2020224 Emplo4 Employyee Benefitee Benefits Marks Market Outlook 3et Outlook 3 Executive Summary In 2023, employers were forced to confront several new and enduring challenges, including rising health care costs, regulatory changes, ongoing high in昀氀a琀椀on, a compe琀椀琀椀ve labor market and growing employee demands. For many organiza琀椀ons, these challenges resulted in a di昀케cult and demanding year. While many of these di昀케cul琀椀es will likely con琀椀nue through 2024 and beyond, understanding these challenges as well as likely trends can help employers develop e昀昀ec琀椀ve and e昀케cient strategies to address them. Employers that prepare and act proac琀椀vely will likely gain a compe琀椀琀椀ve advantage in the market. Addressing the challenges presented in this Market Outlook will be the key to employers’ success in 2024 and beyond. Employers face the di昀케cult task of 昀椀nding e昀昀ec琀椀ve ways to address rising health care costs while keeping bene昀椀ts a昀昀ordable for employees. Reining in rising health care costs has been a major employee bene昀椀ts challenge for employers for many years. However, health care costs are expected to increase more in 2024 than they did in 2023. Therefore, it’s cri琀椀cal that employers 昀椀nd e昀昀ec琀椀ve solu琀椀ons to control costs while s琀椀ll delivering bene昀椀ts employees want and need. To accomplish this, employers will likely need to plan and implement mul琀椀ple strategies, including plan design altera琀椀on, cost-sharing ini琀椀a琀椀ves, evalua琀椀on of specialty drug costs and claims data u琀椀liza琀椀on. In some instances, some employers may need to take more dras琀椀c measures in 2024, such as modifying health plan designs to properly address health care cost increases. Employers have tradi琀椀onally shi昀琀ed increasing health care costs to employees to address rising costs. However, the compe琀椀琀椀ve labor market over the last few years has forced employers to keep employee coverage a昀昀ordable to a琀琀ract and retain talent. Consequently, employers have shied away from cost-sharing ini琀椀a琀椀ves to avoid disrup琀椀ng recruitment e昀昀orts. As 2023 ended, the labor market showed signs that it is so昀琀ening and, as a result, more employers may revisit cost-sharing ini琀椀a琀椀ves to rein in rising health care costs in the upcoming year. Many organiza琀椀ons have embraced o昀昀ering personalized voluntary bene昀椀ts as an integral part of their bene昀椀ts strategy, and more employers will either embrace these bene昀椀ts or expand their o昀昀erings in 2024. These bene昀椀ts are popular with employees and allow employers to tailor their bene昀椀ts to employee demands and needs. Bolstering voluntary bene昀椀ts will be an e昀昀ec琀椀ve way for employers to expand their bene昀椀ts o昀昀erings without raising costs in 2024. Addi琀椀onally, many employers will embrace a holis琀椀c approach to employee well-being to address employees’ physical and mental concerns. In 2024, in昀氀a琀椀onary pressures exacerbated many physical and mental health issues in the workplace. Employer e昀昀orts will include focusing on 昀椀nancial bene昀椀ts and educa琀椀on to help reduce in昀氀a琀椀on’s impact on workers. Moreover, family-building bene昀椀ts will become much more important for employers in the upcoming year as they try to meet employees’ bene昀椀t needs and demands. Even though the labor market is expected to so昀琀en somewhat in 2024, it is s琀椀ll expected to remain compe琀椀琀椀ve. Because of this, strategies employers have implemented to address the 琀椀ght labor market over the last few years are changing. For example, in 2024, employers plan to increase employee compensa琀椀on and adjust their recruitment strategies to focus more on skills-based hiring to