07-31-2026IMPACT COUNCIL

The employee benefits paradox

Companies are spending more on benefits and getting less in return.

[Photo: Getty Images]

The Fast Company Impact Council is an invitation-only membership community of top leaders and experts who pay dues for access to peer learning, thought leadership, and more.

According to the Kaiser Family Foundation, employers are spending more on benefits than at any point in history, yet employees remain overwhelmed, distracted, and increasingly stressed. This affects employee morale and engagement, and impacts organizational productivity. Yet that disconnect rarely gets the scrutiny it deserves.For decades, companies viewed benefits as an investment in organizational performance. They offered them to attract talent and retain employees. Every dollar spent on benefits represented a conscious tradeoff: Leaders believed that dollar would create more value than spending it elsewhere, whether through direct compensation, technology investments, or other business priorities.

HIGHER PRICES, NO WORKFORCE ADVANTAGE

Those objectives remain, but employers are changing where the money goes. Over the last several decades, healthcare costs have steadily consumed a larger share of benefits budgets. According to the Kaiser Family Foundation’s 2025 Employer Health Benefits Survey, the average annual premium for family coverage reached nearly $27,000, rising 6% year-over-year and marking the third consecutive year of increases at or above that level. Over the past five years, family premiums climbed 26%, reshaping how employers allocate benefits dollars.The pressure is only intensifying. Mercer reported that employer healthcare costs are expected to increase 6.7% in 2026, pushing average spending above $18,500........

© Fast Company