Rising Healthcare Costs and Employee Wellbeing are Driving Employers’ Supplemental Health Benefits Strategies

Healthcare costs have been moving in one direction for years.

Deductibles have increased. Out-of-pocket maximums have climbed. Employees are taking on a greater share of healthcare expenses than previous generations, often while balancing higher costs across nearly every aspect of daily life.

Most employers didn't create this reality. In many cases, they have worked hard to protect employees from the full impact of rising healthcare costs. Yet even the most thoughtful benefits strategies face a difficult challenge: how do you continue supporting employees when healthcare becomes less affordable every year?

For many employers, that question is prompting a closer look at financial protection.

The Growing Gap Between Coverage and Protection

Having health insurance and being financially protected are not always the same thing.

An employee diagnosed with cancer may have medical coverage but still face significant out-of-pocket expenses, travel costs, childcare needs, prescription expenses, and lost household income. A hospitalization or serious accident can create similar challenges. Even when health insurance performs exactly as intended, employees can find themselves under financial strain during some of the most difficult moments of their lives.

This reality is becoming harder to ignore.

During a recent discussion on the future of employee benefits, Lamont Thurston, Founder and CEO of BeneRe, shared a simple example that illustrates the challenge.

Two employees work for the same company. They have similar jobs, similar incomes, and access to the same benefits. Both experience a serious health event. One receives a benefit payment that helps offset the financial impact. The other receives a stack of bills.

The difference isn't the diagnosis.

The difference is participation.

For years, the supplemental health benefits market has largely focused on enrollment. Open enrollment meetings, participation campaigns, and enrollment percentages have become the primary measures of success. Yet a growing number of employers are beginning to ask a different question:

How many employees are actually protected?

Employers Are Looking for Answers

That question surfaced repeatedly during BeneRe's recent discussions with employers and advisors, including conversations throughout a series of employer roundtables.

Employers are asking for greater transparency. They want to understand how benefit dollars are being spent, what value employees are receiving, and whether programs are delivering meaningful outcomes. Increasingly, they are moving beyond simply offering benefits and asking a more fundamental question: is this helping employees when they need it most?

The conversation mirrors broader trends taking place across the benefits industry. Organizations have become more focused on employee wellbeing, financial stress, and measurable outcomes. Participation still matters, but numbers alone don’t tell the full story.

As Thurston puts it, "For years, the industry has focused on enrollment. The better question may be how many employees are actually protected."

That distinction matters because participation rates often leave a significant portion of the workforce without coverage.

Most employees do not spend their time thinking about critical illness insurance. They do not expect a cancer diagnosis. They do not anticipate a hospitalization or serious accident. They are focused on raising families, managing household budgets, and navigating the demands of everyday life.

As a result, many decline coverage not because they have evaluated the risk and rejected it, but because they simply do not expect to need it.

Until they do.

Why Some Employers Are Challenging Conventional Thinking

Historically, accident insurance, critical illness insurance, and hospital indemnity insurance have been placed in a separate category from core benefits.

Medical coverage is expected.

Dental and vision have become standard.

Basic life insurance is routinely employer-paid.

Most organizations provide basic life insurance because they understand the importance of protecting employees and their families from catastrophic events. Yet accident, critical illness, and hospital indemnity coverage are often treated differently, despite the fact that many of the events they cover are statistically more likely to occur during an employee's working years. 

Rather than being embedded within the benefits strategy, these protections are frequently offered on a voluntary basis, placing the responsibility on employees to opt in. That reality is prompting some employers to reconsider whether financial protection deserves a more prominent role in their overall approach to employee benefits.

Kyle Frigon, Chief Commercial Officer at BeneRe, believes the conversation is evolving. As more employers look for meaningful financial protection solutions, the company created BeneRe 100 – a group captive program designed to make supplemental health benefits accessible to companies with 100 or more employees.

"Employers are not looking for more benefits," Frigon said during a recent discussion about BeneRe 100. "They're looking for benefits that matter."

His point reflects a broader shift in thinking. Employers increasingly recognize that financial wellbeing is not separate from employee wellbeing. An employee dealing with a serious illness is already facing significant challenges. Financial uncertainty only compounds the stress.

The question is no longer whether these benefits can make a difference, but whether enough employees can access that protection when they need it most.

From Offering Benefits to Delivering Outcomes

One of the more interesting themes emerging from employer conversations is a growing emphasis on outcomes.

Benefits leaders want to know:

• Are employees receiving meaningful value?
• Are benefits helping employees navigate financial challenges?
• Are programs performing as intended?
• Are benefit dollars working as hard as possible for employees?

Those questions are driving discussions around transparency, accountability, and benefit design across the industry.

In one example shared by Thurston, a large employer reviewing its annual employee benefits stewardship report discovered that employees were receiving only a fraction of every premium dollar paid into the program. For the first time, leaders could clearly see how premium dollars were being allocated and ask whether the program reflected the outcomes they expected for employees.

The lesson extends beyond any single product or funding model.

Employers are increasingly evaluating benefits not simply based on what is offered, but on the impact those benefits have on employees.

A Different Conversation for the Next Decade

The future of employee benefits will almost certainly involve continued conversations around affordability, transparency, and employee wellbeing.

Financial protection belongs in that conversation.

Not because employers need another benefit to offer.

Not because enrollment rates need to improve.

But because employees are assuming more financial responsibility for healthcare than ever before.

The question facing employers is no longer simply what benefits are being offered.

It's whether employees will have meaningful protection when they need it most.