An illustration demonstrating increasing percentages
With U.S. health care costs expected to keep climbing in 2025, it’s no surprise that benefits plan sponsors cite “cost reduction” as their top priority when considering changes to employee benefits programs, according to results of the “2025 Lockton National Benefits Survey.”
The finding is still noteworthy, though, because it marks the first time since the annual survey began in 2019 that cost reduction overtook attracting and retaining talent as the highest priority for employers. The number of respondents choosing cost reduction as the top priority jumped 18% between 2022 and 2025, while attracting and retaining talent has fallen by 14% since 2023.
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“The fact that cost reduction is now the top priority for employers shows us the impact that rising health care costs are already having and are expected to continue to have on benefit expenses for employers of all sizes and types,” Shannon Demaree, executive vice president and People Solutions Practice Leader at Lockton, said in a statement. “We believe plan sponsors should take a closer look at the cost reduction options available to them and how to implement them effectively.”
The new report from Lockton, a large privately held insurance broker, includes responses from 1,817 plan sponsors representing various ownership structures and group sizes across the United States.
Even with the increased focus on cost control and containment, plan sponsors remain cautious about making changes to employee benefits programs. Only 9% of survey respondents consider their organizations to be “trailblazers” when it comes to adjusting employee benefits plans, with 31% classifying themselves as “fast followers.” The majority of respondents (53%) prefer to wait until a tactic has been used effectively by other companies in the market before implementing it in their own organizations.
“Plan sponsors are recognizing the need to optimize their benefits programs for the highest value at a lower cost, but we’re still seeing a hesitation to take decisive action, and especially on more progressive types of adjustments,” added Chris Bartnik, senior vice president and People Solutions Growth and Innovation Leader at Lockton. “Employers don’t want to be perceived as prioritizing cost savings over member needs or not caring about meeting employee expectations. At the same time, delaying changes is likely to compound cost issues and make problems more difficult to solve down the road.”
The report suggests that plan sponsors looking to reduce costs should focus on four key areas:network solutions, eligibility management, pharmacy, and plan optimization. “Within those categories, sponsors can make changes of differing degrees, ranging from foundational (changes that cause the least employee disruption), to progressive, and finally disruptive changes (those that impact employees the most,” according to the report.
Here are three other takeaways from the report:
- Plan sponsors are seeing increased demand for pharmaceutical weight loss interventions, with 33% of self-funded plan sponsors offering intensive lifestyle programs that emphasize nutrition, physical activity, and mental health. Nearly one-third (29%) of self-funded plan sponsors cover GLP-1 medications for weight loss.
- Mental health remains a priority for plan sponsors, with 54% providing a standalone employee assistance program with additional services.
- Almost half (46%) of self-funded plan sponsors provide advocacy or navigation services to assist employees with their health care needs.
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