Employee benefits are at a critical crossroads. Rising costs, new technologies, and shifting employee expectations are forcing employers to rethink not just their benefits packages, but their entire approach to employee care and retention.
Hub International’s 2025 North American Outlook Report sheds light on what’s coming next. The findings are both sobering and full of opportunity for HR and business leaders.
Rising Costs and Tougher Choices
Healthcare costs continue to climb, with the report projecting an average 8% increase for 2025. But averages can be deceiving. Some employers face 20%, 30%, or even 40% hikes depending on large claims, specialty medications, and high-cost treatments such as GLP-1s.
Employers are forced into difficult choices: absorb the increases or pass them onto employees. Inflation is only part of the story. Advances in cutting-edge treatments, greater utilization, and costly new drugs drive much of the spike. The big takeaway? Expect uneven cost pressures across the market and plan for volatility.
One Size Doesn’t Fit All
The workforce is more diverse than ever, spanning multiple generations with very different priorities. Younger employees may value flexible time off or pet insurance, while mid-career professionals are focused on healthcare, retirement, and stability.
This requires a more personalized approach to benefits strategy and communication. If employees don’t see themselves in the package — and don’t understand the value quickly — they’ll likely disengage.
Employee Dissatisfaction: Often About More Than Benefits
The report also highlights a surprising truth: dissatisfaction with benefits often masks broader workplace issues. When employees cite benefits as a reason for leaving, it’s sometimes shorthand for deeper frustrations, like poor management or lack of career growth.
Focusing too narrowly on medical plans misses the larger opportunity. In fact, as many as 40% of employees may not even be on an employer’s medical plan. Expanding the definition of benefits to include flexibility, caregiving support, mental health resources, and development opportunities creates a more holistic value proposition.
Retention Pressure: Half of Workers Are Considering Leaving
Perhaps the most alarming statistic from Hub’s report is that 50% of professionals are considering leaving their jobs within a year.
The antidote isn’t a shinier health plan alone. Organizations must think in terms of total rewards, addressing employees’ basic needs for safety, time, and mental health before layering in financial and career perks. When those fundamentals are ignored, no benefit tweak will keep people around.
The State of Mental Health: From Afterthought to Essential
Mental health is no longer optional in benefits design, it’s essential. The Hub report makes it clear that employers who integrate mental health into overall health strategies, rather than treating it as separate, are ahead of the curve.
That means ensuring faster access to care (days instead of weeks), providing a continuum of support, strengthening privacy protections, and reducing stigma. Mental health isn’t a perk, it’s healthcare.
The Role of AI: Toward a Frictionless Future
Artificial intelligence is already reshaping how benefits are delivered. From scheduling and appointment booking to personalized plan recommendations, AI can eliminate friction that wastes employees’ time.
After all, time is the one currency employees can’t get back. Even saving 10 hours per year through AI-enabled benefits delivery can drive measurable ROI in productivity and satisfaction. But silence around AI can breed fear. Employers must communicate clearly about how AI supports — rather than replaces — their workforce.
Upskilling: The Antidote to AI Anxiety
AI disruption also raises an urgent need for reskilling. Hub’s report emphasizes cataloging current skills, identifying future needs, and then investing in upskilling. Importantly, learning, development, and change management must go hand in hand, you can’t simply layer new skills on top of outdated processes.
Clear communication about the “why” behind reskilling efforts is critical. Without it, employees risk disengagement and turnover.
Harnessing Data for Smarter Decisions
If there’s one action HR and people leaders should prioritize, it’s harnessing internal data. Claims, utilization rates, and turnover patterns are goldmines for designing benefits strategies that actually serve employees.
This isn’t about trendy perks. It’s about building a benefits ecosystem grounded in the real needs of your workforce today, while supporting growth and retention tomorrow.
Final Thought
There’s no silver bullet to the benefits challenge. But organizations willing to personalize, communicate, and adapt will thrive in this new landscape. Hub’s 2025 Outlook Report makes one thing clear: the future of employee benefits is about creating workplaces where people want to stay.
To learn more, check out Hub International’s 2025 Outlook Report for deeper insights.
Brandon Laws is a workplace culture and leadership enthusiast, host of the Transform Your Workplace podcast, and VP of Marketing and Product at Xenium HR.