WTW: Half of Employers Exceeded Their Healthcare Budgets in 2024

By Marissa Plescia – It’s no secret that employers are struggling when it comes to healthcare costs. A new survey from Willis Towers Watson revealed that more than half of employers were over budget by an average of 4.5 percentage points in 2024. The survey, released Monday, received responses from 417 employers with over 100 employees. About 81% were self-insured and 19% were fully-insured. Read Full Article...

HVBA Article Summary

1. Healthcare Costs Are Rising and Expected to Continue Climbing: Employers forecast a continued upward trajectory in healthcare expenses, with projected increases of 7% in 2024, 8.1% in 2025, and 9.1% in 2026 before any plan adjustments. After implementing cost-saving changes, the increases are still significant at 6%, 7%, and 8%, respectively. The primary contributors to these rising costs include the growing use and expense of specialty pharmacy drugs (notably GLP-1s), a higher number of high-cost claimants, and the ongoing burden of managing chronic health conditions.

2. Employers Are Shifting Strategies to Manage Costs: Looking ahead to the next three years, 59% of employers intend to adopt broader cost-saving initiatives, 47% plan to shift more healthcare costs onto employees, and 32% expect to absorb some of the rising expenses. This marks a change from the past three years, where a greater share of employers had been absorbing costs. Many now recognize that continued cost absorption is financially unsustainable, while aggressive cost-shifting can negatively impact employee satisfaction and retention. As a result, employers are gravitating toward more innovative and balanced strategies to manage costs effectively without compromising workforce well-being.

3. Vendors, Pharmacy Management, and AI Are Under Increased Scrutiny: Employers are becoming more proactive in holding their healthcare partners accountable. Nearly half (46%) are actively evaluating vendor performance, 36% are rebidding their medical plans, and 50% are considering doing so. Dissatisfaction with pharmacy benefit managers is also high, with 75% of employers either having already taken or planning to take their PBM contracts out to bid. Transparency and audits are becoming more common. Additionally, AI is viewed as a powerful tool for transformation—around 80% of employers believe it will fundamentally reshape healthcare benefits management within three years, particularly in areas like care navigation, personalized decision-making, communication, and vendor assessment.

How The One Big Beautiful Bill impacts HDHPs, HSAs and telehealth

By Nick Karls and Dan Bishop – The federal “One Big Beautiful Bill Act” (OBBB) has made big waves in the employee benefits industry, rewriting many of the rules in the space and increasing demands on benefits advisors and employers as they scramble to keep up with the changes. We recently sat down with Holmes Murphy’s Nick Karls, Compliance Director Employee Benefits, and Den Bishop, Senior Advisor, Employee Benefits, to discuss some of the implications in several key areas. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Telehealth Safe Harbor and HDHPs: With the permanent telehealth safe harbor in place, benefit advisors can now confidently recommend bundling telehealth services with high-deductible health plans (HDHPs) without disqualifying employees from making contributions to their health savings accounts (HSAs). This creates flexibility for employers to consider offering first-dollar telehealth coverage — particularly helpful for managing chronic conditions — while making it clear that adoption of this option is not mandatory. The change also creates opportunities for employers to modernize benefit offerings and expand access to virtual care without losing HSA eligibility.

2. Direct Primary Care and HSA Compatibility: Beginning in 2026, employers will be able to integrate direct primary care arrangements into HSA-compatible plans, provided that monthly fees remain within specified federal limits. Since only primary care services are included under this provision, and ambiguity still exists regarding excluded items such as prescription drugs, advisors must closely monitor regulatory guidance. In addition, advisors should help employers assess potential provider arrangements, ensure employees understand the scope and limits of the benefit, and prepare communication and education strategies ahead of open enrollment once eligibility is finalized.

3. Compliance and Documentation Updates: The new $7,500 dependent care assistance program (DCAP) limit increases tax-advantaged savings potential but also raises compliance concerns, particularly around nondiscrimination testing. Advisors should help employers evaluate workforce demographics, analyze participation rates, and determine testing frequency to proactively identify and address issues before tax consequences arise for highly compensated employees. Beyond DCAP, employers will also need to update summary plan descriptions, cafeteria plans, enrollment guides, and other plan documents to reflect telehealth coverage changes, direct primary care eligibility, higher DCAP limits, and upcoming benefit provisions. This proactive documentation work will help maintain compliance and build employee trust.

Healthcare Policy Priorities Take Center Stage as Congress Barrels Towards Shutdown

By Mark Hagland – A federal government shutdown is hanging over the heads of members of Congress, as leaders of the two national political parties battle it out over a range of healthcare policy issues, the resolution of which hangs in the balance. Republicans in both the House of Representatives and the Senate are demanding that Democrats agree to what’s called a “clean CR”—a continuing resolution meant to fund the federal government through October 31; but Democrats in both houses are demanding that the Republicans agree to reverse some of the most damaging elements included in the tax and immigration bill passed in July, including around Medicaid cuts and the expiration of subsidies for health insurance purchased on the ACA health insurance market exchanges. Read Full Article...

HVBA Article Summary

1. Impending Government Shutdown Deadline: The federal government is at risk of a shutdown beginning October 1 unless both chambers of Congress pass a continuing resolution (CR) to maintain funding. Congressional Republicans, who hold the majority in both the House and Senate, have proposed a CR that would extend funding through November 21 and focus primarily on increased security spending in response to recent events. However, since 60 votes are required in the Senate, they will need some Democratic support to pass the measure.

2. Breakdown in Bipartisan Negotiations: A potential opportunity for compromise was disrupted when President Trump abruptly canceled a scheduled meeting with Democratic congressional leaders, stating that their demands were unreasonable and unproductive. The cancellation came shortly after the meeting had been agreed upon and significantly lowers the chances of a deal being reached in time to avoid a shutdown. Both sides remain entrenched in their positions, and the breakdown in dialogue highlights the challenges of achieving bipartisan cooperation under current political tensions.

3. Dispute Over Healthcare and Fiscal Priorities: At the center of the impasse is a deep policy divide, especially on healthcare funding. Democrats are pushing for a CR that includes extensions of Affordable Care Act subsidies, the reversal of Medicaid cuts, and the restoration of funds to public broadcasting—measures they argue are essential to protect public health and services. Republicans, led by Trump, oppose these provisions, claiming they represent excessive spending and expand benefits to undocumented immigrants. This fundamental disagreement underscores broader partisan conflicts over budget priorities and social policy.

PBMs to pitch self-reforms to CMS: Bloomberg

By Alexandra Murphy – Pharmacy benefit managers are working on a proposal to change certain business practices in an effort to curb potential regulation from the Trump administration, Bloomberg reported Sept. 24. Read Full Article...

HVBA Article Summary

1. PBM Lobbying and Policy Proposals: The Pharmaceutical Care Management Association (PCMA), which represents pharmacy benefit managers (PBMs), has submitted a set of proposals to the Centers for Medicare & Medicaid Services (CMS). These proposals include measures such as preventing patients from paying more than the cash price for medications at the pharmacy counter, encouraging greater use of more affordable biologic alternatives (biosimilars), and increasing reimbursement rates for rural and independent pharmacies. According to PCMA, these efforts align with the broader goal of lowering drug costs for patients.

2. Skepticism from Independent Pharmacists: Some industry groups, particularly the National Community Pharmacists Association (NCPA), have responded critically to the PBMs' proposals. They argue that PBMs already possess the ability to implement these kinds of reforms independently but have consistently chosen not to. The NCPA views the proposals as potentially disingenuous and cautions the administration against relying on PBMs to self-regulate, noting that PBMs have historically resisted regulatory efforts through legal challenges or non-compliance.

3. Context of Heightened Scrutiny: The release of these proposals comes at a time when PBMs are facing increased scrutiny from lawmakers across the political spectrum. Both Republican and Democratic legislators have called for more transparency and stronger oversight of how PBMs operate, particularly in their role negotiating discounts and rebates for prescription drugs. The timing suggests the proposals may be part of a broader response to mounting political pressure and regulatory attention in Washington.

Bipartisan House bill could add step therapy rules to ERISA

By Allison Bell – Five members of the U.S. House have revived the fight to keep employer-sponsored health plans from using step therapy provisions to limit patients' use of new, dangerous or very expensive prescription drugs. Rep. Rick Allen, R-Ga., has introduced a version of the Safe Step Act for the 119th Congress, which started in January. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Purpose and Function of Step Therapy: Step therapy is a cost-management strategy used by health insurance plans that requires patients to first try lower-cost or preferred medications—such as generic drugs—before approving coverage for more expensive alternatives like biologics (e.g., Humira). Proponents argue that this approach can reduce unnecessary healthcare spending and promote safe, effective treatments. However, many physicians, drug manufacturers, and patient advocacy groups express concern that step therapy may delay access to timely and potentially life-saving medications, especially for patients with complex or severe conditions.

2. Safe Step Act and Legislative Proposals: The latest version of the Safe Step Act seeks to add new requirements to the Employee Retirement Income Security Act (ERISA), mandating that employer-sponsored health plans establish a formal process for requesting exceptions to step therapy protocols. The bill would require decisions on such requests to be made within 72 hours and allow exceptions in urgent cases where a patient could face serious health consequences, severe pain, or death. This bipartisan bill—introduced by Rep. Rick Allen with support from both Democratic and Republican cosponsors, several of whom are physicians—has been under consideration in Congress since 2019.

3. Regulatory and Stakeholder Perspectives: Regulation of step therapy varies by state, with some states like Illinois banning or restricting its use in certain insurance policies. However, due to ERISA preemption, such rules currently cannot be applied to self-insured employer plans, which cover a significant portion of the workforce. Employers and industry groups, like EmployersRx, acknowledge the importance of careful implementation but oppose broad regulatory bans or strict limits. They argue that step therapy, when properly designed, can be an essential tool for balancing access to care with controlling rising drug costs.

UnitedHealthcare to pay $359M in ACA rebates

By Elizabeth Casolo – UnitedHealthcare is set to pay $359 million in ACA-required rebates for 2024, sending checks that are slated to arrive by Sept. 30, according to a news release from the insurer. Read Full Article...

HVBA Article Summary

1. Rebate Distribution Across the U.S.: In accordance with the Affordable Care Act’s medical loss ratio (MLR) provision, commercial health insurers are expected to issue approximately $1.1 billion in premium rebates this year. These rebates will be distributed across 30 states and Washington, D.C., reflecting a widespread impact on both individuals and group policyholders nationwide.

2. Breakdown of UnitedHealthcare Rebates: UnitedHealthcare, one of the largest insurers in the U.S., is set to issue substantial rebates across multiple market segments. Specifically, 29 small group plans and 27 large group plans are slated to receive a combined total of about $192.2 million, while 19 individual aggregation sets will receive an additional $167.1 million in rebates, highlighting the insurer’s broad exposure to the MLR rule.

3. Regulatory Driver of Rebates: These rebate payments stem directly from the ACA’s MLR provision, which mandates that insurers spend a minimum percentage of premium revenues on actual medical care and quality improvements. If insurers exceed the allowed threshold for administrative costs, marketing, or profit, they are legally required to return the excess funds to policyholders in the form of rebates.

Benefit leaders may be creating obstacles to mental health support

By Paola Peralta – Benefit leaders have invested a significant amount of time and effort into improving mental health coverage, but employees are still struggling to use their insurance to get care they need. Anxiety, depression and ADHD disorders are the most frequently reported mental health conditions, according to a new survey from the Employee Benefit Research Institute (EBRI). Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Employees with Mental Health Conditions Face Greater Barriers to Care: According to EBRI’s research, employees with mental health conditions were twice as likely as those without to be unable to obtain needed medical care, tests, or treatment over the past six months. A major barrier cited was that providers refused to accept their insurance, a reason mentioned nearly twice as often by this group compared to others. These barriers contribute to a heavier reliance on emergency care: 62% of these employees visited the ER in the past six months, making them 50% more likely to use emergency services than those without mental health conditions.

2. Complex Benefit Designs and System Flaws Undermine Access: While mental health benefits may exist in employee plans, they often fail in practice due to poor implementation. Issues such as narrow provider networks, long wait times, and incompatibility with existing employer healthcare packages make it difficult for employees to use their coverage effectively. Fronstin notes that even well-intentioned efforts fall short when the healthcare infrastructure limits usability, leaving many employees functionally without access despite having coverage on paper.

3. Employers Can Address Many Barriers with Practical Adjustments: Though some systemic healthcare challenges require broader reform, many access issues lie within employers’ control. Companies can expand in-network provider options, ensure providers are actually accepting new patients, and support access through virtual care, flexible scheduling, and additional paid time off for appointments. Fronstin also emphasizes the importance of regular employee feedback to continuously refine offerings. Without such action, employers risk increased healthcare costs, lost productivity, higher absenteeism, and greater turnover—especially among employees with untreated or delayed mental health needs.

Customer satisfaction with PBMs drops to 15-year low

By Alan Goforth – Pharmacy benefit managers are facing heightened criticism and scrutiny from legislators and regulators. Customers are not happy with them, either, the 2025 Pharmacy Benefit Manager Customer Satisfaction Report from Pharmaceuticals Strategy Group found. “The 2025 survey results for high-level satisfaction with PBMs are remarkable, showing declines in overall satisfaction, perception of how services align with expectations, likelihood to recommend and likelihood to renew the contract,” the report said. Read Full Article... ^{_{(Subscription required)}}

HVBA Article Summary

1. Overall Satisfaction Has Declined Significantly: Overall satisfaction with Pharmacy Benefit Managers (PBMs) has dropped sharply from 7.6 to 7.1 on a 10-point scale—marking the lowest point in more than 15 years of tracking. This decline extends beyond general sentiment, affecting key service areas such as traditional and specialty drug discounts, responsiveness, issue resolution, and formulary management. Long-standing issues like lack of innovation, limited integration with other pharmacy solutions, and insufficient cost-management tools remain largely unaddressed.

2. Employer and PBM Size Differences Affect Satisfaction: Satisfaction levels vary notably based on the type of plan sponsor and the size of the PBM. Employers generally report higher satisfaction than health plans across most metrics. Furthermore, customers of smaller or non-“big three” PBMs—those outside CVS Caremark, Express Scripts, and OptumRx—tend to express greater satisfaction and show fewer signs of declining sentiment. These differences suggest that PBM scale and business model may influence customer experience.

3. Growing Interest in PBM Alternatives and Industry Change: There is a clear and increasing appetite for change in the PBM industry. Many respondents are open to carving out specific PBM services and working with multiple vendors, signaling a shift away from reliance on a single provider. While some see value in rebate adjustments and the availability of Humira biosimilars, concerns persist about PBM-led manufacturing practices and a lack of transparency. Nearly half of respondents indicate their organizations are moderately or very willing to support systemic changes in the industry.