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While being able to offer a new benefit or a better cost to employees can be refreshing, exhilarating even, getting ready for a new year of benefits offerings can be taxing and stressful—sometimes thankless, too.
Employee benefits compliance is no walk in the park either with ever-changing regulatory requirements on Flexible Spending Account (FSA) caps, Health Savings Accounts (HSA) adjustments, and more.
Oh, and did we mention benefits season is quickly approaching? It’s the story of tonight, today and tomorrow.
To help Professional Employer Organizations (PEOs) get ready for benefit season and beyond, PrismHR has launched PrismHR Insurance Advisory & Benefits Services.
To help our customers deal with these ever-present challenges, we have launched PrismHR Insurance Advisory & Benefits Services. This new service reimagines benefits delivery by combining strategic advisory, flexible voluntary insurance products and Broker of Record services execution under one unified framework.
After all, consistency and scalability matter—especially since there are no shortages of big challenges when it comes to benefits and insurance. It’s enough to make any HR outsourcer (HRO) feel helpless, but it doesn’t have to be that way.
How to Prepare for Skyrocketing Healthcare Costs: Benefits & Compliance Challenge No. 1
Rising costs lead to volatility and unpredictable margins, which directly affects PEOs.
And volatility seems to be omnipresent these days.
For example, group medical costs are expected to rise a robust 9% for in 2027 and individual markets close behind at 8.5%, according to PwC research. This would be the highest increase we’ve seen since the end of the Great Recession in 2009. Reasons for the big jump include AI adoption, inflation and pharmacy cost increases, among other factors.
All this is about to happen at a time when 83% of employees say they are already concerned about the rising cost of living and medical costs, according to a recent MetLife report. Indeed, the Consumer Price index increased 4.2% year over year in May, which is the most recent data available from the U.S. Bureau of Labor Statistics before falling 0.4% in June.
Employers will have to wrestle with how much of those benefit-cost increases they will eat. They can protect their bottom line by passing additional costs onto their employees and risk employees evaluating whether there are better employment options or they can cover some or all of the costs and risk their own profitability.
But there’s a potential ripple effect, too, that could lead to layoffs, hiring freezes or budget cuts that could affect your business growth as well. Healthcare challenges are indeed nonstop.
Understanding Benefits Compliance Issues: Challenge No. 2
To piggyback on the health care discussion, one of the fundamental benefits and compliance challenges right now is related to employer health plan administration, particularly when it comes to prescription drug benefit programs.
As Jones Day reports, there have been three high-profile class-action lawsuits alleging fiduciary mismanagement of Pharmacy Benefit Manager (PBM) contracts, which led to “millions of dollars of overpayments, inflated premiums and higher out-of-pocket costs for plan participants.” While two of those cases were dismissed, one is still currently moving forward.
Separately, with mental health being recognized as such an important part of health care, states like Colorado, Washington and Virginia have passed recent laws requiring health plans to base coverage determinations on recognized, not-for-profit clinical criteria for making plan determinations. On the national level, the Employee Benefits Security Administration monitors whether mental health coverage is on par with the medical and surgical benefits.
What about retirement benefits? Absolutely.
In 2026, high-earning employees over aged 50 will need to make prior year catch-up contributions on an after-tax basis instead of pretax under the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act. Businesses will rely on their payroll systems to handle the change appropriately.
In other words, there’s no time to take a break.
How Does Underinsurance Impact Benefits Providers: Challenge No. 3
According to the most recent generational workplace report from the U.S. Labor Department, millennials make up 36% of the U.S. workforce, followed by Generation X at 31%, Generation Z at 18% and baby boomers at 15%.
Unfortunately, underinsurance is a common problem across all working-age generational lines. Biennial research from the Commonwealth Fund found that almost a quarter of the U.S. working population (23%) were underinsured, and 66% of those underinsured people had coverage from an employer.
There were three factors considered. The underinsured person either:
- Had out-of-pocket costs over the previous year that were at least 10% of their household income, excluding premiums.
- Had out of pocket costs over the previous year that were at least 5% of their household income, excluding premiums, if they were living under the federal poverty guidelines.
- Had an individual or family deductible that made up at least 5% of household income.
When workers are underinsured they often delay or avoid seeking health care to avoid costs. The Commonwealth Fund study found that 3 in 10 adults aged 19 to 64 with chronic health conditions either skip or do not fill needed prescriptions for serious problems like asthma, diabetes and even heart failure.
Not taking preventive measures like taking regular medication can lead to bigger problems down the road and more expensive treatments, which can lead to higher insurance rates for you and your clients.
How PrismHR’s Insurance Advisory & Benefits Services Tackles Benefits Challenges
Through a single, unified framework that combines strategic advisory, voluntary insurance products and Broker of Record services, PEOs and service providers can simplify administration, close coverage gaps and enhance employee experience.
As the Commonwealth Fund states about employers’ rising healthcare costs: “A more definitive strategy would be to fight back on prices. This would require employers to join forces to increase their market power to negotiate lower prices with powerful local healthcare providers.”
That’s exactly what PrismHR Insurance Advisory & Benefits Services is designed to do. Taking a holistic approach to insurance and benefits follows the co-employment model for being able to provide better, more affordable options to PEOs’ clients.
With this new service, you get a consistent, scalable model that simplifies administration, improves employee access to coverage, supports benefits administration and reconciliation, and strengthens client satisfaction and retention.
Let us take care of the strategy while you take care of what you do best: helping your clients manage their payroll, benefits, HR and more while helping to solve the Top 3 challenges related to benefits and benefits compliance.
Learn more about PrismHR Insurance Advisory & Benefits Services.
