According to a report by Aflac, only 38% of employees said they understand everything about their benefits, suggesting that most workers need more guidance on how their coverage works. When employees lack health care literacy — the ability to find, understand and use health information and services — they are more likely to delay care, make poor medical decisions and incur unnecessary costs.

For employers, that translates into higher claims costs, lower productivity and frustration with benefit programs.

Improving health care literacy can deliver measurable benefits. The Centers for Disease Control and Prevention has estimated that better health literacy could prevent nearly 1 million hospital visits annually and save more than $25 billion in health care costs.

The cost of confusion

Employees who do not understand their benefits often:

• Use out-of-network providers unnecessarily.
• Choose higher-cost care settings, like emergency rooms for non-emergencies.
• Skip preventive care that could head off more serious conditions later.
• Misinterpret bills or fail to challenge incorrect charges.

These behaviors drive up employer-sponsored plan costs and can also lead to more absenteeism and presenteeism.

Open enrollment is not enough

Many employers concentrate their communication efforts during open enrollment. While important, that once-a-year push is not enough to build true understanding.

Employees make health care decisions year-round, like when they schedule a test, fill a prescription or choose where to seek care. Without ongoing education, even well-designed benefit plans can go underutilized and employees may make costly choices.

Employers that take a continuous approach to education are more likely to see employees engage with their benefits and make smarter decisions.

Practical ways to build health care literacy

Employers do not need to overhaul their benefits strategy to make progress. Small, consistent steps can have a meaningful impact:

• Use plain language. Rewrite benefit materials to eliminate jargon and explain key terms like deductibles, copays and coinsurance in simple terms. Aim for a sixth- to eighth-grade reading level.
• Educate year-round. Provide monthly or quarterly communications that focus on one topic at a time, such as preventive care, telemedicine or how to read an explanation of benefits.
• Show real-world examples. Compare costs for common scenarios like urgent care vs. emergency room visits so employees see the financial impact of their choices.
• Promote in-network savings. Use visuals or tools that highlight how much employees can save by staying within network providers.
• Leverage multiple channels. Combine e-mail newsletters, intranet content, webinars and short videos to meet employees where they are.
• Offer decision support. Provide access to benefits counselors, either in person or virtually, to help employees choose plans and understand coverage.
• Encourage preventive care. Regular reminders about screenings, vaccinations and annual checkups can reinforce healthy behaviors and reduce long-term costs.
• Use data to guide efforts. Review claims trends and employee questions to identify where confusion is highest, then tailor education accordingly.

Build trust and engagement

Employers that invest in health care literacy often become a trusted source of information for their workforce. That trust can increase participation in wellness programs, improve satisfaction with benefits and strengthen retention.

It also aligns with a broader shift in how employees view their benefits. Workers increasingly expect guidance and want help navigating a complex system. Fortunately, employers are well positioned to provide it.

At the same time, health insurers can no longer shift additional costs to employers and employees through higher deductibles or narrower networks.

Instead, many insurers are pursuing structural changes designed to control long-term costs while improving care quality and member experience.

Interviews with health plan executives and recent industry reporting point to a common theme: reducing avoidable care, simplifying administration and investing earlier in health to prevent expensive problems later.

Employers and their staff can benefit from these strategies, which are increasingly being built into plan design, provider networks and care management programs that influence both premiums and employees’ out-of-pocket costs.

Preventive and personalized care

A central focus for many insurers is expanding preventive care and making it easier for enrollees to engage with their providers before health issues worsen. Executives at plans such as Humana and Highmark Wholecare, in a recent roundtable with the news website Becker’s Payer Issues, emphasized coordinated care models that connect primary care, specialists and support services around the individual.

These models rely on data and digital tools to identify care gaps early, such as missed screenings or unmanaged chronic conditions. Members may receive targeted reminders, care manager outreach or digital coaching to stay on track. For employers, this approach can translate into:

• Fewer high-cost claims tied to late-stage disease
• Fewer avoidable hospitalizations
• Fewer emergency department visits

Employees benefit from clearer guidance, easier navigation of benefits and more proactive outreach instead of reacting to health issues once they become serious and costly.

Cost containment through innovation and collaboration

Insurers are increasingly rethinking how care is paid for and delivered. Many are expanding value-based payment arrangements that reward providers for keeping patients healthy rather than paying for higher volumes of services.

Under these arrangements, insurers and providers share data and align financial incentives around outcomes and the total cost of care.

Plans are also using predictive analytics and artificial intelligence to identify members at higher risk of complications and intervene earlier through care coordination, remote monitoring or alternative sites of care.

For employers, this can help slow medical cost growth over time without eroding access to care for their employees.

Administrative efficiency and transparency

Health plans are investing in modernized claims systems, real-time eligibility and claim validation and more streamlined prior authorization for routine or evidence-based care.

Some plans are reducing or reforming prior authorization requirements where data shows little value, while using technology to make remaining reviews faster and more predictable. Insurers are also working to improve transparency around costs and benefits, helping members better understand service costs and coverage before care is delivered.

For employers, lower administrative costs can help moderate premium growth and reduce HR workload tied to billing disputes and employee questions. Employees may benefit from fewer delays, clearer explanations of benefits and less confusion when accessing care.

What this means for employers

While no single initiative will eliminate health care cost pressure, insurers argue that combining preventive care, value-based payment and administrative simplification offers a more durable path forward.

Employers evaluating plan options may want to work with us to assess how their carriers are implementing these or similar strategies and how they measure success.

The new “Trends to Watch in 2026” report by Business Group on Health (BGH) outlines developments that will shape next year’s benefits environment. Rising medical and pharmacy spending, a rapidly changing policy landscape and increased pressure for innovation may pressure employers to revisit long-standing strategies and consider new ones.

Below are six trends the report predicts will affect health plans.

1. Affordability pressures intensify

Employers project a median 9% increase in health care costs for 2026, dropping to 7.6% after plan design adjustments. These increases follow two years of costs that ran higher than expected, signaling that inflationary pressure has become a persistent challenge.

Chronic conditions, an aging workforce, higher medical and pharmacy prices and ongoing system fragmentation all contribute to the strain. As a result, employers may need to weigh short-term mitigation tactics against longer-term structural changes, including program reductions or redesigned plan approaches.

2. Emphasis on preventive care and primary care

With chronic disease remaining the top cost driver, employers are expected to “get back to basics.” That means increasing the focus on preventive care, evidence-based screenings and stronger primary care engagement.

Many organizations will also reassess well-being and chronic-condition programs to ensure they produce measurable results. Incentives or alternative plan designs that encourage screenings, primary care use or condition management may become more common as employers push to improve long-term health trends.

3. Pharmacy costs will continue to weigh

Drug spending is one of the fastest-growing costs, driven by GLP-1 drugs, gene and cell therapies and broader price inflation. Existing mitigation strategies are losing effectiveness, prompting employers to re-examine pharmacy benefit manager (PBM) relationships, transparency, contracting terms and utilization controls.

The rise of direct-to-consumer cash prices adds another layer of complexity, as employees may seek lower-cost options outside the plan. Employers will need a clear stance on whether to support or discourage such use.

4. Streamlining and tightening vendor partnerships

As a result of years of adding new programs, many employers now face fragmented, duplicative services and inconsistent data integration. In 2026, the report predicts that employers will place vendors under greater scrutiny and focus on measurable outcomes. Vendors will be expected to improve data sharing, coordinate care with other partners and demonstrate value.

5. Faster adoption of alternative plan models

To manage rising costs, employers will continue to explore new plan structures. Options such as copay-based designs, virtual-first plans, primary care-centered models and network-less structures are gaining traction.

We can help you compare these models with traditional preferred provider organization, health maintenance organization and high-deductible health plan options.

6. Shifting policy landscape adds uncertainty

PBM reforms, updated preventive care guidelines and new chronic-disease coverage policies may influence employer plan design. Potential ACA subsidy expirations and ongoing Medicaid eligibility changes could increase reliance on employer coverage.

With the 2026 midterm elections approaching, legislative action may slow while regulatory activity increases. Employers will need to monitor these developments closely to anticipate compliance obligations and communicate changes to employees.

Takeaway

If the BGH report is accurate, many employers will be looking for ways to cut costs, boost vendor accountability and explore new plan structures.

If you are interested in alternative plan models, we can help you compare them with preferred provider organization, health maintenance organization and high-deductible health plan options.