Authors: Kelly Conlin Maddison Grigsby Jason Orlosky
Key Insights
- 67% of employers view voluntary benefits as a vital part of their financial wellbeing strategy.
- 63% of businesses have operationalized AI within parts of their operations, a significant jump from 45% in 2025.
- 48% of employers now cover infertility services or fertility treatments.
- 32% of employers are now "carving out" their pharmacy benefits to a separate Pharmacy Benefit Manager (PBM), up by 13 points from 2024.
As healthcare costs rise and the workforce becomes increasingly fragmented across generations, life stages and working styles, the disconnect between what employers offer and what employees need continues to grow. What used to work previously is no longer effective.
To bridge this benefits gap, leaders are shifting toward precision planning. This strategy uses segmentation to align benefits with specific roles. In retail and deskless environments, the focus remains on mobile-first communication to maintain accessibility.
Conversely, manufacturing roles emphasize long-term physical health and musculoskeletal support to address the nature of manual labor. In the technology sector, companies favor disruptive benefits designed to attract and retain specialized talent.
By allocating benefits based on actual life needs, organizations ensure every dollar impacts both the bottom line and the individual.
As Maddison Grigsby, sales leader, Communications at Gallagher states: "You can have the best benefits, products and programs in the world, but if people don't understand it or aren't able to access it, then it's going to land flat. We help build that sense of employee support and empowerment by communicating the benefits."
Driving precision benefits through lifestyle spending accounts
One of the most effective tools for closing the value gap is the Lifestyle Spending Account (LSA). Unlike traditional health plans, which often limit benefits to those enrolled in medical coverage, LSAs offer a flexible and inclusive alternative. By providing a set stipend for a wide array of personal needs, they ensure the entire workforce, including those not participating in the health plan, feels supported.
Jason Orlosky, global managing director, Investments at Gallagher, states: "The shift toward LSAs moves the focus from "Return on Investment" to "Value on Investment." It uses data to ensure that benefit spending improves the human experience."
For parents, this might mean help with childcare or tutoring; for younger workers, it often goes toward fitness or pet insurance. By covering everything from mental health apps to meal delivery, LSAs show that a company understands the "human" side of work. This flexibility turns a basic benefit into a powerful reason for people to join and stay with a company.
In the tech industry, personalized LSAs are now the standard for winning over top talent. Employees often feel greater loyalty toward a personalized LSA than toward a standard pay increase, as it demonstrates a tangible investment in their wellbeing.
How AI is turning personalization into reality
AI in benefits administration is not about replacing human judgment; it provides HR teams with the insights needed for better decision-making. AI integrates claims data with utilization metrics to pinpoint specific cost drivers. For example, it can address specialty drugs, which are a major challenge for many employers, by ensuring employees get the right care before costs spiral.
Kelly Conlin, managing director, Health at Gallagher, indicates: "AI is our most powerful tool for guiding employees toward high-quality, effective care. Automating routine administrative questions frees HR teams to focus on advisory work that truly moves the needle."
AI's role in the employee journey:
Guided enrollment: AI tools act as a "choice architect," helping employees visualize how their health plan choices today impact their bank account tomorrow.
Smarter retirement: Employees can see the value of compound interest in a way that feels real. While AI handles the data, it prepares the employee to have a more meaningful conversation with a financial advisor.
Better health outcomes: AI can guide employees toward high-quality, lower-cost providers, ensuring they get the right care without any guesswork.
Shifting communication from volume to relevance
Success in communication is not immediate but grows over time. Consistently executing a strong communication plan builds familiarity and engagement among employees.
Relying solely on email leads to information fatigue, where critical updates are lost in the noise. People lose trust in what you are sharing, and as a result, they tune out.
An effective strategy uses a mix of channels:
Interactive sessions: Benefits fairs and live Q&A sessions to build a human connection.
On-demand content: Using digital content like videos and AI chatbots helps employees access care 24/7.
According to Conlin, "Spouses are often the primary health decision-makers in a household. Providing easy access to benefit microsites is a game changer for driving real utilization."
With 61% of organizations still reacting to communication challenges rather than planning for them, information overload has become a major risk. This "communication gap" causes burnout, transforming a potential support tool into a financial liability for the business.
Educating employees
Education has evolved from a basic support tool into a powerful driver of program performance. By providing resources that guide people toward the right level of coverage, organizations help their workforce avoid the pitfalls of overpaying for unused perks or being underinsured during a crisis.
Clear, accessible education ensures that benefits are not just offered but effectively used to provide genuine financial security.
Quick wins for cost containment:
Redirecting care: Explaining to employees the difference between a $50 telemedicine visit and a $500+ emergency room visit.
Preventive compliance: Increasing doctor visit rates to catch health issues early.
Measuring use: Cutting programs with low engagement and reinvesting those funds into what employees actually value, such as voluntary pet insurance or funds for fitness resources.
By supporting an employee's life outside of work, including their families and pets, you build an authentic culture that inspires people to join and stay.
From ROI to VOI: Highlighting the "moments that matter"
The standard measure of success has always been Return on Investment (ROI), a narrow focus on immediate cost savings. However, this often fails to capture the true human impact. Organizations are now moving toward Value on Investment (VOI), which provides a complete picture by considering morale, job satisfaction and productivity.
Value is created when an organization's internal culture matches its external brand, ensuring employees feel as understood as the customers they serve. This requires a shift toward hyper-personalization, recognizing those life events where an employee needs their organization to see them as humans, not just a worker.
Moments that drive VOI:
Career milestones: Taking on a new role or earning a promotion
Family transitions: Starting a family or managing bereavement
Personal resilience: Dealing with health challenges or personal crises
Future security: Planning for retirement and long-term financial stability
As Grigsby states: "Employees don't just want a paycheck anymore; they want to feel like they are part of the solution. When they understand their benefits and feel supported as humans, they're more likely to roll up their sleeves and stay committed to the organization's mission."
Organizations that acknowledge these moments create stronger connections with their workforce. There is also a broader expectation around authenticity.
Benefits planning and finalizing for 2027: A critical window
When you shop online, the algorithm often knows what you want before you do. Employees now expect that same level of hyper-personalization inside their workplace.
With many organizations already thinking about their 2027 strategies, now is the time to explore innovative approaches to benefits design, focusing on programs that will have the greatest impact on employees' wellbeing.
If you're working with limited resources, the biggest wins usually come from a deep dive into your current contracts:
Check your carrier: If you haven't issued a Request for Proposal (RFP) for your medical carrier in 3-5 years, you may well be overpaying for a network that has changed.
Fix pharmacy spend: Moving away from complex pricing models can save significant money without changing a single employee benefit.
Comprehensive audit: Regular reviews ensure your plan is being managed efficiently by your vendors.
Leverage analytics: Optimize your strategy by identifying high-engagement programs, mitigating risks through a clearer understanding of cost drivers and making confident decisions backed by industry benchmarks.
Key takeaways
- Focus on education, communication and personalization to ensure that benefits programs are effective and well-received by employees.
- Leverage AI and other tools to enhance decision-making, improve engagement and maximize the value of your benefits offerings.
- Establish a two-way feedback loop to foster trust and reduce burnout among employees.
- Upskill employees and demonstrate how AI can enhance their roles. This will help encourage adoption and reduce anxiety.
Not sure where to start?
Moving toward precision benefits is about using the right data to guide your people strategy. With Gallagher Drive, our proprietary data and analytics platform, we provide the analytics and consulting necessary to identify workforce gaps and ensure your offerings have a long-term impact.
Reach out to a Gallagher consultant today to explore how AI-driven insights and hyper-personalized LSAs can deliver a benefits package that truly works for your people.
