As workplace benefits continue to evolve, employers face challenges such as rising costs, especially in healthcare, and how to address existing gaps in employee perceptions and the reality of employees’ needs. A new study released by Aflac reveals that benefits are becoming increasingly critical to employee retention and organizations will need to better address and communicate employees’ needs to maintain a strong workforce.

According to the study, over the past year nearly two-thirds of employers saw an increase in benefits costs, driven primarily by rising prescription drug prices and increased mental health claims. These increased costs have affected organization's ability to invest in their employees in other ways such as offering bonuses (40%), offering higher quality coverage (38%), offering a more diverse range of benefits (35%), and offering raises (32%).

When selecting a benefits provider, the study found that cost remains a critical factor for employers with 53% ranking it among their top three considerations. Other important factors identified by the study include brand reputation as well as financial strength.

Rather than reduce access to benefits, in order to manage rising costs, employers are increasingly shifting expenses such as deductibles and premium shares to employees.

Despite employers efforts to improve employee benefits packages, a gap still exists. The study found that the difference between what employers and their employees think when it comes to benefits and satisfaction has decreased by 12 points – however there is still room for improvement.

Related: Most benefits communication and education efforts fall short, employees say

According to the study, more than 3 in 5 employees say they would consider leaving their current job for one with more robust benefits, even if it meant taking lower compensation – an uptick compared to the 53% of employees who said the same thing in 2023.

As benefits packages continue to become more and more important for employee retention, organizations will need to address existing communication gaps.

While understanding of employee benefits might be improving, the study found that nearly half still don’t fully understand their health insurance policies and nearly three-quarters of employees say they want more information about benefits.

“Don’t wait to address a gap in communication. Many employees still struggle to understand their benefits,” the study said. “Rather than waiting for a stressful situation to arise – when an employee is undergoing medical treatment, for example – look for ways to proactively provide clear, easily accessible information about benefits upfront and offer personalized assistance and education.”