The Future of Employee Benefits: Strategies for 2025

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What to Expect in 2025 What to Expect in 2025 Adic to consed qui volorio voluptatus est, int, id mo iuntusa ndent. The cost of healthcare benefits — driven largely by skyrocketing Et quis aut dolor aut apicidemquis eum solenti con pores sumquas pharmaceutical prices — will continue to pressure employers who pedionsequia doleste veliquae et aliquis de sit laut quia dolorunt, are committed to maintaining these and other benefits. In addition, conemol orruptatem et, occuptamus repelignam, omnis de in cust employers are enhancing benefits to improve mental health and vellam volupitia non corerro bla ditest que elicilisto quis maxim employee wellbeing. To increase productivity and retention, employers nonecto eossitiures nobit, simet ullab incium, ulla volest ofÏctur? will ramp up job training and reskilling programs, leaning heavily on data analytics, artificial intelligence (AI) and personalized benefits. Profitability 1 vellam volupitia non corerro bla ditest que vellam volupitia non corerro bla ditest que bla ditest que vellam bla ditest que vellam 46% 56% of professionals are considering of employees were satisfied with their Vitality vellam volupitia non corerro bla ditest que vellam volupitia non leaving their jobs in the next 12 months, benefits in July 2024, compared with 2 corerro bla ditest que bla ditest que vellam bla ditest que vellam 2 compared with 40% ahead of the 65% a year earlier. 1 “Great Resignation” of 2022. Resiliency 3 vellam volupitia non corerro bla ditest que vellam volupitia non corerro bla ditest que bla ditest que vellam bla ditest que vellam 1. CNBC, “Nearly 50% of people are considering leaving their jobs in 2024 — more than during the ‘great resignation’,” May 8, 2024. 2. Reuters, “US workers more glum on compensation and work prospects, New York Fed says,” August 19, 2024. Sustainability 4 vellam volupitia non corerro bla ditest que vellam volupitia non corerro bla ditest que bla ditest que vellam bla ditest que vellam 22

Affordability Sustainability Cost pressures will require rethinking how health insurance plans are constituted and delivered. Medical cost trend — which represents employers’ most providers, resulting in savings not visible on the surface. significant expense in benefits — is expected to rise 8% in This type of analysis is at the forefront of cutting costs — 2025, the highest increase in 13 years.3 especially pharmaceutical costs. While high utilization and the cost of behavioral care are In addition, employers can reduce costs through managing two reasons for the increase, the main culprit is a familiar health and employee wellbeing. Employee wellbeing one: pharmacy drug prices. Overall prescription drug programs to improve employee mental and physical health spending is expected to increase 10% to 12% in 2024,4 with lead to better health outcomes, improve productivity and pressure coming from increased use of GLP-1 drugs for 6 reduce absenteeism. weight loss and specialty treatments like gene therapies that can cost millions of dollars.5 Such insight requires a dedicated team of professionals who understand the mechanics of healthcare and Health insurance premiums are rising, but employers are insurance — and who know what they’re seeing when they wary to pass the cost increases to employees. Strategies look under the hood. like not paying for drugs like GLP-1s for weight loss — developed to treat diabetes but also showing efÏcacy in weight loss and improving cardiovascular health — may 3. PWC, “Medical Cost Trend: Behind the Numbers 2025,” accessed achieve short-term savings but without the improvements September 20, 2024. these drugs afford on long-term employee health. It 4. National Library of Medicine, “National trends in prescription drug expenditures and projections for 2024,” July 8, 2024. also can burden organizations with additional medical 5. Evernorth Health Services, “As more gene therapies come to expenses over time and lower productivity. market, payers need expanded options to protect their plans,” August 28, 2024. Employers can reduce costs through leveraging data 6. WellSteps, “Published Workplace Wellness Statistics Show the Benefits of Wellness,” January 2, 2020. analytics, clinical informatics and claims data to better identify health risk trends and analyze contracts with Case Study In reviewing a PBM contract for a very large (10,000+ lives) self-funded client, HUB identified two component-level guarantee stipulations under which missing one guarantee would offset the other. HUB and the client adjusted the contract so that both had to be covered — and when one of the guarantees was subsequently missed, the client received a $750,000 financial guarantee payout. 3

Vitality Upskilling and smarter incentives will help make benefits programs indispensable to employers and employees. Month-over-month unemployment fell slightly to 4.1% in September 2024 as total nonfarm employment increased 7 by 254,000 jobs. The higher employment comes in the 8 face of a predicted slowdown, showing that it’s impossible to predict the future. But what is clear is that many businesses in numerous industries can’t fill open positions, while struggling to keep top talent. Employers are also making major changes — including implementing artificial intelligence (AI) and to offer benefits that are relevant to employees, meeting automation — that could profoundly alter the workplace. them where they stand in their life journey. Paired with these changes is the fact that productivity Doing so requires data analytics that can help determine remains an enormous concern for employers. Productivity which employees need assistance in financial wellbeing, has grown at an annualized 1.6% rate in the current which ones need help caring for an elderly relative, which business cycle, below the long-term rate of 2.1% but above ones need help with supporting a growing family, or which the 1.5% in the business cycle from the fourth quarter of have completely different needs altogether. 9 2007 through the fourth quarter of 2019. Tools like HUB’s Workforce Persona Analysis™ can identify In fact, 69% of respondents to the HUB International 2025 individual needs and help employers build a benefits 10 strategy that aligns with organizational goals. In doing so, Outlook Executive Survey said improving productivity was a workforce priority for 2025, making it the most- benefits can deliver a quality employee experience (QEX) often cited response, even more than dealing with medical that lifts recruiting, retention and employee engagement. benefits costs. Two-thirds of respondents intend to align total rewards incentives to drive productivity gains. 7. U.S. Department of Labor, “The Employment Situation — While it’s true that AI and automation will eliminate September 2024,” October 4, 2024. positions, it’s likely to create more jobs due to the need 8. Morningstar, “We Expect the Job Market’s Slowdown to Renew in 2024,” September 6, 2024. 11 That fact alone means employers for AI-trained workers. 9. Bureau of Labor Statistics, “Productivity and Costs,” September 5, need to showcase training and “upskilling” efforts in their 2024. The long-term rate measures productivity gains since 1947. benefits offerings, as it’s easier and less expensive to train 10. HUB’s Outlook Executive Survey polled 900 C-Suite and VP-level existing workers than hire new ones. It’s not a message lost executives on the issues facing them on profitability, employee vitality and organizational resilience. on employers, as 80% pay for training and education to 11. Forbes, “The Future Of Work: Embracing AI’s Job Creation 12 Potential,” March 12, 2024. develop new skills. 12. SHRM, “2024 Employee Benefits Survey,” accessed September 23, Training opportunities comprise only one of many benefits 2023. an employer must offer to recruit and retain a dedicated workforce. What’s become evident is that employers need 4

Resiliency Employers who adapt to changes in technology and the workforce will create benefits plans that are resilient for the long haul. Case Study Technological changes that have been underway for several years are likely to accelerate in 2025, presenting A HUB client needed to find cost savings in its challenges to benefits plans. But the same changes also self-funded health plan. Using sophisticated represent an opportunity for employers to optimize data analytics, HUB came up with a plan that productivity, recruiting and retention. saved millions of dollars through ingredient More than 90% of companies use technology in some cost discounts, improved rebates and clinical form for their benefits administration and delivery, with program enhancements. HUB also formulated 13 That’s not half centralizing them on a single platform. a detailed cost-benefit analysis of GLP-1 to mention data analytics and AI, which can identify drugs for weight loss to help inform decision- employees likely to leave and design retention strategies making on the drug class. to keep them with the company. Artificial intelligence can also leverage employee biometric data to improve employee wellbeing. More than 75% of HR executives feel they need to adopt AI in the next 12 to 24 14 and wants. Even within each group, there are variations: months to avoid falling behind their competitors. For instance, retirement planning may be important to Indeed, almost all organizations say that they are someone in their early 20s, while a Generation X employee moving forward with technology and analytics: 37% of in her or his mid-50s may want benefits to care for an respondents to the HUB survey see analytics in shaping adopted child. their benefits strategy as “extremely important,” 30% reporting analytics are “significantly important,” and Technology and AI can help employers meet these another 30% reporting them as “moderately important.” challenges and keep benefits programs resilient for the long haul. The right benefits advisor can help HR Growing technological sophistication and improved access leaders understand and leverage the interaction between to benefits data under the Consolidated Appropriations technology, benefits and employees’ desires, optimizing 15 programs and reducing the pressure on HR. Act of 2021 have made data analytics even more potent. Leaning into this new environment will provide greater control over costs and provide insights to shape benefits initiatives in 2025. 13. Guardian, “Quantum Leap: Real-time connectivity is the next frontier in employee benefits administration,” accessed October All the recent changes in technology and benefits — along 11, 2024. with the recognized need to personalize benefits — have 14. Gartner, “AI in HR: The Ultimate Guide to Implementing AI in Your HR Organization,” accessed September 23, 2024. put additional pressure on HR departments to deliver. 15. Certilytics, “How the Consolidated Appropriations Act Puts Healthcare Power in Employers’ Hands,” December 14, 2022. The stress is made more tangible by the fact that multiple generations in the workforce have far different needs 5

Employee Wellbeing To ensure employee wellbeing, organizations will focus on mental health, human-centric workplaces and benefits delivery. While efforts to improve employee health, career and financial situations are essential elements to a successful benefits strategy, employers will pay extra attention to mental health and work environments to help employee wellbeing in 2025. The U.S. has an ongoing mental health crisis: Anxiety affects 42.5 million Americans, and 41% are dealing with upscale the use of digital platforms, improving patient an untreated mental illness. Mental health crises lead to 60 comfort in using such tools and allaying privacy issues. million visits to primary care and 6 million to emergency 16 Another way to improve wellbeing is through “human- rooms each year. centric” workplaces that emphasize flexible work, There’s also enormous productivity and retention issues collaboration and empathetic management. Doing so will with burnout. Nearly 45% of workers feel burned out and boost group cohesiveness and help reduce stress and are three times more likely to be looking for another job 21 burnout. 17 than employees who aren’t feeling burned out. These conditions underscore how claims and cost data And mental health isn’t just a productivity or compassion can be a powerful tool in uncovering overall wellness issue, but also a financial one. Behavioral health is a major trends in the workforce and identifying gaps in access and healthcare expense — and four out of five employers benefits equity. Combined with a deep understanding of are seeing an increase in utilization of behavioral health the workforce, employers will have the guidance they need 18 benefits. to maximize employee wellness. Employers cannot simply depend on employee assistance plans (EAP), which typically cover a limited number of 16. The Zebra, “Mental Health Statistics,” July 26, 2024. therapy visits and are often underutilized. 17. SHRM, “Here’s How Bad Burnout Has Become at Work,” April 30, 2024. The high cost of therapy, combined with a shortage of 18. HR Executive, “How priorities for employee benefits are shifting in 19 has made access a problem 2025,” August 20, 2024. mental health professionals, even for employers with generous mental health benefits. 19. Health Resources & Services Administration, “Health Resource And due to a patchwork of state regulations, some health Projections,” March 2024. 20 often used to 20. NPR, “Insurers can restrict mental health care. What laws protect insurers may not cover online therapy, patients in your state?” August 27, 2024. improve access. 21. Gartner, “Gartner Research Shows Human-Centric Work Models Boosts Employee Performance and Other Key Talent Outcomes,” Digital platforms that combine telepsychiatry, digital December 7, 2022. therapeutics and wellness apps to help manage stress and anxiety are emerging and show promise. Employers can 6

Navigating Your Next Steps Navigating Your Next Steps HUB construction insurance, risk management and employee benefits HUB employee benefits specialists and financial advisors will work with you specialists will work with you to develop a tailored strategy that will protect to develop a tailored strategy that protects the bottom line, supports your the bottom line, support your workforce and build resiliency for 2025. Here workforce and builds resiliency for 2025. Here are some initial considerations: are some initial considerations: Making risk management a pillar of your organization’s culture Consider The rising cost of benefits — especially for health insurance — can help identify exposures and develop response plans in case Develop a will burden employers throughout 2025. Solutions like health alternative of any type of incident, whether that is a weather-related event, 1 comprehensive insurance captives or self-insurance can be less expensive 1 healthcare a threat of physical safety or a cyberattack. Make sure your risk plan. and more effective than traditional third-party coverage. Ask financing broker understands how to approach risk and can identify gaps your broker if they have expertise in alternative solutions to approaches. in insurance that could disrupt your daily operations. traditional health insurance to tame costs. Whether your main HR goals include lower turnover, improved To compete for a shrinking pool of skilled labor, personalized benefits Create a employee engagement or streamlining costs, determining specific based on HUB Workforce Persona Analysis and data analytics can personalized employee benefits goals will inform your approach to benefits in Dive into data help your company differentiate itself from the competition. Creating 2 benefits 2025. Data analytics tools such as HUB Infused Analytics™ or HUB 2 to set goals. a quality employee experience (QEX) will boost engagement, improve strategy. EmpoweRx™ can help you reach your goals. Work with your HUB recruitment and retention and promote worker wellbeing benefits specialist to define goals and an approach through data. Personalized benefits fit the needs and wants of individual Remain Safety is already the focal point of your operation, but with Turbocharge employees. HUB’s Workforce Persona Analysis™ will help 3 focused on an influx of new and less-experienced workers, injury risks benefits provide data-driven insights that support sound decision- 3 workplace increase. Work with a risk professional to review your safety personalization. making and lead to quality employee experiences throughout safety. program at least annually and address any issues. the organization. A benefits strategy that focuses on employee wellbeing can help energize the workforce, improve retention and enhance workplace Stay in contact with your broker and let them know about culture. Holistic, integrated solutions that take the employee’s Be transparent changes to the business to eliminate surprises at renewal. entire wellbeing into account will perform better than stand-alone Make employee Review exposures and insurance needs at least 90 days prior with your initiatives that have a limited shelf life and limited effectiveness. 4 wellbeing a to policy renewal to allow your broker to find the optimal 4 broker. For instance, organizations can offer access to financial education priority. coverages for your organization. and wellness programs through HUB FinPath and help connect workers to personal insurance coverage through solutions like VIU by HUB. 7 7

HUB Employee Benefits When you partner with us, you’re at the center of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB employee benefits specialist. 5th largest insurance broker in the world 6M+ covered employees 5,000+ HUB employee benefits associates Stay up to date Subscribe to receive risk and insurance insights and event invitations throughout 2025. Subscribe hubinternational.com