Key Trends in U.S. Benefits for 2024 and Beyond

Key Trends in U.S. Benefits for 2024 and Beyond
April 18, 2024 20 mins

Key Trends in U.S. Benefits for 2024 and Beyond

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As healthcare costs continue to rise, employers are struggling to balance cost control with attracting and retaining talent. The results of Aon's 2024 U.S. Health Survey point to key strategies organizations are using to help.

Key Takeaways
  1. Employers’ biggest benefit priorities remain consistent; control costs while still investing in human capital.
  2. Rising healthcare costs are prompting employers to consider new strategies that incentivize value and quality, while also improving affordability and closing health disparities.
  3. Pharmacy design is at the forefront of 2024 plan changes, with strategies focused on access and affordability.

With the labor market normalizing and benefit budgets tightening, employers are shifting their focus to maintaining a competitive position while managing healthcare costs. Aon’s 2024 U.S. Health Survey reveals a change in mindset. Last year, companies aimed above the market, while now they just want to keep pace. One reason for this shift is that employers had raised the bar over the past few years in order to compete, and now they are adjusting their competitive expectations in a new environment.

How Companies See the Role of Benefits Today
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Investing in People While Managing Costs

Employers’ top priority in 2024 is to manage healthcare costs, which was ranked number one by 38 percent of respondents (up five points from the 2023 survey). The next three priorities are all focused on investing in benefits. They include, attracting and retaining employees, supporting workforce health and wellbeing, and improving healthcare access and affordability. All four priorities haven’t changed in the past year. The competing pressures to manage costs while investing in employees make it challenging for employers to find the right balance for their benefits.

Over the next four years, Aon’s analysis shows healthcare costs are predicted to increase at a rate that is four times general inflation, nearly three times wage increases and more than double the rate of retirement plan contributions. Without significant action to rein in these costs, healthcare will consume an increasing share of total rewards budgets.

Healthcare cost increases are impacting employees as well. Our research across employer sponsored plans shows that one in five employees are spending more than 10 percent of their annual income on healthcare — including premiums and out-of-pocket expenses.

The fifth business priority, moving up one spot from last year, is related to monitoring and proving the impact of programs. According to a survey by Paychex, employers have increased their benefit offerings by 22 percent since the start of the pandemic. But that increased spend may not ultimately be achieving the intended outcomes. The rising focus on monitoring and proving impact of programs is therefore expected to continue.

2024 Benefit Priorities

Analyzing the shift in benefit priorities in 2024 vs. 2023

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How Organizations are Addressing Rising Healthcare Costs

Healthcare costs are projected to increase 8 percent in 2024. However, through a variety of strategies, like plan design changes and tighter management of prescription drugs, employers anticipate an increase of 6.5 percent. Despite these strategies to lower costs, healthcare is still trending much higher than the 4.5 percent increase in 2023.

Projected Healthcare Cost Increases in 2024
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In addition to the typical levers of increasing cost sharing through plan design and contributions, plan sponsors are addressing rising costs through tighter cost management strategies, alignment with effective delivery partners and more steerage to cost-effective care.

  • Increasing employee cost sharing. More than one third of respondents said they are adjusting their contribution strategy, with a similar number citing plan design changes. It’s worth noting that no other tactic was mentioned by more than 20 percent of respondents. Clearly, asking employees to share in cost increases continues to be an important lever. Employers raised the amount that employees pay out of their paycheck for healthcare premiums by 5 percent in 2024, more than double the 1.7 percent increase employees experienced in 2023.
  • Cost management strategies. Respondents cited marketing programs for cost and competitiveness, tighter prescription management, and implementing new condition management and prescription drug solutions as their top cost management approaches for 2024.
  • Focus on optimal care. Some employers are using plan design to incentivize virtual care. Others are steering participants to high-quality, low-cost providers through plan design or network changes.

While many companies are taking these steps to minimize costs, about one in five employers have still made no changes to their plan.

Quote icon

Reining in these cost increases while improving affordability requires innovative strategies that reduce ineffective spending and create more equitable benefits. One of the best ways is to make it simple to select high-quality, cost-effective care.

Janet Faircloth
Senior Vice President and Thought Leadership Leader, Health Solutions, North America

Five Key Areas of Focus for Plan Sponsors

To help manage rising costs, employers are focused on five key areas in their healthcare and benefit strategies for 2024 and beyond.

1. Driving quality and value.

Value-led strategies that encourage the use of high-quality and cost-effective care dominate how organizations move forward. Areas of focus include:

  • Plan design steerage: More than one third of organizations steer participants to high-quality or cost-efficient providers, and nearly that many more are interested in adding it. Additionally, employers are taking multiple approaches to plan design, including variable cost sharing models and virtual-first designs.
  • Guidance and incentives: Guiding participants to high-quality, low-cost providers through a third party navigator is similarly used by about a quarter of organizations, with another quarter interested. While not often in place today, employers are also looking to offer incentives to use centers of excellence or surgical networks in the future.

Future Focus: Driving to Quality Through Value-Based Strategies

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2. Managing high-cost claimants.

High-cost claimants are on the rise, with the number of $1 million-plus claims increasing by 45 percent in the past five years. Identifying and managing these claimants is crucial. The current focus is on clinical programs and audits:

  • Carrier clinical and case management programs are used by more than two-thirds of respondents.
  • Prior authorization and precertification requirements are cited by 63 percent of respondents.
  • Pre- or post-service audits are used by 60 percent of employers.

Going forward, employers recognize that it’s important to engage members earlier in the process to direct them to high-quality, lower cost providers. Some of the ways they are doing that include:

  • Nearly one quarter of organizations have started using predictive analytics to identify potential high-cost claimants and an additional 35 percent are interested in adding that capability.
  • Twenty-three percent of companies use digital navigation apps with personalized data to connect individuals with relevant benefits, while another 35 percent are interested in adding them.
  • While requiring the use of centers of excellence for certain complex procedures is not prevalent, nearly one quarter of employers are interested in adding the requirement.

Future Focus: Managing High-Cost Claimants Proactively

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3. Doubling down on prescription drugs.

Prescription drugs are the fastest growing area of healthcare spend. It is more critical now than ever for employers to stay ahead of the curve with pharmacy cost management solutions. The class of diabetes drugs known as GLP-1s and specialty drugs are key drivers of pharmacy cost increases. In fact, Aon’s actuaries predict that GLP-1s alone could add up to 1 percent to overall healthcare costs in 2024.

The current focus for employers is on specialty drugs:

  • One third of respondents are using an exclusive specialty pharmacy and about one in four are using specialty manufacturer “maximizer” programs.
  • Another quarter have custom utilization programs, with 20 percent looking to add them in the future.

Looking ahead, plan sponsors are interested in performance-based contracting and expanding coverage tiers, including specialty drugs and possibly GLP-1s:

  • 24 percent of plan sponsors are interested in adding an additional formulary tier with a different cost share for specialty drugs.
  • The same number are interested in adding outcomes-based contracts through pharmacy benefit managers (PBMs) or drug manufacturers to pay for performance, while 22 percent are interested in value-based contracts to improve drug adherence.

Managing Specialty Rx Spend More Tightly and Maximizing Cost Savings for Members

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With GLP-1 drugs dominating the conversation, it is worth noting how employers are managing them. Nearly two thirds of employers require prior authorization and another 34 percent have step therapy rules in place. Just over one third are covering the drugs for both diabetes and weight loss.

GLP- 1 Management Tools Being Implemented or Considered
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4. Advancing benefit equity.

A sense of belonging is crucial to positive employee culture, and that sense of belonging can be enhanced by equitable benefits. Employers are doing this by:

  • Enhancing support for historically underserved populations. 38 percent of organizations plan to audit existing clinical programs and vendors for BIPOC and social determinants of health best practices, with another 27 percent considering this option. Specialized support for LGBTQ+ employee groups is offered by 24 percent of organizations, but more than one third are interested in adding this support. Making prescription drugs more affordable is a future focus area for 29 percent of employers.
  • Creating more flexibility. A quarter of employers are planning to increase flexibility and choice of benefits to better fit personal priorities.
  • Responding to regulatory actions that restrict access. While less than 15 percent of employers offer travel or relocation benefits to support access to care that is restricted in the employee’s state of residence, 27 percent said they were interested in adding it.

Future Focus: Advancing Benefits Equity

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5. Adopting technology and personalized insights.

Implementing digital solutions that are both cost effective and popular with participants is rare. It requires the cost saving goals of the company to align with the preferences of employees. However, employers have increasingly adopted new digital solutions to expand access to care with a focus on virtual urgent and virtual primary care. Virtual urgent care is already used by nearly three quarters of employers, while virtual primary care is used by more than half, with another quarter planning to add. Going forward, companies expect to adopt new technology in areas like:

  • Specialized care. More than a third of companies offer digital health apps or remote patient monitoring to manage chronic conditions. Looking ahead, nearly one third of employers are interested in adding virtual care for services like physical therapy, women’s health and services that support the specialized needs of specific populations like BIPOC or LGBTQ+.
  • Benefit education. Over half of employers either have or plan to add text messaging reminders for things like annual enrollment. A similar number use or plan to use claims data integration to support proactive initiation of claims for disability and voluntary benefits.
  • Personalized data. More than a third of employers are looking to add benefit navigation apps that incorporate personal data to connect individuals to relevant benefits and resources.

Future Focus: Embracing Technology

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Making Better Decisions About Health Benefits

The pressure to do seemingly opposite things — control benefit costs and use benefits to attract, retain and sustain talent — isn’t going away. Nor are healthcare costs going down any time soon. However, not all spend is the same. Employers can better manage rising healthcare costs if they embrace a thoughtful, data-driven approach that reduces ineffective spend, while increasing impactful investment with a focus on inclusion and wellbeing.

For more insights on how organizations are thinking about health benefits, contact our team.

1 Unless otherwise cited, all statistics come from the Aon 2024 U.S. Health Survey.
2 https://www.paychex.com/articles/employee-benefits/employee-benefits-administration-and-management

Aon’s Thought Leaders
  • Chris Giovannello
    Senior Vice President, Health Solutions, North America
  • Janet Faircloth
    Senior Vice President and Thought Leadership Leader, Health Solutions, North America
  • Keri Stuart
    Assistant Vice President, Health Solutions, North America

General Disclaimer

The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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