5 Things to Know About Open Enrollment This Year

Open enrollment season—a pivotal and busy time for organizations—is underway. Here’s a look at five challenges many employers and employees are expected to face with open enrollment this fall.

1. Health care costs are projected to jump significantly for employers. Inflation, GLP-1 drugs, and catastrophic medical claims will push employer health care costs to rise significantly higher next year, according to new projections. The average cost of employer-sponsored health care coverage in the U.S. is expected to increase by 9% in 2025, surpassing $16,000 per employee, according to an analysis from Aon. That’s significantly higher than the 6.4% increase in health care budgets that employers experienced from 2023 to 2024, with an average cost of $14,823 per employee after the implementation of cost-saving strategies.

Meanwhile, a survey from the International Foundation of Employee Benefit Plans predicted a slightly lower—but still high—increase for 2025, finding that U.S. employers project a median health care plan cost increase of 8%. This increase is higher than the projections from similar surveys conducted in 2022 and 2023, which projected a 7% rise for those respective years, according to the group.

Industry experts suggest that employers should talk about rising health care costs with employees, especially if they are raising employee costs. Explaining the rising costs can also start a conversation about how employees might be savvier health care consumers and save money.

2. Employees plan to spend less on benefits this year. The new monthly median amount that consumers will spend on benefits in 2024—excluding retirement savings—is $120, down $30 from the previous two years, according to recent data from LIMRA, an insurance industry trade association based in Windsor, Conn.

“These findings are unfortunate, since employees’ willingness to spend is going down at the same time benefit costs are going up,” said Kimberly Landry, associate research director for workplace benefits research at LIMRA. “It’s not a good combination.”

Although the LIMRA data doesn’t spell out exactly which benefits employees might cut or reduce, Landry said she expects workers to “target the benefits they think they’re least likely to use, which means ancillary products such as disability insurance, supplemental health plans, and other voluntary benefits.”

Medical insurance premiums are continuing to increase significantly year over year, and these already eat up a majority of workers’ benefits budgets, Landry noted.

3. Employees are prioritizing health care coverage. While comprehensive health care coverage is always essential, employee sentiment about this benefit is particularly important this year.”

Research from New York City-based financial and insurance firm Voya Financial indicates that shift in employee priorities.  The company found that nearly three-quarters (72%) of U.S. employees strongly or somewhat agree that they would take a job with a slightly lower salary for better health care and medical coverage, including lower premiums and out-of-pocket costs. This sentiment is felt even higher among millennials (80%) compared to Generation Z (60%), Generation X (69%), and Baby Boomers (72%).

4. Not many employees are happy with their coverage. Just 25% of employees report being happy with their company’s current benefits, according to data from insurance firm Guardian—a finding that indicates employers might want to consider expanding benefits offerings or better educating their employees on existing ones.

Guardian’s survey also revealed that there is a big disconnect between employers and employees regarding their benefits coverage: Roughly one in four employees said their company’s current benefits effectively address their physical (25%), emotional (25%), and financial needs (23%), but most employers said that addressing and improving their employees’ physical (66%), mental (46%), and financial health (74%) is very important.

5. Employees’ understanding of benefits is lagging. Data remains the same around a pivotal aspect of employee benefits: Employees are confused about their options. Recent research from Payroll Integrations found that nearly three-fourths (73%) of employees said they don’t feel completely educated about their company’s benefits.

A lack of education from their employers might be partly to blame: Just 54% of employees said their employer communicates about benefits well, according to LIMRA.

Other data from Optavise, a benefits administration firm based in Carmel, Ind., found that only 27% of employees said they received information about benefits from their human resources team, while 15% were educated by benefits experts.

“Employees need education, not just information, about what benefits are available and which ones they’d be best suited to use,” said Bridget Lipezker, vice president of worksite member operations at Optavise. “Otherwise, employees will not fully recognize or appreciate the benefits they have access to as part of their employer-sponsored benefits package.”