Are Employees Spending Their Benefits Dollars Wisely?
Employers are frustrated. Insurers are pointing to utilization. Advisors are blaming drug costs. HR teams are caught in the middle.
Yet almost nobody is willing to have the conversation that matters:
Are employees spending benefit dollars wisely?
In many cases, the answer is no.
Before anyone accuses me of blaming employees, let's be clear: this isn't entirely their fault. Most benefit plans are designed in a way that actively discourages responsible consumer behaviour.
And for years, brokers and insurers have enabled it.
The Pandemic Gave Everyone an Excuse
When COVID hit, employers were dealing with unprecedented challenges.
The labour market was tight. Employees demanded more flexibility. Mental health claims surged. Organizations were afraid to make any changes that could be perceived as taking something away.
So what happened?
Benefits plans became politically untouchable.
Rather than redesign plans to improve sustainability, employers kept adding more coverage, more programs, and more spending.
Insurers were happy to collect higher premiums.
Brokers were happy to sell additional products and services.
Employees were happy to receive richer benefits.
Everyone won — until the bill arrived.
We've Known the Solutions for Years
Here's the part that should make employers uncomfortable.
The industry already knows how to influence behaviour and control costs.
We've known for years.
Examples include:
Tiered drug plans that reward members for choosing lower-cost options.
Meaningful cost-sharing arrangements between employers and employees.
Plan designs that encourage generic substitution.
Pharmacy comparison tools that identify lower-cost dispensing fees.
Mail-order and virtual pharmacy options.
Smarter use of Health Care Spending Accounts.
These aren't revolutionary ideas.
They're not new.
They're just rarely implemented.
Why?
Because introducing meaningful change creates friction.
And most brokers would rather shop the market every few years than have difficult conversations about plan design.
“PEPM - d to Death”
Over the past decade, the industry has developed a new solution to every problem:
Add another vendor.
Mental health concerns? Add a vendor.
Sleep issues? Add a vendor.
Financial wellness? Add a vendor.
Parenting support? Add a vendor.
Second opinions? Add a vendor.
Virtual care? Add a vendor.
Every solution comes with another Per Employee Per Month (PEPM) fee attached.
Individually, many of these programs are excellent.
Collectively, they have created a marketplace where employers are spending thousands of dollars annually on programs that are rarely measured, rarely evaluated, and often poorly utilized.
Ask yourself a simple question:
How many employers can confidently quantify the return on investment of every PEPM program they purchase?
The answer is usually somewhere between "few" and "none."
Why Doesn't Behaviour Change?
Because there is no reason for it to change.
Most benefit plans are designed so that employees experience little or no financial consequence for making expensive choices.
Why compare pharmacy prices if someone else is paying?
Why choose the lower-cost provider if reimbursement is the same?
Why question utilization when there is no personal financial impact?
Human behaviour is predictable.
If plans reward consumption, consumption increases.
Yet every year the industry acts surprised when claim costs rise.
The Broker Playbook
An uncomfortable truth:
Many brokers have become renewal managers rather than advisors.
Claims increase.
Rates increase.
The broker goes to market.
A new insurer offers a discount.
The employer gets temporary relief.
Three years later the cycle repeats.
Nothing fundamentally changes.
The underlying behaviour remains untouched.
The plan remains inefficient.
The costs continue climbing.
This is not a strategy.
It's a Band-Aid.
Why Employers Finally Have Leverage
The environment is changing.
High-cost specialty drugs continue to push claims upward.
Benefit plans now represent one of the largest labour costs for many organizations, often reaching 10% of payroll or more.
National Pharmacare may help absorb some costs that employers previously carried.
Most importantly, employers now have access to far better data than they did a decade ago.
For the first time, organizations can evaluate whether plan changes are actually producing results.
The Future Isn't More Benefits
The future isn't another app.
It isn't another wellness platform.
It isn't another PEPM charge.
The future is creating benefit plans that encourage employees to become better consumers.
That means introducing accountability.
That means measuring outcomes.
That means challenging utilization patterns that don't make sense.
And that means brokers and insurers being willing to recommend changes that may be unpopular in the short term but beneficial in the long term.
The real question isn't whether employees are spending benefit dollars wisely.
The real question is whether employers, brokers, and insurers finally have the courage to demand it.
