Bracing for a Rise in Healthcare Costs Next Year?

4 Steps to Optimize Your EB Plans

Healthcare costs are one of the largest expenses for more employers. Since 2020, these costs have increased even more dramatically. In 2025, employers are bracing for another spike.The expected increase of about 8% has been reported by the International Foundation of Employee Benefit Plans and is slightly higher than cost increases in the preceding years.

The survey reported specialty prescription drugs as driving prices upward, and specifically pointed to glucagon-like-peptide-1 drugs (GLP-1) (75%), while 19% said cell and gene therapy are driving up costs. For example, GLP-1 prescriptions have an average list price of more than $11,000 a year to treat diabetes. In fact, PwC found that the use of GLP-1 drugs quadrupled from 2021 to 2023 and leading to a per-member costs increase ($8.99 to $23.16).

Other drivers of the persistent rise in healthcare costs include inflation, large claims, the rising need for mental health services, medical provider costs and long Covid, which according to the World Health Organization (WHO), impacts 10–20% of individuals infected with Covid.
So, what should employers do? There are several strategies that employers can implement to offset the cost increase without sacrificing employee wellbeing.

Embrace Preventive Care and Wellbeing Programs

A strong focus on preventive care can lead to long-term cost reductions. Companies should promote employee wellness through initiatives such as regular health screenings, flu shots, fitness challenges, and wellness incentives. Employers can offer programs that encourage healthier lifestyles, like smoking cessation or weight management, which reduce chronic illness risks and, in turn, lower long-term healthcare claims. By investing in wellness, companies can foster healthier workforces that result in fewer claims and lower premiums.

Mental health should not be overlooked. The use and cost of behavioral care has increased significantly since the pandemic. Offering mental health services such as therapy, counseling, and stress management workshops is essential. Not only does this improve overall employee wellbeing, but it also reduces the costs associated with absenteeism and lower productivity due to untreated mental health issues.

Leverage Telemedicine

Telemedicine continues to prove its worth as a cost-effective way to provide healthcare services. By offering telemedicine options as part of their healthcare packages, companies can reduce the costs associated with in-person visits, ER visits, and other high-cost care scenarios. Telemedicine allows employees to access healthcare professionals more conveniently and affordably, especially for minor health concerns or ongoing management of chronic conditions. These virtual visits tend to have lower copays, helping both the company and employees save on healthcare costs.

Educate Employees on Cost Management

Helping employees become more informed healthcare consumers is another key strategy. Employers should offer resources and tools to educate employees on how to navigate the healthcare system, such as how to compare healthcare provider prices, choose cost-effective prescription options, or use urgent care versus the emergency room. Companies can also incentivize employees to use generic medications, participate in wellness programs, or opt for telehealth services by offering financial incentives like reduced copays.

Consider a Global Risk Solution

To offset rising healthcare costs, companies should consider a global risk solution. Global risk solutions like multinational pooling —the most used risk system among multinational companies— can help organizations optimize their employee benefits programs by consolidating their local employee benefits programs from at least two countries into a single multinational pooling program.

This approach offers advanced risk management and governance, centralized reporting, and can offset the cost of employee benefits through multinational pool dividends. In addition, it can offer higher free cover limits for life and disability. Eligible benefits include life, medical, accident, disability, and retirement with risk across different regions or countries.

Last thoughts

GLP-1 drugs, inflation, increased use of mental health services, long Covid, and medical provider costs are all driving up healthcare costs for employers. This can present a significant challenge for companies in 2025. However, by adopting preventive care measures, leveraging telemedicine, reviewing plan designs, educating employees, and optimizing risks, businesses can successfully offset these costs while maintaining a robust and competitive employee benefits package.