4 employee benefit trends to track in 2025

4 benefit trends employers should watch in 2025

December 19, 2024 4:12 PM

A new year means a fresh start, but for many employers, it's also an opportunity to tackle old problems.

From healthcare costs to AI training and development, 2025 will likely be defined by the benefits and policy challenges leaders have struggled to make headway on in the last few years. Add in the political and economic uncertainty Trump's incoming presidency brings, and it's clear HR teams will continue to have a lot on their plates. But if leaders need a guiding light for 2025, they don't have to look further than their own employees, says Linda Keller, the national chief operating officer and employee benefits practice leader at insurance brokerage HUB International.

"If we haven't learned this lesson, then we need to learn it now: You have to start listening to your employees," says Keller. "So many decisions are made in a vacuum, but you need to start listening to really know what's driving issues for employees."

While the labor market has increasingly shifted to favor employers in the last two years, Keller warns leaders against putting retention efforts on the back burner. In other words, employee demands around benefits and policies like flexibility, AI learning and mental health support matter. EBN spoke with Keller and Jeff Faber, chief strategy officer at HUB International, about what issues will likely shape the employee benefits landscape in 2025 — and how employers can face these challenges head on.

Health plans are overdue for redesigns

According to professional services company PwC, medical costs are expected to rise 8% in 2025, marking the highest increase in 13 years. Employers and employees will face higher premiums and higher costs of care — and most workers' wages cannot keep up. If employees don't access care, then their underlying health issues will likely worsen, eventually causing even higher costs of care. Keller and Faber agree that HR teams must redesign their healthcare benefits if they want their employees to be healthy and mitigate spiraling costs.

"Listen to your employees and figure out their issues. Is it the high deductibles? Is it the co-pays?" says Keller. "What happens if employers give employees access to tools that tell them where they can get higher quality care at a reasonable price?"

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Faber advises employers to understand what healthcare benefits and plans see high utilization rates and invest in strategies that have proven to show long-term positive health outcomes.

"If you make people healthier, give them access to higher quality care, that benefits the employer's bottom line," he says. "We need to recognize that [healthcare] costs are a functional component of operating a business."

AI has a steep learning curve

While AI continues to be the talk of the town in corporate America, it's clear not everyone is confident they even know what they're talking about. According to a LinkedIn report, four in five employees want more training on AI tools, but only 38% of U.S. executives are helping employees improve their AI literacy. If employers genuinely want to integrate AI into their business, employees not only need training, but they need to be able to voice where the tech would be useful, explains Keller. Employers run the risk of hurting their operations by not creating a foundation for people and AI collaboration.

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"If employees spend more time on things they enjoy, then obviously you are going to have a happier, more productive workforce," says Keller. "Talk to your employees about where they think you can use AI in their jobs and see if it can be done. Then it's a win-win for everybody."

Mental health isn’t leaving the benefits conversation

Employee burnout hasn't let it up, and EAPs and wellness apps aren't cutting it. The American Psychology Association found that 67% of adults between the ages of 18 and 34 say stress makes it difficult for them to focus, while 58% say their daily stress is "completely overwhelming." Half of the adults surveyed admitted that their stress is so bad that it impedes their ability to function. Benefit leaders will take stock of their current wellness offerings and pinpoint which, if any, are helping employees.

"Employers have become fairly savvy, recognizing that mental health isn't mental health — health," says Faber. "It goes beyond offering an employee assistance program, which was a tried and true method of attack for 30 years, and clearly not good enough."

RTO policies aren’t set in stone

The battle between in-office and hybrid work models continues, with employees still demanding the flexibility they had at the onset of the pandemic as well as opportunities for in-person connection. And while an increasing number of companies have brought their employees back to the office for at least two or three days a week, that doesn't mean those policies will be a success down the line, warns Keller.

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According to ResumeBuilder, eight in 10 employers have lost talent due to return-to-office mandates, hinting at the importance placed on flexibility, even in today's labor market. On top of that, workers seem to distrust the reasons behind these policies, with 77% of workers believing RTO is about control rather than productivity, according to a survey by MyPerfectResume. Keller questions if some of these policies will ultimately erode employee trust and engagement.

"We fully understand the pros of getting everyone back in the office and being more connected," says Keller. "But there's a balance between that and the additional burden that's been placed on employees for having to be back in the office. It's super hard when you have daycare issues. It's super hard when you're spending an hour each way on a commute. It's super hard when you're having to pay for gas. Employers have to look at everything and then make a decision."