In 2026, the employee benefits landscape is defined by regulatory change, shifting compliance priorities, rising cost pressures, and new workplace expectations. Here are six key insights from Zywave’s 2026 Employee Benefits Market Outlook.
1. Health Care Costs Are Rising
Health care costs continue to rise, with projections indicating a 6.5% increase in 2026 and some estimates topping 10%. As expenses climb, offering competitive health benefits has become increasingly difficult. In fact, Zywave’s 2025 Broker Services Survey reports that balancing attractive benefits with rising health care costs is employers’ top HR and employee benefits concern.
Health care cost increases are being driven by growing use of GLP‑1 drugs, rising demand for specialty medications, ongoing pressure in the health care labor market, and a higher prevalence of chronic conditions. While employers may not be able to fully avoid these increases, they can prepare by focusing on targeted cost mitigation, clear employee communication, thoughtful cost‑sharing strategies, and engagement. Employers who anticipate these trends will be better positioned to manage financial impact and maintain competitive benefits in a challenging market.
2. Specialty Drug Market Expands
The specialty drug market is growing rapidly as the FDA approves more high-cost, high-impact therapies. Specialty drugs now make up the majority of new approvals, with about 80% in 2025 classified as specialty. This reflects a shift toward targeted, complex treatments for chronic and rare conditions, driven in part by increased use of cell and gene therapies, biologics, and biosimilars.
Specialty therapies are complex and often involve unique payment arrangements, making them a growing challenge for employers. Though they represent a small share of prescriptions, they account for roughly half of all drug spending, a share that is expected to rise. Employers should closely monitor how specialty drugs affect their health plan costs, especially as these medications are projected to make up most new drug approvals in 2026.
3. Fertility Benefits on the Rise
Employer-provided fertility benefits are expanding quickly as employers look for new ways to attract and retain talent. Infertility, recognized as a disease by the World Health Organization and the American Medical Association since 2017, affects 1 in 6 people globally, making fertility coverage an increasingly essential component of a competitive benefits package. According to Maven Clinic’s 2025 State of Women’s and Family Health Benefits report, two-thirds of employers plan to invest in family health benefits within the next three years, a 44% increase since 2024, underscoring the positive impact these benefits have on employees’ mental health, performance, and loyalty.
4. AI Impacts Benefits
Artificial intelligence (AI) is reshaping how organizations operate, especially in HR and employee benefits. One of the biggest shifts is in how employers design, manage, and administer their benefit programs.
Traditional benefits often rely on a one‑size‑fits‑all design, leaving many employees underserved. AI is changing this with data‑driven personalization. About 40% of HR leaders now use AI in benefits administration, using information such as claims data, lifestyle indicators, and engagement patterns to recommend benefits that match individual needs, whether mental health resources, fertility support, or chronic condition management. The result is a more meaningful benefits experience that strengthens satisfaction and utilization.
Technology is shifting wellness from one-size-fits-all programs to personalized experiences. AI‑driven platforms use employee preferences, consented health data, and engagement trends to deliver targeted recommendations, such as a stress management module, a nutrition plan, or a financial wellness resource.
5. Gen Z and millennials Reshape Wellness
Generation Z and millennials now make up most of the workforce and they are redefining wellness expectations. These employees (born 1981–2012) value holistic well-being, flexibility, and inclusiveness, and they are prioritizing health and sleep as they manage high levels of stress, burnout, anxiety, and worry. McKinsey’s Future of Wellness research shows that about 30% of Gen Z and millennials are focusing “a lot more” on wellness than a year ago, compared with up to 23% of older generations. They also treat wellness as a daily priority, not an occasional luxury, accounting for more than 41% of annual wellness spending, while those 58 and older account for only 28%.
In short, younger workers are more willing to invest in wellness products and services, from recovery solutions and skin and hair care to nutrition support, and they expect a personalized, science-based, and holistic approach that supports recovery and long-term well-being.
6. Workers Prioritize Financial Wellness
Economic uncertainty and rising health care and living costs are making financial wellness a core element of workplace well-being. Employees increasingly link financial stress to mental health, so this is a critical priority for employers. Vanguard reports that nearly 75% of Americans did not meet their 2025 saving and spending goals, yet most are ready to recommit in 2026, 84% have a financial resolution, with top goals like building an emergency fund and using a high‑yield account for short‑term savings. While most workers are concerned about the economy, priorities differ by generation: baby boomers worry about unexpected expenses, millennials about insufficient income, and Gen Z about living beyond their means. In response, more organizations are expanding financial education and support through benefits such as student loan repayment, employee assistance programs, and financial education workshops.
Conclusion
The employee benefits landscape is poised for major shifts in 2026, requiring employers to be more strategic and adaptable as they address emerging challenges. Download the bulletin for more details.
