Moving into 2025, organizations are navigating rising medical costs, changing workforce demographics, and employee demand for both meaningful and inclusive benefits. According to PwC’s Health Research Institute (HRI), the medical cost trend for 2025 is projected to reach an 8% year-over-year increase for the Group market and 7.5% for the Individual market—the highest growth in over a decade. These trends highlight the urgency for employers to rethink how they address affordability while still attracting and retaining talent with a comprehensive benefits program.

Employers can stay ahead by leveraging innovative strategies, technology, and targeted solutions to address cost, improved health outcomes for their workforce, and employee engagement. Here’s a brief look at some of these options—contact Newfront to dive deeper on any of these topics and more.

Cost-Containment Strategies

Controlling insurance costs without compromising coverage is a balancing act every organization faces. These time-tested strategies can help optimize coverage while keeping expenses under control. 

Cost Containment: Managing Costs via Self-Funded Plans

How can employers rethink traditional benefits designs and embrace a more innovative, flexible approach to healthcare cost management? One increasingly popular option is self-funded plans with carved-out stop-loss insurance and additional pharmacy controls. Self-funded plans offer greater flexibility than fully insured, allowing employers to take a more hands-on approach to managing healthcare costs while providing transparency into their expenses. By carving out specific components, such as pharmacy benefits, employers can gain further control and visibility, which can help lower costs in the long term.

Case Studies

• Newfront saved a publicly-held client 24% ($1M annually) by transitioning to self-funding while still enhancing coverage by adding a new infertility benefit to the plan. Read the full case study for details.

• Think only large employers benefit from self-funding? Think again. For a California tech company with around 300 employees, Newfront identified high dialysis costs and implemented a targeted solution, saving more than $200K annually—8% of their medical claims. Read the full case study for details.

Cost Containment: Addressing Pharmacy Costs by Rethinking Programs

Prescription drugs are projected to be the highest cost driver for health plans in 2025. While employees would prefer to have all pharmaceuticals covered, that is, unfortunately, cost prohibitive to most employers. However, there are ways to control pharmaceutical costs while improving employee health and maintaining a competitive benefits plan. What levers employers pull to manage costs depends on their funding strategy and benefits philosophy.

Adjusting the formulary is one key approach, allowing employers to promote cost-effective options by updating the list of covered medications, changing coverage tiers, or adjusting costs. Employers can also explore direct contracts with pharmacy benefits managers (PBMs) to gain visibility into pricing. Additionally, integrating biosimilars—lower-cost alternatives to biologics—into formularies can help control specialty drug expenses while maintaining quality care and improving patient access.

Spotlight: How should employers handle GLP-1s? The demand for GLP-1s, including Ozempic and Wegovy, has increased twofold in the last decade. GLP-1s are used both for diabetes and weight loss management. With this in mind, how can employers manage GLP-1 coverage costs? Options include excluding coverage, adding it with utilization controls (e.g., prior authorization or quantity limits), imposing restrictions (e.g., BMI thresholds or wellness program engagement), offering employer-funded HRAs, or providing short-term coverage paired with wellness and nutrition support. 

Cost Containment: Supporting Flexibility with Opt-Out Incentives for Covered Employees

If employees are considering whether to get health coverage elsewhere—most commonly, through a spouse or domestic partner—employers may decide to offer opt-out incentives. This could include small cash incentives ranging from $50-250, commonly known as cash-out credits. Opt-out incentives may also include spousal incentives or Health Reimbursement Arrangements (HRAs) for employees who can demonstrate they’ve obtained coverage through another qualified plan, typically through a spouse.

Newfront Tip: Decisions should always be informed by company-specific data. Employers should ensure any potential opt-out incentive or spousal surcharge would make sense financially, align with compliance requirements, and be communicated clearly to employees.

Improved Health Outcomes

Preventive care plays a crucial role in reducing the risk of serious health complications in the future. By promoting and facilitating access to preventive healthcare, employers can achieve significant long-term benefits, including better health outcomes, increased productivity, lower claim costs, and reduced workplace absenteeism.

Improved Health Outcomes: Enhancing Mental Health Support through Supplemental Benefits

Mental health continues to be a top priority for organizations, especially as costs for mental health services have risen faster than general medical expenses. Conditions such as anxiety, depression, developmental delays, and ADHD are key drivers of this trend. Additionally, while individuals with mental health disorders often incur higher overall medical expenditures, provider shortages and accessibility make getting care more difficult. To address these challenges and support talent attraction and retention, employers can consider supplemental mental health benefits and targeted well-being solutions. These may include enhanced employee assistance programs, mindfulness and meditation apps, wellness coaching platforms, and robust clinical provider networks. Additionally, many insurance carriers are now integrating mental health resources directly into their plans through therapy networks and wellness apps, offering more seamless support for employees.

Newfront Tip: Free or low-cost solutions included in benefit plans often go underutilized due to a lack of employee awareness. To bridge this gap, request updated materials from your carrier and implement targeted communication strategies to highlight these resources. Prioritize educating employees on the available benefits and providing clear guidance on how to access and use them effectively.

Improved Health Outcomes: Evaluating Health Equity

While pay equity continues to be a vital focus for organizations, health equity has also become an essential part of the conversation. Employers are recognizing the importance of ensuring that all employees, regardless of their demographics or socioeconomic status, have access to equitable healthcare resources. Advanced reporting tools and carrier data are enabling employers to uncover and address health disparities within their workforce, offering actionable insights to improve outcomes.

For global organizations, this challenge extends to understanding and managing regional disparities in benefits offerings and costs. Solutions that provide granular, region-specific insights can empower employers to design benefit strategies that are not only cost-effective but also responsive to the diverse needs of their global workforce.

Newfront Tip: Analytics tools, such as health equity dashboards or carrier-provided data, can help identify health disparities. Start by examining key metrics, such as preventive care utilization, chronic condition management, and claims data, segmented by demographics, location, and job roles. For global organizations, ensure your analysis includes region-specific variations in healthcare costs and benefits access. Use these insights to implement targeted initiatives, such as expanded telemedicine options, culturally relevant wellness programs, or region-specific benefits enhancements.

Improved Health Outcomes: Proactively Managing Chronic Disease

Chronic disease management is a growing concern for employers, with late-stage diagnoses driving up healthcare costs. Million-dollar claims have risen by 8% in the past year and surged a staggering 50% over the last four years. A proactive approach emphasizing prevention, early detection, and expert care can help reduce these costs and improve health outcomes.

Routine screenings, prehabilitation, and regular preventive exams keep employees healthy and can catch chronic conditions, like cancer, in their early stages. Nearly 42% of high-cost cancer claims could be detected earlier through recommended screenings, potentially saving lives and significantly lowering costs. Employers should also consider leveraging second-opinion services to ensure accurate diagnoses and optimal treatment plans, as 88% of chronic disease cases change course after a second opinion. Finally, employees diagnosed with a chronic diagnosis should be guided to high-quality, in-network treatments and clinical trials.

Newfront Tip: For employees with a chronic health diagnosis, a Center of Excellence (COE) offers cost-effective, specialized care in targeted medical areas. A COE is a healthcare facility that focuses on delivering expert, high-quality care for specific conditions or treatments. There is also a wide variety of point solutions that provide specialty care resulting in better outcomes and lower costs.

Employee Experience 

Organizations can meet employee needs through personalized and flexible offerings. Employee experience benefits can foster a supportive work environment, enhance employee engagement and retention, and match the priorities of today’s workforce.

Employee Experience: Meeting the Growing Demand for Family Support and Gender Health

Benefits that support family-building and gender health are no longer “nice-to-haves”—they’re the standard. For example, Maven’s State of Women’s and Family Health Benefits 2024 report showed that 57% of employees have taken, or would take, a new job because it offered better reproductive and family benefits. There is also increased demand for menopausal support (mentioned more below) and gender-affirming services.

Employers have extended their support by leveraging partners for family planning solutions, which includes fertility support, surrogacy, and adoption assistance. As return-to-office initiatives become more prevalent, employers may want to consider transitioning from a predetermined backup daycare model to a fund-based model, giving employees the flexibility to apply funds toward their specific care needs. Additionally, some organizations offer onsite daycare to enhance employee retention and provide meaningful support, enabling staff to balance family care responsibilities with full-time employment.

Newfront Tip: Employers should check their medical and disability plans to ensure they provide the coverage and support their members need—and, if they do not, explore point solutions that can supplement them. As these benefits evolve, it is also critical to evaluate various leave policies for clarity and consistency.

Employee Experience: Leaning into Life Stage Benefits

Employee experience benefits have evolved to meet the diverse and dynamic needs of today's workforce, embracing inclusivity across all stages of life. Modern benefit programs now encompass offerings such as fertility support and family planning resources, as mentioned above, and even child disability coverage, like those offered by Juno, a Newfrontiers partner that provides critical support for employees raising children with unique needs.

Additionally, benefits addressing menopausal support reflect a growing awareness of the challenges employees face during mid-life transitions, fostering a more inclusive and compassionate work environment. These progressive benefits underscore a commitment to holistic employee well-being, recognizing that supporting employees through every life stage not only enhances individual satisfaction but also drives organizational loyalty and engagement.

Employee Experience: Improving Leave—and Leave Management

The most common types of leave include time for birthing and non-birthing parents, as well as medical and caregiver leave. And, with older adults projected to outnumber their adult children by 2034, caregiver leave will become more important as employees care for aging relatives. However, while supporting parents and caregivers can boost morale and increase retention, organizations may need help implementing leave plans. Newfront clients often partner with vendors that offer a concierge service assisting employees navigate their benefits plan. Additionally, Newfront can recommend low-cost and easy-to-implement software applications for employers who want to establish their programs quickly and avoid high costs can leverage low-cost and easy-to-implement software applications.

Many organizations are looking at expanding leave for other circumstances. Some types of leave to consider are bereavement leave, safe leave (for survivors of domestic violence and other crimes), voting leave, jury duty leave, and bone marrow and organ donation leave.

Newfront Tip: Leave laws have become complex and the cost of hiring in-house expertise to manage leave can be high but, if determined to be out of compliance, fees may be higher. Partnering with a vendor is often the best solution to address leave management and stay compliant. We see positive benefits (higher retention rates and better employee performance) in organizations that use vendors to manage leave, though no solution is perfect. Be prepared to remain involved.

Looking Ahead: Key Takeaways for 2025

1. Rising costs demand innovative strategies: With medical costs projected to rise in 2025, employers should explore solutions to address affordability such as self-funded plans, targeted pharmacy cost controls, and opt-out incentives.

2. Employees want enhanced benefits: Organizations can appeal to employees across life stages and circumstances with comprehensive leave options, family planning and caregiver support, and life-stage benefits.

3. Proactive health management saves lives and reduces cost: Preventive care, chronic disease management, and mental health resources reduce long-term healthcare expenses while improving employee productivity and well-being.

4. Partnerships are crucial for implementation: Collaborate with trusted providers and innovative vendors to deliver meaningful and cost-effective benefits, streamline implementation, and ensure compliance. 

5. Prioritize health equity for a more inclusive and supportive workplace: Ensure that all employees, regardless of demographics or socioeconomic factors, have access to the healthcare they need.

6. Promote awareness so employees take advantage of the offerings: Educate employees about existing resources, including embedded carrier benefits and free mental health solutions.

By staying proactive, employers can offer compelling and cost-effective benefits that resonate with a diverse workforce, supporting both organizational goals and employee well-being.

Contact Newfront: This summary contains just the tip of the iceberg when it comes to controlling costs and impacting employee health outcomes and experience. At Newfront, our experienced consultants have been solving these challenges for decades, both with established and emerging approaches. Don’t get lost in the noise—trust proven strategies and fresh opportunities to tackle rising healthcare costs. We’re here to help.