LOCKTON'S POV
Plan sponsors should take a longer-term view to balance health plan costs & plan member experiences
Rising health plan costs are the leading obstacle organizations are facing this year regarding their benefits plans, with 84% of employers surveyed citing cost increases as the biggest challenge their company faces regarding employee benefits.
This increased focus on cost reduction, which has now overtaken talent retention and attraction as the primary influential factor when making benefits decisions, was predicted in our Q1 Market Update, given the high medical and pharmacy trend rates that are expected to persist.
MOST IMPORTANT FACTOR IN MAKING BENEFITS DECISIONS
Source: 2025 Lockton National Benefits Survey
84% of employers cite increasing cost as the biggest challenge their company faces regarding employee benefits.
#1
Reducing costs is the most important factor chosen by employers when making benefits plan decisions.
Source: 2025 Lockton National Benefits Survey
The balancing act between cost savings & employee experience: Strategies impeded by potential disruption
In response, plan sponsors are implementing some foundational steps to manage costs, such as advocacy or navigation services, but generally steering clear of tactics that would cause employee disruption, such as reference-based pricing or individual coverage health reimbursement accounts (ICHRAs).
The majority of surveyed employers are hesitant to pursue changes that may disrupt employees, with only 2% indicating they would be willing to make plan adjustments despite disruption. But cost pressures will persist, and avoiding disruption is not a sustainable strategy.
Taking a more thoughtful, longer-term view allows organizations to manage potential disruption, and when executed effectively, strategic adjustments can both reduce costs and improve outcomes. As rising healthcare costs converge with increased scrutiny and ongoing workforce transformation, employers have an opportunity to act while there’s more room for flexibility and broader organizational alignment.
Delaying may limit future options, making it more difficult to achieve savings and increasing the risk of reactive, high-impact disruption down the line. A clear long-term strategy, combined with targeted communication and leadership alignment, can help reduce confusion, improve employee understanding, and support more sustainable decisions.
Leveraging communication to mitigate disruption
A strong benefits communication strategy is a crucial tool to help reduce employee disruption when making plan changes. Developing clear, engaging communication helps employees understand the value of the benefits provided and why they are being offered, and can minimize confusion around adjustments.
While many employers utilize a range of channels within their open enrollment strategy, including printed materials like brochures and guides, digital formats — videos and benefits websites — remain the most widely used, with 66% of surveyed employers utilizing a benefits website and 50% leveraging video.
Beyond open enrollment, it’s important to communicate year-round. Providing situational guides and timely reminders throughout the year can help employees when they need a specific benefit and reinforce the value of the benefits provided.
How can you create a strong benefits communication strategy?
01.
Define objectives and the key messages you need to convey
02.
Determine what gaps exist in existing communication
03.
Analyze audience demographics and preferences
04.
Assess media channels and engagement opportunities
05.
Establish key performance metrics to measure overall success
Speak to a Lockton expert to learn more.
As more organizations encounter challenges stemming from rising healthcare costs, being proactive in implementing the right changes and providing clear communication around the value and purpose of benefits can help foster understanding, drive engagement, and minimize disruption.
