey showed this may be an area employers are looking to save money. Six percent of large employers dropped their coverage of weight-loss-related GLP-1 coverage in 2026, and another 5% are considering it or planning to do so next year. 

Shifting higher costs onto workers can have consequences beyond reduced employee morale. Studies have shown employees may reduce or delay care if costs get out of hand, which may increase their and employers’ costs over the long term.

ORLANDO, Fla. — SHRM members are shaking up their prescription drug benefits strategies thanks to cost increases that are driven in part by a massive uptake of weight loss medications, analysts for the HR organization said during its 2026 annual conference.

Specifically, GLP-1 drugs have become a “massive line item” for employers, said Kathryn Mayer, senior specialist, content at SHRM. The organization’s 2026 Employee Benefits Survey found that while close to half of the roughly 5,500 employer respondents covered GLP-1s for Type 2 diabetes management, only 15% did so for weight management.

“We’re finding that employers are struggling to fund GLPs,” said Calven Engstrom, a SHRM senior researcher. But given strong evidence of the drugs’ effectiveness and high demand from employees — a 2025 KFF poll found that 1 in 8 U.S. adults said they were currently taking a GLP-1 drug — organizations have to weigh competing interests.

“Many of these organizations are trying to balance employee health outcomes with the long-term affordability and sustainability of their typical health plan,” Engstrom said, adding that utilization rates for GLP-1s are probably among the most closely monitored by employers at the moment.

The results come less than a week after consulting firm Mercer announced that 6% of large employers dropped GLP-1 coverage this year, according to results from a recent survey.

SHRM’s findings on weight loss drug coverage also formed part of a broader observed shift in pharmaceutical coverage. Results showed a 16 percentage point year-over-year decrease in the share of employers that bundled prescription drug coverage with their health insurance, a decoupling that is likely tied to cost concerns. Relatedly, the use of third-party pharmacy management programs rose by five percentage points from 2025, SHRM said.

Unsustainable costs, particularly those tied to specialty pharmaceuticals, are driving employers to take a closer look at pharmacy benefit managers and become more deliberate about cost management, Mayer said.

A ‘course correction’ on mental health?

One of the more surprising results of this year’s survey concerned mental health. SHRM found that while the majority of employers offered mental health benefits, that share reached 82% this year, down six percentage points from 2025 and nine points from 2022.

“That’s not insignificant,” Engstrom said.

The sudden downward trend shouldn’t be too much of an alarm for employers, according to Mayer, but it may signal that organizations are rethinking their investments in mental health after a spike in offerings that occurred shortly after the COVID-19 pandemic.

“It was the biggest part of COVID in so many ways for benefits strategy,” Mayer said of the mental health benefits space, noting that growth of offerings like specialized counseling and mental health coverage may have duplicated existing medical or fringe benefits. “I think, possibly, it’s a course correction to fix some duplications, hold down some of those benefit line items and look at utilization.”

Hybrid work’s falloff continues, while menopause benefits, pet insurance surge

Fewer respondents said that flexible work benefits were “very important” or “extremely important” compared to 2025, SHRM said, and the share of those offering hybrid work options continued a downward trend dating back to 2022. Whereas 63% of employers offered hybrid work that year, 57% did so in 2026.

Meanwhile, menopause-specific employee benefits represented one of the highest-growth categories in SHRM’s survey, with 27% of respondents offering such benefits — up nine percentage points from 2025.

The growth of offerings in that space may reflect employers’ desire to offer more comprehensive packages that apply to multiple life stages, Mayer said. She noted the effects that menopause and perimenopause can have on metrics such as productivity, engagement and well-being.

Pet benefits also experienced a significant jump of five percentage points year over year, with 27% of employers offering them. The benefits are largely seen as a “win-win” for employers and employees, Mayer said, given that they are primarily paid by employees and generally entail securing a discounted rate for enrollees than they might otherwise find on the insurance market.

As part of the survey’s publication, SHRM noted that employers can use its interactive Employee Benefits Tool to dive deeper into the survey data based on factors such as organizational size, location and industry.

Sponsored content

By Personify Health

Healthcare benefits are one of the most significant investments employers make in their people. As costs keep climbing and employee needs become more complex, many organizations are still treating wellbeing as a collection of disconnected programs rather than a core workforce strategy. That's a missed opportunity – and an expensive assumption.

Scott Charles, CFO at Personify Health™, put it plainly: "If you don't get ahead of it, you're going to be well behind the curve." For HR leaders, that means taking a more proactive, data-driven approach to benefits and wellbeing – one that connects employee engagement, care navigation, and measurable business outcomes. Finance remains an important partner, but HR is uniquely positioned to understand employee needs and turn wellbeing strategy into meaningful workforce impact.

Employees who aren't actively engaged in their wellbeing drive up absenteeism, short-term disability claims, and avoidable ER visits. The question isn't whether you can afford to invest. It's whether you can afford not to.

The small population driving outsized health needs

In a typical year, just 5% of your members drive over 50% of your total healthcare spend. These aren't routine doctor visits. They're complex cancer cases, cardiovascular events, premature births, and major surgeries. These are the kinds of moments when employees and their families need clearer guidance, more coordinated support, and timely access to the right care.

When care is unmanaged, employees can fall through the cracks and costs can escalate quickly. When it is coordinated, organizations are better able to support their people through complex health moments while creating more stability.

Personify keeps high-cost members from falling through the cracks, with clinical advocates guiding them to the right care at the right time. The result: a 14% reduction in healthcare costs for high-cost claimants, independently validated against commercial market benchmarks.

Prevention is one of HR’s strongest workforce strategies

When budgets tighten, preventive programs are often the first to go. But for HR and benefits leaders, prevention is one of the most effective ways to support workforce health before employees reach a crisis point. According to the Prevent Cancer Foundation, only half of American adults report having had a routine medical appointment or cancer screening in the past year. That's a 10-percentage-point drop from 2024.

A preventive screening costs around $100. A Stage 4 cancer diagnosis costs $100,000+. The math isn't complicated: helping employees take small, preventive steps today can make a meaningful difference in both health outcomes and long-term benefits sustainability.

Personify Health members utilize 23% more preventive care visits than the control group, including higher rates of cholesterol, mammogram, and cervical cancer screenings. Engaged members also show an 11% reduction in acute inpatient admissions and a 55% drop in avoidable admits. Fewer emergency situations mean less drain on your plan, less strain on teams, and a healthier workforce overall. Personify Health data also shows $788 in absenteeism costs saved per improved member. Healthy employees show up. The gap between engaged and disengaged populations is measurable.

Don’t overlook the “moveable middle”

The "moveable middle" represents one of the most strategically important, yet frequently overlooked, populations in health management. Outwardly, these individuals appear healthy and rarely trigger the red flags that draw clinical attention, yet they sit at a critical inflection point: without the right nudges, habits, or timely interventions, they can quietly drift into high-risk territory, driving significant long-term costs and health burdens. They don't need crisis care. They need preventive care.

That’s where Personify Health comes in - a nudge to sign up and participate in a pre-diabetes program, a health coaching conversation, or even a simple biometric screening can be the difference between someone maintaining their health trajectory and someone tipping into chronic disease. Engaging the moveable middle isn't just good medicine — it's a smart cost savings strategy that helps employees stay healthier, more productive, and better supported before serious health issues emerge.

What AI can see that manual processes miss

Healthcare costs rarely spiral because of one catastrophic failure. They rise because of thousands of small, disconnected decisions made every day: claims processed in isolation, fraud and waste slipping through unnoticed; members not using the benefits available to them that you're already paying for.

A peer-reviewed study involving Personify Health, MIT, and the University of Michigan found that AI-driven fraud, waste, and abuse detection delivered $11.8 million in reduced paid claims in just eight months. High-cost claims dropped 58%, with average savings of $20,513 per flagged claim.

This isn't about replacing human judgment. It's about giving HR and benefits teams better signals sooner, so they can act before money walks out the door and make benefits investments work harder for the people they’re designed to support.

One experience. Real ROI.

Too many vendors create too much noise. Research shows that 88% of employees use up to five apps just to access their health benefits, with average engagement across those fragmented systems sitting below 10%. That fragmentation creates an employee experience challenge: people may have benefits available to them but still struggle with confusion. Low engagement means you're paying for benefits nobody uses.

Personify Health clients see 51% average member engagement compared to a sub-10% industry average. That engagement drives real outcomes: 20% fewer avoidable ER visits, 14% lower healthcare costs year-over-year for engaged participants, and $699 in potential cost savings per member per year.

What you should be tracking

You can't manage what you can't measure. If you're evaluating your current health strategy, or vetting a new partner, these are the questions worth asking:

• How many high-cost claimants are being actively managed, and what is it saving?
• What are preventive care participation rates, and where are gaps emerging?
• How are you identifying employees with moderate, rising risks before they become high-cost or high-need?
• What do engagement rates look like, and how do they correlate to absenteeism and health outcomes?
• Can you see real-time cost savings across your top health initiatives?

Healthier people. Lower costs. Stronger business.

Personify Health has supported 7,500 employer clients to-date and 25 million members. The data is clear, the outcomes are independently validated, and the platform is built to give both HR and benefits leaders the visibility, control, and tools to make health and wellbeing an important part of a broader workforce strategy.

The cost of doing nothing keeps compounding. The cost of acting is an investment with a measurable return.

Employers are looking for a simpler pharmacy benefits model, particularly an approach that eliminates rebates to send savings directly to patients, according to the results of a recent survey.  

More than 90% of employers surveyed agreed a rebate-free model would improve transparency into prescription drug prices, according to the research by communications and reputation management firm Penta Group for Evernorth Health Services, which operates the Express Scripts pharmacy benefit manager. 

Additionally, 91% said an approach that removed rebates is easier to understand, and 90% reported it would improve employee satisfaction and drug affordability. 

PBMs are intermediaries in the drug supply chain that manage prescription drug benefits for payers, including negotiating rebates from drugmakers, creating medication formularies and contracting with pharmacies.

The drug middlemen have faced increased scrutiny in recent years from regulators and lawmakers who argue PBMs’ opaque business practices are driving up already high medication costs. For example, critics argue the drug middlemen prefer more expensive drugs with higher rebates from manufacturers, given they often earn a portion of the rebates they negotiate. 

Employers seem to prefer a model that removes rebates altogether, according to the report, which surveyed 300 employers with at least 1,000 workers. 

Eight-seven percent of respondents said a rebate-free approach better aligns with their organization’s needs, while 86% said a model without rebates would improve the predictability of pharmacy spending. 

“This data confirms employers want pharmacy benefits that are easier to understand, easier to budget for, and designed around the experience of the people they cover,” Ashley Holzworth-Nash, vice president of retail network product strategy and solutions at Evernorth, said in a statement. 

The survey comes as the drug middlemen have faced increased political and regulatory pressure. Earlier this year, President Donald Trump signed a funding bill that included reforms like transparency requirements and a prohibition on PBMs’ linking their pay to manufacturers’ list prices in Medicare Part D.

And in 2024, the Federal Trade Commission sued the nation’s largest PBMs — UnitedHealth’s Optum Rx, CVS’ Caremark and Cigna’s Express Scripts — for allegedly steering patients toward more expensive insulin in a bid to score higher rebates. 

Express Scripts reached a settlement with the FTC earlier this year, agreeing to no longer prefer drugs with high list prices on its standard formularies and delinking its compensation from savings it negotiates with drugmakers. 

However, the PBM was already shifting towards some of those reforms. In October, Express Scripts announced it would transition to a rebate-free model. 

Other large PBMs have also begun to shift their pharmacy benefits strategies. On Monday, Optum Rx said it would shift toward a new model where clients pay monthly fees that aren’t linked to manufacturers’ list prices or prescription volume. 

A new rule proposed by the Trump administration would amend federal regulations in order to expand employers’ ability to offer certain fertility benefits to employees, the U.S. Department of Labor announced.

Under the rule, benefits used for diagnosis, mitigation or treatment of infertility or infertility-related reproductive health conditions would be recognized as “limited excepted benefits” similar to certain dental and vision benefits. The rule would set a combined lifetime maximum cap of $120,000 for participants and their beneficiaries, and this amount would be indexed for inflation from 2028 onward.

As part of the proposal, benefits would be exempt from some requirements of the Affordable Care Act and other federal health coverage laws, DOL said. The rule is a follow-up to the administration’s October 2025 guidance that permitted employers to offer standalone fertility treatment benefits.

President Donald Trump has made fertility benefits coverage a key plank in his labor agenda, writing in a February 2025 executive order that the expense of fertility treatments — namely in vitro fertilization, which the order said can cost $12,000 to $25,000 per cycle — had made infertility “an emotional and financial struggle.”

Sunday’s joint proposed rule, issued by DOL and two other federal agencies, is intended to build upon Trump’s order and address declining birth rates, Acting Labor Secretary Keith Sonderling said in a press release. The rule’s text cited Centers for Disease Control and Prevention data showing that the number of U.S. births fell by 9% between 2014 and 2024, while 1 in 5 Americans experienced infertility.

“President Trump is committed to expanding access to fertility benefits so that more American families can have children, building on his longstanding efforts to support family formation and stability,” Sonderling said.

Though fertility benefits have gained prominence in the employee benefits space in recent years, adoption remains relatively low. A 2024 survey by the International Foundation of Employee Benefits Plans found that 42% of employers offered fertility benefits that year, with smaller shares hosting specific offerings such as coverage for IVF, fertility medications and genetic testing.

The administration’s 2025 guidance specified that employers could offer fertility benefits as a separate form of excepted benefit, known as “independent, noncoordinated excepted benefits,” provided the benefits met certain conditions. The same guidance noted that fertility benefits also could be offered as limited excepted benefits via health reimbursement arrangements, or HRAs.

In a 2025 analysis, the American Society for Reproductive Medicine wrote that the administration’s guidance provided employers a “manageable way to support fertility care” but noted the limited financial scope of the benefit types specified, concluding that such benefits do not provide or replace comprehensive fertility coverage. ASRM also said that the coverage pathways specified were voluntary for employers.

“This leaves open questions about whether lower-income workers, those with self-insured plans, or historically underserved populations will actually gain meaningful access to fertility care,” ASRM said in its analysis.

At press time, the proposed rule announced May 10 had not yet been published in the Federal Register. The agencies said a 60-day public comment period would begin after publication.

In tandem with the release of the fertility benefits proposal, the U.S. Department of Health and Human Services announced the launch of Moms.gov, a federal website with resources and information for new and expectant mothers.

Massive employers Deloitte and Zoom recently came into the spotlight for their decisions to cut worker benefits. 

At Deloitte, a group of workers will see parental leave, PTO, pensions and IVF funding scaled back starting in January, Business Insider reported. Meanwhile, Zoom reduced the number of weeks offered as paid parental leave. 

As more power shifts to employers, hiring remains tight and healthcare costs continue to soar, where exactly does the employee value proposition stand? 

Erin McAuley, chief people officer at Springline Advisory, an accounting and advisory services firm, said the changes aren’t surprising. 

“Firms are definitely under real pressure right now between cost structure and our workforce models, client expectations,” she said. 

But she urged caution. 

“Benefits aren’t perks, really; they’re signals to people,” McAuley said. “When you think about them as signals — and signals [of] how people translate their value — you have to be very cautious about the different decisions that you’re making.”

The main thing, she said, is to consider how any benefits changes will land with employees. 

“You’re going to see that show up in your profitability and the economics of your business,” McAuley said. “People risk it hitting their pocketbook in lots of different ways, both in the cost of retention and great talent leaving but also the cost of client experience and what that means for client retention.”

The business decisions companies make as they decide where to spend and where to pull back are tied directly to employee trust, Jared Pope, a benefits and employment law attorney and CEO of Work Shield, a workplace misconduct management firm, said in emailed comments. 

“What is new is that benefits people thought were locked in are now being adjusted, and in some cases, applied differently across parts of the workforce. And that’s where things get tricky,” Pope said. “Employees don’t see these as perks. They see them as part of what they were promised as total compensation when they took the job. When that changes, it doesn’t just hit compensation. It creates uncertainty.”

That uncertainty shows up in lower levels of focus, shifts in engagement and potential turnover, he said. 

“Some benefits carry more weight than others. Parental leave and fertility support are not interchangeable with gym stipends or office perks. They directly affect how employees plan their lives and careers,” Pope said. 

For that reason, changes aren’t evenly distributed, he said. Rather, women and caregivers — groups that companies have targeted to improve retention and representation for years — tend to be harder hit. 

“At the end of the day, once you start pulling back on something employees rely on, you don’t just change the benefit. You change how people evaluate working for you,” Pope said. 

In an emailed statement, a Zoom spokesperson said the company is committed to employee well-being and supporting new parents. 

“We regularly review our benefits to ensure they remain aligned with the marketplace and the long-term health and sustainability of our business. We are confident our overall compensation and benefits package – including our updated parental leave policy – remains competitive and in line with peers,” the spokesperson said. 

Deloitte did not respond to a request for comment. 

McAuley recommended making sure that a company’s people strategy is representative of its business strategy. 

“That's what’s going to guide you through these ebbs and cycles,” she said. “People remember how they were treated … That shows up in both the cost of retention, the cost of hiring and then your employee brand.”

Dr. Roger Shedlin, CEO of WIN, a family-building and reproductive health benefit provider, said his company’s experience convinces them that the companies making benefits cuts are “outliers.”

“It is rare, in our experience working with clients, to see clients cut back on these benefits. Actually, we’ve seen the exact opposite,” he said.

In an era where some companies are cutting back on employee benefits, others are still leaning into the worker experience. 

FlexJobs, a job board for remote and flexible jobs, identified in a recent blog post 15 companies that offer travel benefits to employees, including some that even help pay for vacations.

“That’s right — these organizations help pay for, reimburse, or provide a stipend or bonus for employee vacations,” wrote Kirsten Chorpenning, a career advice writer. 

Software company BambooHR, for example, offers workers a $2,000 annual reimbursement stipend for vacation costs, only requiring that employees share photos upon their return. 

Similarly, marketing start-up MNTN provides employees with a $2,000 annual vacation stipend. 

Toni Frana, a career expert for FlexJobs, told HR Dive that considering a company’s benefits offerings can help a job seeker determine whether it promotes work-life balance. 

“What we see and what we know is that job seekers are interested in work-life balance benefits, whether that’s remote work or flexible schedules,” Frana said. “The ability to travel or having a perk like this generally would mean that using those PTO benefits is encouraged at these companies.”

Nearly a quarter of U.S. workers didn’t take any vacation days in the past year, according to a report by FlexJobs published in October 2025. Workers said heavy workloads, manager expectations and company culture were behind their decision not to take more time away, the survey found.

Yet, when a company offers 6 to 10 days of PTO, not only 1 to 5 days, resignations decline significantly, according to research from Florida Atlantic University and Cleveland State University.

“It’s essential to have that break from work to avoid burnout. It’s essential for human wellness, employee wellness,” Frana said. “People who are able to take advantage of their PTO benefit are more engaged. Productivity doesn’t suffer when people are not burned out.” 

These paid travel benefits can incentivize workers to take that needed time off because it removes some of the associated costs, Frana said.

New grads, too, are prioritizing work-life balance in their job searches, a March report from Monster found. Other than salary and security, graduates identified work-life balance, growth opportunities, benefits like health insurance and PTO, remote or flexible work, and company values as their top considerations when evaluating a job offer.

Companies like Deloitte and Zoom made headlines recently for their decisions to pare back employee benefits — parental leave, in particular. 

As healthcare costs continue to rise, others may be tempted to do the same thing. But they should make any benefits decision cautiously, said Rich Fuerstenberg, senior consultant and actuary at consulting firm Mercer.

About 3 in 4 U.S. finance leaders with budgetary oversight identified healthcare costs as one of their company’s top five operating expense concerns, an April Mercer report found, and 38% said they’ve cut spending on other benefits over the past two years as a result.

“Everything’s on the table,” Fuerstenberg said. 

Companies are going to look for savings wherever they can find it, and sometimes CFOs come in with “a sledgehammer,” he said. HR can help add nuance to the conversation, to explain ROI in terms of retention and to contextualize benefit costs. 

“If we work with a client and we cut their life insurance rate by 10%, their life insurance rates go down by 10%. If we cut their parental leave from 20 weeks to 15 weeks, their costs don't go down by 25%. Not everybody took 20 weeks,” Fuerstenberg said. 

The savings from reducing paid parental leave also can vary by industry and by state, he said. 

In a hospital or a retail setting, for example, if someone is out on leave, that person likely will need to be replaced 100% of the time. But, in a white-collar workforce, the work can probably be redistributed, he said. At the same time, many states mandate paid family leave, so employers aren’t paying the full cost of the leave. 

“Certainly the optics of this cut is not going to be received well. Are we getting as much value from that reduction as you think we're going to get just by looking at it at 50,000 feet?”  Fuerstenberg said. “Is it worth the bad blowback we're going to get from our employees if we're only going to save such a nominal amount?”

Before making cuts, he said, companies should consider three questions: ​​How do they demonstrate the value of the program already in place; how do they compare to benchmark; and how much would they really be saving?

“Is it worth it when you factor in state mandated benefits, productivity costs, exempt versus non-exempt employees? When you start adding those subtle fees, maybe the juice isn't worth the squeeze,” Fuerstenberg said. 

There are other ways companies can potentially trim costs, he said, including offering unlimited paid time off. 

“If you cut parent leave from 20 weeks to 10, the company wins, the employees lose. Period. Full stop,” Fuerstenberg said. 

In switching to unlimited PTO, generally the only people who lose are those leaving the company who have accrued time off, he said. “With everything on the table, I have to find savings. That's one of those areas where I think there are savings to be had.”