Key takeaways
While Texas employers are concerned about rising benefits costs, data shows that they are determined to address this issue without compromising valued employee benefits.
Technological investments and flexible, self-funded arrangements are a few of the ways in which employers are addressing their cost concerns.
Data also indicates a small step back in GLP-1 coverage as employers are navigating different cost management strategies.
Texas employers are navigating one of the most challenging benefits environments in recent memory. Healthcare costs continue to climb. Employee expectations continue to evolve. And business leaders are under increasing pressure to offer competitive benefits while maintaining financial discipline.
For years, employers could address rising costs through incremental adjustments. Today, that approach is becoming less sustainable. Organizations are being forced to rethink how benefits are designed, funded, and managed.
The results of Lockton's latest benefits survey, which include responses from more than 1,700 employers nationwide and more than 200 in Texas, suggest that many Texas organizations are doing exactly that.
Cost cutting without compromising valued benefits
Survey data shows that rising prices are still a big concern — nearly half of Texas employers (49%) identified cost reduction as their top benefits priority, (up from 45% last year). However, many indicate that cutting costs doesn’t come at the expense of valued benefits. In fact, the number of respondents who said that employee impact remains a priority consideration when evaluating benefit changes increased to 83% this year, up significantly from 71% a year ago. In addition, almost three-fourths (74%) of employers said that investing in employee wellbeing programs is a company priority.
Employers are challenged with the dual mandate of controlling costs while preserving the benefits their employees value most. They are responding by taking a harder look at long-term sustainability, with the understanding that poorly designed changes can undermine engagement, retention, and productivity. In other words, Texas employers are asking the same question: How can we spend smarter while still delivering meaningful value to our employees?
More targeted decision making
Survey responses indicate that Texas employers are addressing this problem in various ways, one of which is investing in data and technology that can boost the frequency and effectiveness of benefits communications. Though adoption remains early, 28% of respondents said they are implementing AI use in benefits communications, as opposed to 1% last year, for example.
Texas employers are also shifting to more flexible arrangements that allow them to be more selective about where they allocate resources. Nearly two-thirds (64%) of Texas employers now operate self-funded plans, while fully insured arrangements have declined from 41% to 32% over the past year.
GLP-1s
The evolving approach to GLP-1 medications for weight loss is a clear example of this shift. Among self-funded Texas employers, only 20% reported covering GLP-1 medications, down from nearly 30% a year ago. Another 4% indicated that they are considering removing coverage for GLP-1s.
And as costs rise, many employers are also reassessing their approach to cost management by adding care requirements to qualify for coverage. Nearly half (42%) either require, or are considering requiring intensive lifestyle programs, with another 10% offering optional programs.
The organizations that succeed in this evolving environment will be those that balance affordability, employee expectations, and business performance. It is about creating sustainable strategies that deliver value for both employees and employers. Based on this year's survey, many Texas employers are already moving in that direction.