Employers are aiming to be more strategic in how they administer benefits as costs continue to rise, according to a new survey from the consulting firm WTW.
WTW released its latest Benefits Trends Survey on Tuesday, and found that rising benefit costs were the largest factor driving the strategy around coverage for employers. In addition, employers ranked the financial pressures on budgets as the fourth-highest factor.
Close to half (44%) of those surveyed said that they faced challenges in delivering on their health benefit strategies given rising costs, with 44% saying the same about wellness programs and 36% saying they faced challenges around leave offerings.
Given the cost hurdles, few said they were expanding their portfolio of benefits. Instead, they're putting a greater focus on "extracting value" from their current programs, or making the switch to new vendors and partners that deliver improved outcomes and greater value.
“After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives real value for employees and the business," Jeff Levin-Scherz, M.D., WTW's population health management leader, said in a press release.
"That means targeting support and spending on the benefits that matter most, enabling personalization and helping employees make better decisions," Levin-Scherz added.
A majority (63%) of the surveyed employers said they are looking to reallocate or rebalance their spending over the next several years, a massive jump from the 8% that said the same last year. Seventy-three percent said they're looking to switch to new vendors for health, retirement and risk benefits, according to the survey.
This tracks with the findings from a recent survey conducted by the Business Group on Health, specifically looking at well-being programs. That poll also highlighted that employers are set to put more pressure on vendors, pushing them to show results around outcomes and savings.
WTW found that 44% of employers also plan to address high-cost medical conditions, and 37% said they're looking to adopt a high-performance provider network.
Employers are also looking at ways to more effectively nudge workers toward offerings that may benefit them, especially in key focus areas like mental health and financial well-being. They're also seeking feedback from employees that will influence their review of vendor partnership, according to the survey.
"Finding innovative solutions for old and new challenges and reallocating spend on benefits that deliver true value is a good start," said Levin-Scherz. "There is still a long way to go to address these pressure points, but employers are headed in the right direction by focusing on what matters most to their employees."