Redesigning Group Benefits: Balancing Cost and Employee Value
Redesigning Group Benefits: Balancing Cost and Employee Value
In conversations with employers, one theme comes up again and again: benefits costs are rising, and budgets are under pressure. Medical inflation, new drug therapies, and evolving employee expectations are all contributing to the challenge. At the same time, employees are asking for more flexibility, more personalized coverage, and more support in areas like mental health and family care.
As benefits advisors, we see this tension every day. The question for employers is clear: how can you control costs while still delivering benefits that employees truly value?
Why Cost Pressures Are Growing
For many of the organizations we work with, cost containment is the number one priority. Medical inflation continues to drive expenses upward, and benefit plans are feeling the strain.
Employers typically explore a few common strategies to manage costs:
Renegotiating with carriers to improve pricing.
Going to market with RFPs to compare options.
Reviewing contracts to consolidate or streamline services.
What employers are often reluctant to do, however, is cut benefits outright. And for good reason. Only about one in four say they would reduce coverage to offset costs — most recognize that taking away coverage can create bigger challenges in the long run, from retention risks to decreased engagement.
The Risk of Reducing Coverage
When budgets are tight, trimming coverage may seem like an easy fix. But in our experience, it usually comes with unintended consequences:
Employee trust takes a hit. Reductions are highly visible and can feel like a signal that the company is pulling back on its commitment to people.
You might cut in the wrong areas. Without clear data, it’s easy to remove benefits employees rely on while keeping underused ones.
Talent attraction suffers. A weaker benefits package makes it harder to stand out in a competitive job market.
These risks are why many employers are shifting their focus — not on cutting, but on understanding what employees value and reallocating resources accordingly.
What Employees Value Most
We hear it often from employees: they don’t necessarily want “more” coverage. What they want is choice.
Surveys show that more than 60% of employees would trade off some traditional coverage in exchange for greater flexibility. That reflects the reality that benefit needs vary across life stages and personal situations.
Common areas of employee interest include:
Family support — childcare, parental leave top-ups, and flexible credits that can be used for family expenses.
Mental health services — counselling, therapy apps, and wellness platforms are increasingly in demand.
Support for aging and caregiving — as more employees care for older relatives, resources in this area are highly valued.
Tailored options for lower-income employees — practical benefits that provide immediate financial relief.
The takeaway is simple: employers shouldn’t assume all benefits carry equal weight. The key is to ask, listen, and adapt.
The Shift Toward Flexibility and Personalization
The days of one-size-fits-all benefits are behind us. Employees are looking for personalization, and employers are finding ways to provide it — without losing control of costs.
Some of the approaches we’re helping clients implement include:
Health and wellness spending accounts. These accounts give employees the flexibility to decide where to spend, while allowing employers to cap costs.
Digital health solutions. Virtual care and wellness apps extend access and convenience.
Choice-based models. Allowing employees to mix and match benefits within set budgets is gaining traction.
Technology is also changing how plans are delivered. While only a small percentage of employers are currently using AI in benefits administration, adoption is expected to grow quickly. That shift could mean more efficient claims processing, better data insights, and smoother employee experiences.
A Framework for Reviewing Benefits
When guiding organizations through benefits redesign, we recommend a structured approach:
Collect employee feedback — through surveys or focus groups.
Analyze utilization data — to see which benefits are being used most.
Compare value to cost — identify high-value, high-cost benefits and low-value, low-cost ones.
Explore flexible models — like spending accounts or modular plan designs.
Review regularly — benefits need to evolve as workforce demographics and expectations shift.
This framework makes it easier for employers to align spending with impact, ensuring that dollars are directed to where they matter most.
Demographic Differences in Benefits Needs
One important reminder: not all employees value benefits in the same way. Demographics such as age, family structure, and income influence priorities.
Younger employees often seek mental health, wellness, and flexible accounts.
Parents of young children value family support, childcare, and parental leave.
Caregivers look for eldercare resources and leave flexibility.
Older employees tend to prioritize health coverage, chronic condition support, and retirement readiness.
A benefits program that takes these differences into account is far more likely to resonate with the full workforce.
The Role of Data and Feedback
From our perspective, the most successful benefits redesigns are data-driven. Employers who gather feedback and combine it with utilization data gain clear insights into which benefits deliver value and which don’t.
This reduces guesswork and builds confidence in decisions. Instead of assuming what employees want, employers can design programs around what the data shows people actually use and appreciate.
Looking Ahead
The future of benefits is evolving quickly. We expect to see:
More flexibility through choice models and accounts.
Expanded digital health offerings.
Greater use of data and analytics to inform decisions.
The gradual adoption of AI in administration.
These trends point toward a benefits environment where employees have more control and employers have better clarity over where their dollars are going.
Key Takeaways
Rising costs are unavoidable, but cutting benefits is often counterproductive.
Employees want flexibility and personalization more than blanket increases.
Using data and feedback helps employers make confident, evidence-based decisions.
Flexible accounts and digital health are becoming mainstream solutions.
Regular reviews ensure benefits remain aligned with both costs and employee needs.
Shaping Benefits for Tomorrow
Balancing costs with employee value doesn’t have to mean compromise. By listening to employees, analyzing data, and exploring flexible options, organizations can create benefits programs that stay sustainable while supporting their people. The best next step is to review your current plan with fresh eyes and start the conversation about where adjustments can deliver the most impact.
Sources: Plan Sponsors Focusing on Costs, Member Feedback When Redesigning Benefits Programs.” Benefits Canada, 2025, www.benefitscanada.com/benefits/health-benefits/plan-sponsors-focusing-on-costs-member-feedback-when-redesigning-benefits-programs-expert
This is for informational purposes only and does not constitute financial, legal, or tax advice. Always consult a qualified professional regarding your specific situation. We are not responsible for any actions taken based on this content.
