U.S. employers are moving beyond annual benefits negotiations toward continuous, data-driven management as healthcare costs, pharmacy spending and regulatory complexity put pressure on workforce budgets. Gallagher’s 2026 Workforce Trends Report – Benefits Benchmarks suggests the next phase of HR technology will focus less on adding benefits and more on measuring, governing and optimizing the ones employers already provide.
Employers are becoming more deliberate about how they manage employee benefits, with healthcare inflation, specialty-drug costs and growing regulatory complexity pushing HR teams toward stronger analytics and vendor oversight.
That’s the central message from Gallagher’s 2026 Workforce Trends Report – Benefits Benchmarks, based on responses from more than 3,700 U.S. organizations. The findings point to a benefits market where cost containment remains important, but employers are increasingly reluctant to solve rising costs simply by shifting more expenses onto employees.
Instead, organizations are putting more emphasis on governance, data and continuous monitoring.
That represents a meaningful change for HR technology vendors. Benefits administration has traditionally centered on enrollment, eligibility and employee communication. The emerging technology opportunity is broader: helping HR and finance leaders understand why costs are changing, model potential interventions and measure whether those interventions actually work.
The pressure is substantial. Gallagher found that 36% of employers experienced health-plan premium increases of at least 10% at their most recent renewal, even after making plan changes.
Independent research shows the same underlying cost trend. KFF’s 2025 Employer Health Benefits Survey found that average employer-sponsored family coverage reached $26,993 annually, up 6% from 2024. Over five years, family premiums increased 26%.
For benefits leaders, the implication is straightforward: annual renewal negotiations are becoming an insufficient way to manage healthcare spending.
Healthcare costs are becoming a data problem
Gallagher’s findings suggest employers are responding by scrutinizing plan performance throughout the year.
Claims volatility, hospital pricing and variation in where employees receive care can make healthcare costs difficult to predict. A plan that appears financially stable during one period can encounter unexpected utilization or high-cost claims before its next renewal.
That creates demand for analytics capable of identifying changes earlier.
Gallagher’s research says 37% of employers use analytics to inform workforce planning and decision-making, highlighting the growing role of data in benefits strategy.
The trend mirrors a broader transformation across HR technology. Platforms from Workday, SAP, Oracle and Microsoft increasingly incorporate analytics and AI into workforce management, while specialist benefits and healthcare technology providers are building more sophisticated tools for claims analysis, employee engagement and cost management.
The technology challenge is connecting those systems.
Benefits data often sits across carriers, pharmacy benefit managers, payroll platforms, retirement providers and HR systems. Without a common analytical layer, HR teams can see individual pieces of the workforce-cost picture without understanding how they interact.
Pharmacy becomes a strategic battleground
Pharmacy spending is emerging as one of the clearest examples of that problem.
Nearly 49% of employers surveyed by Gallagher identify rising specialty-drug costs as a top healthcare cost challenge. The growing use of high-cost therapies, including GLP-1 medications, has made pharmacy benefits a much more visible component of employer healthcare strategy.
Rather than relying primarily on higher employee cost-sharing, Gallagher says employers are focusing on greater transparency in pharmacy benefit manager relationships, pricing reviews and utilization management.
That puts PBM contracts under greater scrutiny.
The issue is not new. Gallagher’s previous benefits research found employers increasingly examining PBM contract terms and considering alternative arrangements as prescription-drug costs rise.
For HR technology vendors, this creates an opportunity to move beyond reporting toward decision support. Employers need to understand utilization patterns, benchmark costs, evaluate vendors and determine where intervention is likely to produce savings without undermining access.
That requires data integration as much as dashboards.
Voluntary benefits fill the affordability gap
The report also identifies a second trend: employers are expanding voluntary benefits to broaden total rewards without absorbing the entire cost.
Gallagher says 72% of employers cite a more comprehensive benefits package as a reason for offering voluntary benefits, while 66% use them to address coverage gaps and 49% to improve employees’ financial protection.
Interest in specific supplemental benefits is also rising. Employee perks and discount programs reached 51%, up seven percentage points from 2023. Identity-theft protection reached 42%, while pet insurance reached 36%, a 13-point increase.
That diversification makes benefits communication more complicated.
Employees now have more choices, but more choice does not necessarily mean better outcomes if workers cannot understand what is available or determine which options fit their circumstances.
This is where digital decision-support technology becomes increasingly important.
Modern benefits platforms can use employee data, life-stage information and personalized communications to make benefits easier to navigate. The goal is shifting from simply providing a menu of options toward helping employees make informed decisions throughout the year.
Wellbeing programs face an engagement test
Wellbeing is another area where employers are moving from program availability to measurable participation.
Gallagher found that 23% of employers report fewer than one in five eligible employees participate in wellbeing initiatives.
That raises a basic technology question: if employees do not use a benefit, is the problem the program itself, the communication strategy or the way employees access it?
The emerging answer is greater integration.
Instead of standalone wellness programs, employers are increasingly connecting physical health, financial wellbeing and the broader employee experience. Digital platforms can make those resources accessible beyond annual enrollment, while analytics can help HR teams identify which programs employees actually use.
That shift could also change how vendors are evaluated. Participation and measurable outcomes may become more important procurement criteria than the sheer number of benefits a platform can administer.
The next generation of benefits technology
Gallagher’s findings point toward a broader evolution in HR technology: benefits management is becoming a continuous optimization problem.
Employers want to know where healthcare spending is increasing, which vendors are delivering value, which benefits employees use and where additional investment could improve workforce outcomes.
AI could accelerate that process by detecting anomalies, summarizing complex claims or utilization data and surfacing potential actions. But AI alone will not solve fragmented data or weak governance.
The more important development is the emergence of connected workforce analytics.
For HR and finance teams, that means bringing benefits, compensation, retirement, wellbeing and workforce demographics into a common decision-making framework.
Gallagher’s data suggests the market is already moving in that direction. Employers are not necessarily looking to spend less on their people. They are becoming more demanding about proving that every dollar delivers value.
For HR technology vendors, that changes the product brief. The winners may be those that can turn benefits data into decisions, rather than simply displaying it.
Market Landscape
The U.S. employee-benefits technology market is moving from administration toward intelligence and optimization.
Core HCM platforms from Workday, Oracle, SAP and Microsoft provide increasingly broad employee-data infrastructure, while specialist vendors focus on benefits administration, healthcare analytics, pharmacy management, wellbeing and financial wellness.
Gallagher’s findings suggest employers will increasingly demand interoperability between these categories.
The economics are driving that shift. KFF found that the average annual family health insurance premium reached $26,993 in 2025, with employees contributing an average of $6,850.
At the same time, Gallagher’s 2026 research indicates that employers are placing greater emphasis on vendor accountability, analytics and continuous plan management. Gallagher’s current research platform also provides organizations with detailed benchmarking across medical, pharmacy, voluntary benefits and wellbeing strategies.
For enterprise HR teams, the implication is that benefits technology is becoming part of financial planning and workforce strategy rather than an isolated administrative function.
The competitive advantage will increasingly come from connecting cost visibility, employee behavior, benefits utilization and workforce outcomes.
Top Insights
- Gallagher’s 2026 survey shows employers moving toward continuous benefits governance as healthcare inflation, pharmacy costs and regulatory complexity challenge traditional annual planning.
- Thirty-six percent of employers experienced health-plan premium increases of at least 10%, increasing demand for analytics, vendor oversight and proactive cost management.
- Specialty-drug costs are a major concern, with 49% of employers scrutinizing pharmacy spending, PBM relationships and utilization-management strategies more closely.
- Voluntary benefits are expanding as employers seek broader workforce support without absorbing every additional cost, increasing demand for digital decision-support tools.
- Benefits technology is shifting toward continuous optimization, connecting analytics, employee experience, healthcare spending and workforce planning instead of isolated administration.
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