The healthcare marketplace has posed significant challenges for employers in recent years. With inflation impacting nearly every sector, healthcare costs have not been immune. In 2024, employers saw premium increases of 6-7%, according to KFF. As we move into 2025, what can employers expect?
PwC projects an 8% increase in medical costs, which would mark a near-record rise. This article outlines the factors driving these increases and the key benefit trends employers should be aware of to remain competitive and continue attracting top talent.
1. Impact of New Administration on Benefits
Employers should monitor potential changes to the healthcare landscape as the political environment shifts. With the return of the Trump Administration, there could be changes to the Affordable Care Act subsidies, which may impact premium increases and enrollment. Additionally, changes in reproductive health and family policies may affect employees’ needs and expectations. Employers should stay informed, as this year’s election results could trigger broader changes in the healthcare marketplace.
2. Mental Health Benefits
Employee mental health will remain a top priority in 2025. Since 2020, the conversation around mental health in the workplace has gained significant traction. However, according to a study by The Hartford, many employees still feel their workplaces can do more to foster an open, inclusive environment for mental health. Employers who prioritize mental health resources and support, along with clear communication and leadership buy-in, will be better positioned to enhance employee well-being and retention.
3. GLP-1 and Weight Loss Drugs
There has been a sharp rise in demand for GLP-1 drugs, originally designed for diabetes treatment but now widely used for weight loss. Employers are under increasing pressure to offer these medications, which can cost around $1,000 per month per individual, with extended use required for effectiveness. As of now, 34% of employers offer GLP-1 coverage for weight loss, according to the International Foundation of Employee Benefit Plans. When considering whether to cover these drugs, employers must weigh the costs against the potential benefits in employee retention, satisfaction, and health outcomes.
4. Biosimilars: A Cost-Saving Alternative
One of the biggest cost drivers in healthcare is pharmaceuticals. Biologic medications, used to treat conditions like cancer and rheumatoid arthritis, are often prohibitively expensive. Fortunately, biosimilars—drugs highly similar to their biologic counterparts—are emerging as a cost-effective alternative. According to an IQVIA report, biosimilars have saved $56 billion in the last decade by providing a more affordable option for patients and employers alike. As biosimilars become more prevalent, employers should explore their potential to reduce healthcare costs without compromising patient care.
5. Financial Wellness Benefits
Inflation has placed financial strain not only on employers but also on employees. A recent iSolved report found that 54% of workers have saved less due to inflation. As living expenses rise, employees are increasingly looking to employers for financial wellness benefits, including resources for retirement planning and financial education. Employers who recognize the financial stress their employees face and provide tailored resources will improve employee satisfaction and retention.
Looking Ahead to 2025
2025 will be a year of significant change. To remain competitive in the evolving labor market, employers must stay ahead of legislative shifts, rising healthcare costs, and changing employee needs. At JKJ, our experts can provide valuable insights and resources to help you structure and plan your employee benefits program to navigate these trends effectively.
