2025 Midyear Benefits Trends to Monitor

The specialty drug market continues to expand rapidly in 2025, driven by a surge in approvals by the FDA and a robust pipeline of innovative therapies. This rapid growth is being fueled by more plan participants using these key specialty drugs:

• Biologics and Biosimilars
• Cell and Gene Therapies (CGT)
• Glucagon-Like Peptide-1 (GLP-1) Drugs

As specialty drugs become more central to treatment protocols, employers are under increasing pressure to manage costs while ensuring access to plan participants. Employers can continue to monitor these drastically changing trends, consider alternatives for 2026 plan design, and make decisions on plan formularies and how or if GLP-1s are covered for weight loss. Since CGTs are handled differently, generally administered once or twice over a patient’s lifetime, employers can explore nontraditional payment models offered by insurance and pharmaceutical companies to help offset those specialty treatment costs.

Savvy employers will proactively manage formularies, explore alternative funding models for high-cost therapies and make educated choices about how their health care offerings adjust to the fast-changing specialty drugs market. Educating employees and collaborating with providers will also be key to ensuring the cost-effective and clinically appropriate use of these specialty drugs. The complexity of these therapies—often requiring special handling, administration and monitoring— adds to the challenge. Still, the momentum behind specialty drug innovation shows no signs of slowing, signaling a continued evolution in how health care is delivered and financed in the years ahead.

The OBBB Act includes changes for employee benefit plans, including provisions that:

• Expand the availability of health savings accounts (HSAs);
• Permanently extend the telehealth exception for high deductible health plans (HDHPs);
• Increase the maximum annual limit for dependent care flexible spending accounts (FSAs);
• Allow employers to help pay employees’ student loans beyond 2025 and make cost-of-living adjustments to the tax exclusion for educational assistance programs; and
• Allow employers to contribute up to $2,500 per year to a new type of tax-advantaged account for children, called a “Trump Account.”

For further information on employee benefits-related provisions from the OBBB Act, you can read THIS article. 

Americans are stressed about their finances in 2025, largely due to the current economic climate. Recognizing the toll financial stress takes on overall well-being, many employers are stepping in with targeted support to help employees regain control of their financial lives.

To help employees reach these personal financial goals and reduce the related mental health impact, employers are poised to offer retirement planning resources, online financial tools and education to help them develop good financial habits. As usual, compensation and benefits are critical for employers who seek a competitive total rewards program with stability. They’re also offering benefits that include access to financial counseling, financial education and legal support to deal with debt and rising everyday costs. Financial wellness is a valuable investment in an organization’s workforce. Implementing a comprehensive financial wellness program is a step toward building a resilient workforce.

The debate over pharmacy benefit managers (PBMs) and drug price transparency isn’t going anywhere in 2025. For employers, the ongoing scrutiny and reform of PBMs this year signal a critical need to reassess how prescription drug benefits are managed. With increasing state-level legislation and growing pressure for transparency, employers should closely monitor PBM practices and consider alternative models that prioritize cost control and patient access. The instability in the federal landscape and the dominance of vertically integrated PBMs also highlight the importance of diversifying vendor relationships and advocating for fairer pricing structures. Ultimately, staying informed and proactive in this evolving space can help employers protect both their bottom line and their employees’ access to affordable medications. The future of PBM reform remains a pivotal issue this year as stakeholders try to control drug costs and protect patient access.

AI is reshaping how employer-sponsored benefits are designed, delivered and experienced. While AI is commonly leveraged for HR functions, the technology can also bring smarter, faster and more personalized benefits solutions to both employers and employees.

• Benefits Personalization: AI systems can analyze employee data (e.g., health claims, lifestyle preferences and engagement history) to recommend benefits that align with individual needs. This means employees are more likely to be offered relevant options, whether it’s mental health support, fertility services or chronic disease management. The result is a more meaningful benefits experience that drives higher satisfaction and utilization.
• Benefits Navigation: Virtual assistants and chatbots can help employees navigate complex benefits decisions, helping them compare plans, estimate out-of-pocket costs and understand coverage. Notably, this type of real-time support from chatbots may also help offer mental health support to individuals navigating treatment. These tools reduce confusion and empower employees to make informed choices, especially during open enrollment or life events (e.g., getting married, having a child or changing jobs). As with any technology, employers should also consider ways to roll out these new tools and provide support and training. While AI may seem intuitive, many employees may need help building their capability.
• Benefits Administration: Tasks like claims processing, eligibility checks and compliance reporting can be automated, reducing errors and freeing up benefits teams to focus on strategy rather than paperwork. AI also enables real-time monitoring of benefits usage and costs, allowing employers to adjust offerings dynamically based on emerging trends.
• Predictive Insights: AI also allows employers to anticipate future health care needs and costs by analyzing claims and wellness data patterns. For example, if AI detects a rise in musculoskeletal issues, it might prompt the introduction of physical therapy benefits or ergonomic assessments. This proactive approach helps control costs while improving employee well-being.

AI is not just optimizing benefits; it’s transforming them by making benefits more personalized, accessible and responsive. As AI becomes more embedded in benefits platforms, employers should also consider data privacy and transparency concerns. Ensuring that AI tools are used ethically and equitably is essential to building trust and maximizing their impact on the workforce. Ultimately, AI is helping employers deliver a more modern and human-centered experience to employees as they navigate their increasingly complex benefits offerings.

Tariffs are increasingly shaping the U.S. economy, as well as health care and employee benefits. As the federal government imposes new duties on imported medical goods, pharmaceuticals and equipment, the resulting cost increases could impact the health care system.

Employer-sponsored health plans, which cover nearly half of all Americans, are particularly vulnerable. Many employers are already locked into contracts with insurers, which may delay the immediate impact of tariffs. However, as these contracts come up for renewal, the increased costs taken on by providers are expected to be reflected in higher premiums and reduced plan generosity. This could lead to narrower networks, higher deductibles or increased employee cost-sharing. Employers may also be forced to reconsider their benefits strategies, potentially shifting toward plan redesign, direct contracting with providers or expanding preventive care initiatives to manage long-term costs.

Employers must remain agile amid this economic uncertainty. Strategic planning, cost containment and innovative care delivery models will be essential to navigating shifting trade policies.

Finding ways to manage rising health care costs while keeping benefits affordable for employees is critical for employers as open enrollment approaches; however, it won’t be easy. Health care costs in the United States continue to climb at a staggering pace, and 2025 has been no exception.

Employers are feeling the squeeze as they try to balance escalating costs with the need to offer competitive, comprehensive benefits. The current state of health care affordability is also impacting employees. A recent KFF analysis found that more than 1 in 4 adults delayed or skipped care in 2024 due to cost concerns. Out-of-pocket expenses, including deductibles and copays, continue to rise, placing additional financial strain on households.

In preparation for open enrollment and 2026 plan design, employers are expected to double down on cost-containment strategies, including more aggressive contract negotiations, increased cost sharing and greater investment in employee well-being programs aimed at reducing long-term health risks. There’s also growing interest in alternative funding models, such as level funded plans, which offer more control over spending. In addition, while pharmacy spending is a key factor in increasing costs, employers may be exploring alternative drug channels and pricing, such as promoting drug discount cards and allowing members to buy medications from retail or “cost plus” outlets. Direct-to-consumer prescription delivery programs may also be able to lower costs for common drugs. Staying ahead of rising health care costs will require not just tactical adjustments but a strategic rethinking of how benefits are designed, delivered and measured for value. Savvy employers who act now will be better positioned to weather the challenges of this year and beyond.