Building a successful benefits strategy in 2026: Insights from our expert webinar

With healthcare costs projected to hit their highest levels since 2012, and new legislation, therapies, and expectations reshaping the landscape, HR and finance leaders are under more pressure than ever to design benefits programs that do more—without costing more.

The numbers tell the story: medical trend—the year-over-year increase in healthcare costs—is predicted to hit 8.5% in 2026. That means a medical visit costing $100 in 2025 will cost $108.50 next year. For employers already stretched thin with tight budgets, these rising costs demand a strategic response. This is compounded in the small group market, where KFF projects that premiums will rise by an average of 20%.

To help small business owners and HR leaders navigate this challenging landscape, we sat down with two benefits experts: Sarah Wade, Director of PEO Benefits Advising at Rippling, and Ann Wilson, Executive Vice President of Employee Benefits at Hub International. Together, they shared insights on what's driving costs up and how the most effective businesses build their benefits strategy.

Takeaway 1: Costs are going up across the board

In the small group market, insurers are raising premiums by about 20% this year. There are multiple factors driving these costs, including both cost drivers and deflators, which every employer needs to understand before their next renewal so they can implement a strong benefits strategy.

1. Exploding drug costs

GLP-1 drugs like Ozempic and Wegovy have become household names, but their popularity has come with a steep price tag. These medications, originally developed for diabetes, exploded in usage when awareness of their weight-loss effectiveness hit social media and traditional advertising.

The numbers are staggering: American usage of GLP-1s has increased rapidly over the past few years, up nearly 600% over the last six-year period. With monthly costs starting at $1,000 per patient, GLP-1 drugs alone account for 0.5% to 1% of the estimated medical cost trend for 2026.

But GLP-1s are just one piece of the puzzle. Gene therapies—groundbreaking treatments that can edit a patient's genome to treat previously incurable conditions—are also becoming more common. And they can cost a staggering $4.25 million per dose.

While these treatments can transform lives, they also transform healthcare budgets.

2. Provider-insurer conflicts

Recent high-profile disputes—like the Aetna and UW Medicine contract turmoil—temporarily pulled entire provider networks out-of-plan for tens of thousands of employees, forcing them to find new doctors or pay out-of-pocket.

While the issue is resolved, it’s not uncommon for insurance companies to have contentious negotiations with large healthcare providers that put patient/doctor relationships at risk. Even temporary lapses in contracts can be stressful.

When coverage disappears, costs spike—and trust takes a hit.

3. Biosimilars and cost deflators

While the medical trend is creeping up, there are some factors that are helping lower costs, notably biosimilars.

Biosimilars, FDA-approved biologic drugs, like Simlandi (a lower-cost alternative to Humira) offer a potential brake on runaway drug pricing. The FDA has already approved over 50 biosimilars, which are starting to shift costs down.

4. Policy changes on the horizon

While rising medical costs dominate the conversation, shifting state and federal policy is also reshaping employer benefit strategies.

One example is infertility mandates. California and New York signed laws that require large-group health plans to cover in vitro fertilization (IVF) and related fertility care. Small-group plans have more flexibility, but the trend is clear: more states are moving toward fertility coverage mandates, and employers will need to decide whether to get ahead of regulation by offering this benefit proactively.

Takeaway 2: Spend more than 10 minutes on your renewal

You never want to function on autopilot when it comes to benefits renewal. The healthcare and benefits landscape can shift quickly, your employees’ needs may evolve, and the best strategy for your organization may shift year after year.

As Sarah Wade emphasized in our webinar, one of the biggest mistakes benefits advisors see is companies not spending enough time on their renewal planning. Too many employers get their renewal documents, see the increase, and either accept it or make knee-jerk reactions without understanding their options.

Healthcare costs represent the second-largest expense after payroll for most businesses. That level of investment deserves strategic attention.

So, don’t just spend 10 minutes and stick with the status quo. Block out time to review your renewal documents, consult with stakeholders, assess your budget, and evaluate alternatives. The renewal period is often the only time you can make strategic changes to your benefits—don't waste that opportunity by rushing through it.

Takeaway 3: Prioritize choice

Don't assume every employee needs the richest plan at the highest contribution. As Sarah Wade pointed out during the webinar, "It would be super rare for every employee in your company to have the same high health needs."

The most common mistake is offering only premium coverage because it sounds good on paper. But when you do this, you're essentially letting the insurance company win. They collect high premiums, while many employees don't actually need or use that level of coverage.

Some employees will want the richest plans because they either do need it or feel they need it. Younger, healthier employees, however, may prefer lower-cost premiums with high deductibles if they don’t think they’ll need much medical care in the coming year.

Instead, offer plans that can align with various employee needs. You don't need a $300 deductible, a $500 deductible, and a $750 deductible plan. You need meaningful choices. This may include a low-cost, high-deductible option paired with an HSA for healthy employees, and a comprehensive plan for those with higher medical needs.

Give employees the power to choose what works for their situation—some may prefer the money back in their paychecks rather than coverage they won't use.

Takeaway 4: Have a plan going into renewal season

Rising costs don't have to mean cutting benefits or blowing your budget. The key is approaching your benefits strategically rather than reactively.

This three-step framework, developed by Rippling's benefits experts, helps you make smarter decisions that deliver value to employees while keeping costs under control.

Step 1: Understand the benefits landscape

Think of health insurance like car insurance. If you have a good driving record and most drivers around you avoid accidents, your rates stay relatively steady. But when accidents increase—or when cars become more expensive to repair—everyone's premiums go up.

Healthcare works the same way. When more people use expensive treatments, or when the same treatments cost more, everyone's insurance premiums increase. Understanding this dynamic is crucial for making informed benefits decisions, and as we’ve already discussed, the costs are currently increasing quickly.

Benefits costs represent a major business expense that deserves thorough evaluation every year as the healthcare landscape changes.

Take time to consider your options so you can create a benefits strategy that works for your business’s budget and aligns with your employees’ needs. The best way to do this is to equip yourself with information about the current market so you can account for potential cost increases.

Step 2: Identify the gaps in your current strategy

Your benefits program is only as strong as the data behind it. Before adjusting plans, contributions, or offerings, you need a clear picture of how your current benefits are performing—and what your employees actually value.

Use these three metrics to evaluate your current benefits:

1. Benefit enrollment rate: What percentage of employees enroll in benefits, and which plans do they choose? High enrollment in expensive plans might indicate over-rich coverage, while low participation could signal affordability or education issues.

2. Employee satisfaction: Survey employees about their benefits experience. Sometimes dissatisfaction isn't about the benefits themselves—it's about employees not understanding their options.

3. Cost per employee: Track your total benefits cost per employee annually to ensure you can sustain your current package as you grow and costs increase.

When reviewing your policy, you can ask yourself the following questions to predict potential future needs and shape your strategy accordingly:

• What will headcount look like in one year?

• What's the goal of your benefits program?

• What talent do you want to attract and retain?

• What do you want to keep or change about current benefits?

Step 3: Pick the right benefits partner

Most small businesses don't have the time or expertise to navigate the complex benefits landscape alone. That's where partners come in. You have two main options, each with distinct advantages depending on your company's size, resources, and goals.

Professional Employer Organization (PEO)

PEOs provide benefits and comprehensive compliance support through a co-employment model. They essentially act like an outsourced HR department, and can give you access to large-group benefit rates.

• Best for: Small to medium-sized businesses (typically under 100 employees)

• Advantages: Access to large-group benefits, comprehensive HR and compliance support, dedicated benefits navigation for employees

• What to look for: Affordable benefits, comprehensive compliance support, flexibility to scale as you grow.

Broker Partnership

Broker partnerships help you find and compare insurance plans from multiple carriers. Brokers are licensed professionals who handle the legwork of quoting plans and managing enrollment while you maintain direct control over your benefits decisions. You can work with a third-party broker, or work with a broker in-house like Rippling brokerage.

• Best for: Mid-size or enterprise businesses, companies with dedicated HR teams

• Advantages: Deep insurance expertise, ability to place multiple benefit types, support for complex arrangements like self-funded plans

• Consider: Third-party brokers vs. platform-provided brokerage services (i.e. Rippling brokerage)

Flexible benefits administration as your business grows

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Benefits are a strategic lever

Benefits aren't a set-it-and-forget-it expense line. They're a strategic asset that should evolve with your business needs and market conditions.

This means that your benefits strategy will evolve over time, too. What works for a 10-person startup won't necessarily work for a 100-person scale-up. The key is choosing partners and solutions that can grow with you rather than trap you in arrangements that become misaligned with your needs.

Rippling offers flexibility across this spectrum, from PEO services for smaller companies to brokerage support for larger organizations, all on the same technology platform. This approach ensures your benefits can scale seamlessly as your business grows to keep employees engaged and retained.

How Rippling can help

Unlike other solutions that lock you into one approach, Rippling gives you flexibility.

As your business evolves, your benefits strategy can evolve with it—without having to rip and replace your systems. You might start on PEO to streamline benefits and HR admin work early on, and then as you scale, you can easily transition off the PEO, keep using Rippling, and bring in external benefits. With these changes, the core platform stays the same.

Your benefits strategy should grow with your business—not hold it back. We can help with that, giving you the flexibility you need to alter your strategy as your business changes, too.

Take benefits to the next level

Looking to build a cost-effective benefits strategy? Watch the full webinar recording. And if you'd like a personalized consultation on how Rippling can support your benefits strategy, book a meeting with one of our experts today.

Ready to get started?

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FAQs

Does using a PEO offer competitive advantages in terms of benefit rates and offerings?

For small employers, PEOs typically provide access to a broader menu of benefit options and often times more affordable rates than the open market. However, as organizations grow larger, you might want to consider partnering with a broker as your benefits needs change with your business.

Can brokers advise on alternative funding arrangements like self-funded plans?

Yes, experienced brokers can educate you about and quote various plan types, including fully insured, self-funded, partially self-funded, and more. The right option depends on your organization's size, risk tolerance, and growth stage.

What should I know when offering benefits for the first time?

Start with these fundamentals:

• Decide what coverage types to offer (medical, dental, vision, life, disability)

• Establish your budget for premium contributions

• Set up administrative systems for enrollment and payroll deductions

• Consider whether you have internal HR support or need external assistance

Beyond health insurance, what other benefits should I consider?

Key options include:

• Health Savings Accounts (HSAs) paired with high-deductible health plans

• Voluntary benefits like hospital indemnity or pet insurance

• Tax-advantaged accounts (FSAs, dependent care accounts)

• Mental health and fertility support programs