Majority of employers plan to maintain health benefits in 2025, even as costs rise

Despite the surging cost of health care, the majority of employers will not cut employee health benefits, according to the Survey on Health and Benefit Strategies for 2025 from Mercer. Many expect to enhance their programs, although they may do so more selectively than in the past.

“Employers are juggling faster cost growth with the need to offer attractive benefits and keep health care affordable for all employees,” said Ed Lehman, Mercer’s U.S. health and benefits leader. “That’s why it’s important they assess their investments in employee health more carefully than ever to create real, long-term value for employees.”

More than one-third of large employers will offer a high-performance, narrow-network or other alternative medical plan designed to steer employees to quality, cost-efficient care next year. “To strike a balance between cost containment and ensuring access to high-quality care for their employees, employers are leveraging strategies like high-performance networks and enhanced clinical case management,” Lehman said.

Other trends for the coming year include:

• Benefits and resources to support women’s reproductive health needs continue to grow. This includes preconception planning, which 35% of large employers will offer, and benefits designed to help women return to work after becoming a parent (31%).
• Ensuring access to specialized care during menopause is a new but fast-growing benefit. Next year, 18% of employers plan to offer specific resources for women going through menopause, up from just 4% in 2023.
• More than one-third of employers now offer coverage for men’s fertility testing and 20% cover sperm freezing, similar to the percentage that cover egg freezing (19%).

Related: CMS: U.S. employers to spend $1.3T on health benefits this year

• Widespread use of GLP-1 drugs for diabetes and obesity treatment had a notable impact on benefit budgets last year. Despite the cost few large employers have either dropped coverage or plan to drop it (3%), and only 10% say they are considering doing so. Conversely, 27% of employers are considering adding coverage.
• Nearly two-thirds of large employer respondents said their workers have been affected by some type of climate event or natural disaster in the past two years, with more than one-third saying their business operations have been affected. Around half of respondents have at least some policies or programs in place in preparation for climate events or have plans to implement them in 2025. These include policies and resources to help employees in the aftermath of a disaster and guidelines to ensure worker safety and health during extreme weather conditions.

“Employers are starting to think about the impact climate events can have on their people and their businesses,” said Tracy Watts, Mercer’s national leader for U.S. health policy. “Employers could do more to plan for climate events and safeguard employee health. Conducting a vulnerability assessment to understand which employees are most at risk is a good place to start.”