Q4 2024 HR Benefits Trends Report

Benefits leaders work hard to stay up to date on key topics like health and wellness, healthcare costs, and more. These topics are driving forces in the benefits strategies designed and executed by organizations to care for their employees. As such, we wanted to share the latest trends, studies, and thought leadership that we’re seeing.

The Elephant in the Room

Rising healthcare costs, unfortunately, can hardly be called a trend anymore. Consistent year-over-year healthcare cost increases seem here to stay — but we still need to talk about it.

When we look at last year, this year, and project for 2025 we see consistent increases as a whole:

• 2023: Aon states that prices increased 4.5%¹

• 2024: Aon projected an 8% increase¹, while the 2024 Milliman medical Index projected a 6.7% increase in overall costs, with a 13% increase specifically in prescription drug costs²

• 2025: PWC’s Health Research Institute is projecting an 8% increase³. Mercer projects a 5.8% increase⁴. Of note, they are already accounting for cost reduction methods from the employers.

These increases are affecting both organizations and their people. As stated by Aon:

Healthcare cost increases are impacting employees as well. Our research across employer sponsored plans shows that one in five employees are spending more than 10 percent of their annual income on healthcare — including premiums and out-of-pocket expenses.¹

Building a health benefits strategy that works to flatten or bend down the cost curve is as crucial as ever. Not all healthcare cost reduction strategies are made equal. Advanced primary care — delivered in an employer-sponsored access model — should be the engine of a data-informed, holistic approach to health and wellness.

Data, data, data

The era of cookie-cutter benefit plans is a thing of the past. To meet both employee and organizational needs, benefits managers need tailored programs that meet the needs of their people. The best way to identify those needs? Data.

By conducting analysis of data — such as healthcare spend, demographics, benefit engagement, and insurance claims — you can put the pieces of the puzzle together and get an idea of what your people need, what they want, and how they are trying to get it. This lets you design strategies that make it easy for them to get what they need quickly and easily, driving the results you want such as reduced healthcare spend. Aon says,

Organizations can also use data and analytics to support personalized programs and interventions — targeting employees with benefits they are more likely to use. Segmenting employee populations based on factors like location, life stage, health risks, personal preferences and behaviors, can reveal significant opportunities to both reduce costs and meaningfully improve health outcomes.⁵

If you want to equip your employees with the benefits they need, start with data.

Generation-Conscious Benefits

As older employees are approaching what they thought would be retirement age, many are finding the need to keep working. As new employees enter the workforce, this leads to an increased diversity of generations represented in your employee population. While this has been talked about at length from a retirement perspective, companies need to focus on what this means for their benefit plans as well.

While the oldest and youngest of your employees may seem like they have nothing in common, Marsh McLennan Agency’s 2024 Employee Health & Benefits Trends study found a few common threads across all generations: lack of engagement, cost of living concerns, and a desire for better mental health services.⁶

"Employers are facing an unprecedented set of challenges. Economic uncertainty, increased costs, and the ever-growing demand to retain top talent have created a perfect storm. In this era of change, it’s imperative for employers to reimagine their benefit offerings and prioritize the holistic well-being of their workforce."

-Kate Moher, President of National Employee Health & Benefits, Marsh McLennan Agency⁶

Wallets and Wellness

As your employees continue weathering inflation and rising and opaque healthcare costs continue to be an issue for many, it becomes more and more important for employers to consider the financial health of their workforce in addition to physical and mental health.

The Society of Human Resources Management (SHRM) expects financial health to become a bigger priority for employers moving forward. They say,

A significant number of workers said they were living paycheck to paycheck; credit card debt hit an all-time high; employees said inflation was hindering their overall savings, as well as their retirement savings; and employee financial wellness hit an all-time low.⁷

Financial health can also lead to improved physical and mental health. Financial health and security are an accepted social determinant of health. These determinants reflect the reality in which your employees live and how they impact health and wellness. For example, we know that out-of-pocket costs are a primary driver of delayed preventive and acute care, which leads directly to high-cost medical spending down the road as minor issues become major.

As you provide benefits that improve financial wellbeing and control healthcare costs — from budgeting tools to direct primary care, copay assistance, and more — you make it more likely that your people won’t have to choose between paying bills and seeing the doctor. When your employees see the primary care doctor more, they’ll get healthier and spend less on healthcare…and you will too.

Care Navigation: Guidance from a Trusted Partner

Many employers are likely to have a healthcare navigation solution as part of their benefit plans. In a report, the American Cancer Society-led National Navigation Roundtable says,

As US health care spending continues to rise, there is also growing pressure to demonstrate the value of innovative services by tracking their impact on health care costs. Current evidence indicates that navigation programs decrease unnecessary health care resource use by reducing the need for costly health care interventions such as hospitalizations, ED visits, and intensive care unit admissions.⁸

Many point solutions offer this service, but, like many point solution offerings, employees can be hesitant to trust that the service is actually there for their benefit. Building your referral navigation solution into a trusted resource like direct primary care, where your care teams have built trusted relationships with your engaged employees already, can eliminate that hesitancy and encourage your workforce to use their navigation resource. Employee engagement with healthcare navigation matters because avoiding these costly interventions —unnecessary referrals, ED visits, and hospitalizations — have huge negative impacts on health and healthcare spending.

Takeaways

Across these trends, we see a few common threads that we can weave together into an actionable plan.

First, costs continue to go up, so it’s no longer an option just to have a strategy, you need to make sure it’s the right one, with the right pieces and informed by the right data, to help you flatten or even lower healthcare cost trends over time.

Second, caring holistically for your employees means thinking holistically, including considerations like financial wellness and other social determinants of health that haven’t historically been viewed as related to healthcare.

Third, no matter how great a resource is, if your employees don’t trust it, you’ll struggle to get enough engagement for it to make a difference. Finding the right resources and partners who can build trust — and allowing that to open the doors to value-based care or referral navigation — is critical to designing an effective strategy.

References

1. https://www.aon.com/en/insights/articles/key-trends-in-us-benefits-for-2024-and-beyond

2. https://www.milliman.com/en/insight/2024-milliman-medical-index

3. https://www.pwc.com/us/en/industries/health-industries/library/behind-the-numbers.html

4. https://www.fiercehealthcare.com/payers/mercer-employer-benefit-costs-set-rise-more-5-n-2025-third-straight-year

5. https://www.aon.com/en/insights/articles/five-big-hr-trends-to-watch-in-2024

6. https://www.marshmma.com/us/insights/details/employee-health-and-benefits-trends.html

7. https://www.shrm.org/topics-tools/news/benefits-compensation/top-employee-benefits-compensation-trends-to-watch-2024

8. https://navigationroundtable.org/wp-content/uploads/Patient-Navigation-in-Cancer-Care-Review-of-Payment-Models_FINAL.pdf