Annual benefits reviews provide employers with a clear look at where their money is going and whether their offerings still fit their workforce. With benefits costs constantly changing, often on an upward trajectory, plans that made perfect sense for your business just a couple of years ago can become an outsized expense. The best way to keep this under control is by reviewing it on an annual basis to make sure it remains within your budget and provides value to the people who use it.
Why Costs Keep Climbing Between Reviews
Healthcare coverage prices are rising in a way that outpaces wages and general inflation. In fact, Mercer’s 2025 National Survey of Employer-Sponsored Health Plans found that the average cost of employer health coverage climbed to $17,496 per employee in 2025, marking a 6% jump, with another 6.7% increase expected for 2026 that would push the figure past $18,500.
This is the steepest rise seen in 15 years, and it follows a decade during which annual increases averaged closer to 3%. Prescription drugs are a significant part of the story, with spending up 9.4% among large employers. Without a regular check, these increases can compound year after year, and many employers only notice the issue at renewal time, when their options have already narrowed.
The Cost Drivers a Benefits Plan Evaluation Should Catch
Evaluating your benefits plan effectively begins with looking at the numbers behind the spending. Determine which parts of the plan are costing the most and which have risen the fastest since last year. It can also be helpful to identify circumstances in which money is being spent on coverage that few employees are actually using.
Pharmacy and medical claims tend to top the lists of expenses, but duplicate coverage and administrative fees can add up. Strong benefits cost management comes from spotting these drivers early, so you can make adjustments to your contributions or plan design before a renewal quote forces your hand. When you know what is pushing your costs up, you can make targeted changes and avoid broad cuts that frustrate your workforce.
What Utilization Data Tells You About Wasted Spending
Utilization data provides valuable insight into the ways employees are actually using their benefits, and the results can be surprising. Benefits that are favorable on paper may be going untouched, which means the business is paying for something that is not serving its workforce. Enrollment numbers and claims patterns show where real value is being delivered.
For example, you may find that your telehealth option is not being used or that your wellness program isn’t affecting claims. These are all opportunities to control your costs, helping you identify benefits worth keeping and others that could be dropped.
How Employee Feedback Strengthens Your Employee Benefits Strategy
The numbers might tell you what happened, but your employees can tell you why. An employee benefits review will be more effective when you collect direct feedback from your employees via surveys or talk to them about what they want. This can show you which benefits your workforce would miss if you cut and which ones they forget you offer. While younger workforces may be more interested in fertility coverage and student loan assistance, workforces leaning more toward retirement age tend to value health and retirement plans. This input can show you where to spend money while also helping you to gain loyalty and reduce turnover.
Why Benchmarking Keeps Your Benefits Competitive
Benefits benchmarking compares your benefits plans against what similar employers are offering, enabling you to see whether you’re overpaying or falling behind your market. This is useful information when it comes to hiring because job candidates weigh benefits alongside salary, and a weak plan can cost you talent even when your pay is fair. It also flags overspending, as paying well above the market for a standard benefit rarely buys your business extra loyalty. Evidence-based HR benefits planning makes the most of this outside view every year so decisions rest on real market comparisons.
How Benefits Consulting Supports Smarter Long-Term Decisions
Most HR and finance teams have so much on their plate that they don’t have the time to analyze their claims data and negotiate with vendors. This is where benefits consulting can be valuable. A consultant with years of experience will review your plan with fresh eyes and explain what the data means in plain terms, while bringing in market knowledge your business might have struggled to gather on its own. This support turns a yearly review into a habit that keeps down long-term benefits costs because you have someone watching the numbers and pushing for better terms all year, not only at renewal.
Turn Your Annual Review into Lasting Savings
Rising costs are not going away. Mercer found that 59% of employers planned cost-cutting changes to their health plans for 2026, up from 48% the year before, which demonstrates just how much pressure budgets are currently under. A steady annual benefits review is one of the clearest ways to stay ahead of that pressure while keeping benefits your employees respect.
The team at Business Benefits Group has spent nearly three decades helping employers control benefits spending and design plans that support both their people and their bottom line. Contact us today to schedule a benefits review and build a plan that keeps working for years to come.