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

1. Rising benefit costs impact U.S. employers' strategies, reaching 90% concern. 2. Employers shifting focus to existing benefits, targeting enhanced employee experiences. 3. 63% of companies plan to reallocate benefits spending in three years. 4. Double-digit growth in medical costs challenges employee benefit delivery. 5. Key focus areas include mental health, financial wellbeing, and family support.

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FAQ

Why Bullish?

The article presents a proactive stance by WTW in the face of rising benefit costs, enhancing its competitiveness as organizations increasingly seek data-driven solutions to improve employee benefits. Historically, during similar economic pressures, advisory firms like WTW have benefitted from increased demand for strategic consulting.

How important is it?

The insights from the survey reflect broader trends affecting WTW's core advisory business, indicating that the company is well-positioned to capitalize on long-term shifts in corporate benefit strategies.

Why Long Term?

The strategic shift towards better value in employee benefits may take time to manifest in terms of financial results but positions WTW favorably for ongoing engagements with employers needing guidance.

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More companies expanding choice, tackling high cost and reallocating benefit spend June 10, 2025 11:18 ET  | Source: Willis Towers Watson US LLC 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 contactIleana Feoli: +1 212 309 5504Ileana.feoli@wtwco.com

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