The Economy’s Impact on Employees’ 2025 Open Enrollment Decisions

Employers and workers alike paid close attention to this year’s open enrollment period amid an economic climate marked by persistent inflation, rising healthcare costs and a general sense of financial uncertainty.

An October report by Voya Financial showed 77% of surveyed U.S. workers intended to spend more time reviewing this year’s annual benefit elections in light of the economy.

The feeling was mutual for employers, many of whom focused on enhancing support for employees navigating their selection options, said Julie Noblick, a director in the communication and change management practice at consulting firm WTW.

“Employers faced the dual challenge of escalating healthcare costs and employees who were more acutely aware of their out-of-pocket expenses,” she said. “Unable to alleviate the larger economic pressures, employers instead concentrated on equipping their workforce with the tools and resources necessary to confidently prepare for and navigate their benefit decisions.”

Research published in July from LIMRA, a trade association supporting the insurance and related financial services industry, revealed that 12% of surveyed workers said they had opted (or would) out of a benefit they were previously enrolled in sometime during the prior two years. Additional association research published in October showed only 23% of workers had a favorable opinion of the U.S. economy, and 63% were at least moderately concerned about their personal financial situation.

“Budgets are stretched thin,” said Kimberly Landry, LIMRA’s associate director of workplace benefits research. “As the cost of living increases, some employees will reduce their spending on benefits to have more funds for their household expenses.”

Identifying the Changes

Though aggregate selection data for the fall 2025 open enrollment period has yet to be analyzed, the experts interviewed for this article anticipate certain trends from 2024 to have continued or escalated.

Landry shared that in the 2024 enrollment period, the top three benefits workers had dropped were vision, medical and dental insurance, either because:

• The cost increased (26%);
• The benefit wasn’t used enough (28%);
• The employee sought to reduce their benefit spending (23%); or,
• The cost of another benefit had gone up (14%).

“Economic hardship reduces employees’ willingness and ability to pay for benefits at the same time as it increases the potential need for these protections, creating something of a Catch-22 for workers,” Landry said.

Double-digit healthcare cost increases — during 2025 and projected again for 2026 — likely impacted weighed on workers’ 2025 decisions, she continued.

“Given rising costs, employees might prioritize [now and in the future] directing their budgets toward core benefits instead of ancillary benefits they may view as a ‘nice to have,’ leaving them financially vulnerable to unexpected hardship,” Landry said. “It is essential for the industry to make sure we are communicating the value of these ancillary and supplemental benefits to employees so they can make well-informed decisions.”

Justin Held, the director of educational programs at the International Foundation of Employee Benefit Plans, expected health insurance enrollment rates to remain mostly steady, but noted workers could shift how they plan to use their benefits.

“If more than one health plan was offered, employees could have switched to the lower or lowest premium plan,” he said. “Employees could also cut back on in-person medical care and instead use telehealth, which offers a lower copay, for applicable medical issues.”

Held and Landry also anticipate reduced retirement contributions, as workers can adjust their deduction percentage rate during open enrollment but also throughout the year. Held stated total rewards (TR) professionals should work to combat this instinct.

“Contributing consistently and diversifying investments allows funds to grow over the long term,” he said. “Maintaining a savings habit at any contribution level is better than trying to restart it later.”

Long-Term Impacts to Total Rewards

Personalization will be increasingly relevant as employers work to manage rising benefit costs, WTW’s Noblick predicted.

“With the steepest healthcare cost increases in over a decade, employers may be taking a look at their wellness incentive programs, particularly if employee participation and satisfaction have declined over the past few years,” she said. “That said, employers are reluctant to take away a financial benefit from employees who are already experiencing financial strain.”

Instead, Noblick and her team have seen more employer interest in benefit solutions such as defined contribution (DC) choice programs. These programs allow workers to make an annual election during open enrollment to direct portions of their funds toward:

• Saving for retirement;
• Saving for and paying healthcare expenses;
• Saving for and paying childcare expenses; or,
• Paying down student debt.

“This empowers employees to strategically allocate funds to alleviate immediate financial pressures or build long-term security, directly addressing their individual needs,” Noblick said.

The experts interviewed for this article stated employers and their TR pros should seek employee feedback (through formal and informal listening sessions) during the first several months of 2026 to ensure their benefits strategy continuously reflects evolving workforce needs and preferences. For 2026 and beyond, the experts predicted there will be a sustained focus on benefits that support workers’ long-term financial security, including healthcare affordability, and tools that help those workers make more informed benefit decisions.

“Now more than ever, employers need to strengthen their benefits communication strategies and provide resources that help their employees make informed choices and ensure they’re taking advantage of the benefits and programs available to support them year-round,” Noblick said.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Benefits
• Total Rewards
• Well-Being