Four ways employee benefits will change in 2024

2023 didn’t bring the recession economists expected, but it was still a challenging year for the benefits industry all the same. Layoffs were up almost 200% in the fall, with tech, health care, and retail workers most impacted. Meanwhile, employers absorbed a 7% increase in annual premiums for families and individuals — adding to their already rising costs of designing and managing benefits programs that meet employees’ needs for flexibility and convenience.

It wasn’t all bad news. Despite tightening budgets, 79% of employers say they plan on increasing benefits technology spend over the next three years. This growth is an exciting marker of what’s to come for the benefits industry in 2024: more benefits digitization and systems integration between ben-admins, insurance carriers, brokers, and more. The result will be more automated, accessible benefits experiences for employers and consumers alike.

2024: The year of benefits automation

As employers look to reign in benefits complexity without adding overhead, they’re closely evaluating ben-admins’ and carriers’ digital capabilities. Solutions that are easy to understand, trust, and use will win the day in the year ahead, accelerating behind-the-scenes innovation across the wider benefits ecosystem.

Here are the four trends I think will play an important role in 2024:

Artificial intelligence enhances benefits

Across industries, 94% of business leaders say AI is critical to success over the next five years. Many benefits players are already exploring potential applications to bring down costs and boost the customer experience. For example, AI chatbots to help with billing mistakes when errors occur for faster resolution, or decision support tools that turn what can often be stressful decisions into empowered, informed choices for employees. To capitalize on the opportunities AI presents, 2024 will see ben-admins and carriers focus technology investments on standardizing and synchronizing their essential enrollment and eligibility data. Only then will they have the foundation they need to deploy AI tools that get adopted by benefits consumers.

Partner-readiness streamlines integrations

Just over two-thirds of employers say increased systems integrations and benefits digitization play a central role in their overall benefits strategy, yet few have seen success to date. That gap is a reflection of the industry’s approach to partnerships in general — custom, one-to-one, and resource-intensive. A new reality will begin to emerge in 2024 as more carriers and ben-admins make real-time connectivity a priority. Instead of being better at technology, they will pivot to being better at partnering, and the infrastructure changes they will make as a result will pave the way for a more connected benefits ecosystem. Expect to see API adoption grow alongside greater emphasis on keeping benefits data clean, organized, synchronized, and accessible between integrated partners.

Employers double down on budget control

Rising inflation made every aspect of running a business more expensive in 2023, including employee benefits. Heading into the new year, employers expect health benefits costs to increase 5.4% on average. Absorbing these while still making improvements to benefits plans will see employers doubling down on budget control. Mitigation strategies may include cuts to cost-of-living adjustments, employee experiences such as perks and training, and strategic adoption of technology like AI. Automation will also play a key role through the introduction of greater efficiencies across repetitive tasks and high-touch processes. As a result, 2024 will see employers become more informed buyers of benefits technology as they utilize new solutions to bring down OpEx and serve employees with better benefits experiences from quote to card.

Navigation software emerges as a valuable category

Although decision support tools are becoming more prevalent, 72% of Americans report having felt confused about purchasing or using health insurance. Meanwhile, nearly 4 in 10 millennials say they’re very or somewhat unsatisfied with their health insurance options, frustrated by surprise bills and denied claims. An emerging category of benefits technology known as navigation software may help consumers feel more confident making these critical decisions starting in 2024, through new solutions specializing in specific use cases like care management, benefits utilization, and more. Early movers (for example Fortuna Health, a startup empowering Medicaid consumers to make better benefits decisions) will attract investor interest, cementing it as a valuable category in the larger benefits technology ecosystem.

Related: Finding the right tech-enabled solutions for employee benefits

Big changes ahead

The coming year won’t be any easier than 2023, but it will also be rich with opportunities for the industry to sharpen its products and services and use technology more efficiently to better serve consumers. In return, employers will gain a greater say in how benefits are designed and delivered as they vote for digitization and system integrations with their budgets. As we enter 2024, I am inspired by the energy I see the industry already bringing to solve these problems and feel hopeful that whatever adversity lies ahead, we’ll emerge from it stronger together.