Midyear is the perfect time to reassess your benefits strategy, refine plan design, strengthen vendor partnerships, and sharpen cost-containment efforts ahead of 2027 open enrollment. A clear view of today’s benefits market can help employers better meet employee needs, address key challenges, and stay competitive.
1. Healthcare Costs Projected to Hit Record High in 2027
Healthcare costs are expected to keep climbing, with PwC’s annual Behind the Numbers medical trend report projecting a 9% medical trend in 2027 the highest in 17 years. Chronic and mental health conditions remain the biggest cost drivers, while GLP-1 drugs, cancer care, and AI-enabled provider coding tools are adding even more pressure. With national healthcare spending projected to approach $9 trillion by 2035, employers should view 2027 planning as a key opportunity to strengthen their cost-containment strategy.
2. AI Reshapes Benefits Administration and Personalization
AI is playing a growing role in benefits, with Mercer reporting that about 40% of HR leaders already use it for administration and that AI could take on more than half of a rewards team’s workload. Interest is high among employers, but employee adoption still lags due to trust and privacy concerns. As AI use expands, employers should focus on transparency, human oversight, and regular bias testing.
3. Fertility Benefits Shift from Trend to Requirement
Fertility benefits are gaining momentum as employers expand family health offerings and respond to growing regulatory support. Recent federal guidance and new state mandates, including expanded IVF coverage requirements in states like California and Virginia, are making fertility coverage more accessible and increasingly important. Employers should review their plans now to ensure compliance and evaluate cost-effective options for enhancing this benefit.
4. GLP-1 Costs and Pipeline Keep Employers on Alert
GLP-1 medications continue to be a major cost driver for employer health plans, now accounting for a significant share of prescription spending at large self-funded organizations. With new products entering the market and more on the way, that pressure is unlikely to ease soon. As employers plan for 2027, now is the time to refine eligibility rules, prior authorization criteria, and lifestyle program requirements to help manage costs.
5. New Prescription Drug Channels Bypass Traditional PBMs
Two key shifts are putting pressure on the traditional pharmacy benefit manager (PBM) model.
TrumpRx Adds Competition to the Market
TrumpRx.gov gives cash-paying consumers direct access to manufacturer drug discounts, including GLP-1 pricing of about $350 per month through agreements with Novo Nordisk and Eli Lilly. Still, insured consumers may be better off using their health coverage, since purchases through the platform do not count toward deductibles or out-of-pocket maximums. Federal guidance also suggests these direct-to-consumer programs may carry low anti-kickback risk, though they do not have formal safe-harbor protection.
Direct-to-employer (DTE) Drug Platforms Reshape the Market
DTE platforms are also challenging the traditional PBM model by offering fixed, transparent pricing outside the PBM channel, especially for GLP-1s. Growing employer interest in options from Eli Lilly, Novo Nordisk, and GoodRx reflects the appeal of lower-cost alternatives. Still, these carve-outs can create data gaps, so while they are unlikely to replace PBMs entirely anytime soon, their role is expected to keep expanding through 2027.
Conclusion
Healthcare costs and the prescription drug market will keep evolving through 2026, fueled by GLP-1 demand, new pricing pressures, and emerging AI tools. Now is the time to revisit plan design, vendor partnerships, and compliance strategy ahead of open enrollment. Download the bulletin for more details.
