Collin Tawney
Associate Vice President, Employee Health & Benefits
Today’s job market demands that companies raise the bar on health insurance benefits to attract and retain top talent. Employees increasingly expect robust, flexible, and personalized healthcare options that cater to their unique needs. As healthcare expenses continue to rise, employers must find solutions that balance financial viability and employee well-being.
A 2024 analysis from the Kaiser Family Foundation found that the cost of employer-sponsored health insurance for single coverage and family coverage increased by 6% and 7%, respectively, from 2023. Those costs have risen by 25% and 24%, respectively, since 2019.
Anticipating an additional spike in costs, many employers are seeking alternative plans that would improve user experience and reduce costs. A report from McKinsey & Co. found that commercial healthcare costs are expected to rise by 9% to 10% between 2024 and 2026 due to the fallout from the COVID-19 pandemic and high inflation.
Health plan spending accounts are one solution to rising costs that are gaining traction. These accounts allow employees to take greater control over their healthcare spending, offering flexibility while helping employers manage rising costs, reduce their tax burden, and retain workforce talent.
Companies are leveraging technology to conduct surveys and gather feedback to align their health benefits with employees’ needs. Personalized health benefits are becoming more popular with workers, allowing companies to enhance employee satisfaction by offering tailored packages.
Understanding health plan spending accounts
Health plan spending accounts are financial tools that allow employees and employers to set aside pre-tax dollars for eligible healthcare expenses. They offer a unique opportunity for employees to personalize their plans based on current needs, and employers can save costs by reducing their tax burden and managing expenses effectively.
The primary types of health plan spending accounts include:
- Health Savings Accounts (HSAs): Employees can contribute to an HSA, which serves as a savings account for medical services. HSAs can be opened by an individual or an employer, and contributions and unused funds roll over annually. HSAs are particularly beneficial for younger, healthier employees who may want to use these accounts as long-term savings for future healthcare costs.
- Flexible Spending Accounts (FSAs): These plans allow employees to pay for qualifying medical expenses with pre-tax income. Unlike HSAs, FSAs must be used within the plan’s year; otherwise, those funds expire. These accounts appeal to employees who anticipate regular medical expenses, such as prescriptions, copays, and dependent care.
- Health Reimbursement Arrangements (HRAs): Funded by employers, HRAs allow for tax-free reimbursements to employees with qualifying medical expenses. Standalone HRAs, like Individual Coverage Health Reimbursement Arrangements (ICHRA) and Qualified Small Employer Health Reimbursement Arrangements (QSEHRA), appeal to businesses looking to control costs.
Maximizing HSA & HRA contributions in 2025
The Internal Revenue Service announced updated contribution limits for both HSAs and HRAs in 2025, adjusted for inflation. Employers can leverage these higher limits for tax-free contributions to help employees personalize and maximize their health benefits.
HSAs
- Self-only coverage: $4,300 (up from $4,150 in 2024)
- Family coverage: $8,550 (up from $8,300 in 2024)
- High-deductible health plan (HDHP) requirements:
- Minimum deductible: $1,650 (self-only), $3,300 (family)
- Maximum out-of-pocket: $8,300 (self-only), $16,600 (family)
HRAs
- Employer contributions: $2,150 in 2025 (up from $2,100 in 2024)
The ROI of personalized health benefits
The one-size-fits-all approach to health benefits is becoming increasingly unpopular. According to Marsh McLennan Agency’s 2024 Health & Benefits Trends report, 85% of human resource leaders believe employers need to offer personalized benefits that align with employees’ needs and lifestyles to attract and retain talent.
This can be accomplished through:
- Offering customizable spending accounts like HSAs, FSAs & HRAs: These allow employees to allocate funds based on individual health priorities and ensure they get the most value from their benefits.
- Employee engagement & feedback: Employers can conduct surveys and utilize data analytics to help personalize benefits to workforce preferences.
- Tailored communication strategies: Clear, targeted messaging can help employers improve employees’ understanding and participation in their benefits and ensure they maximize what’s available.
While this approach is popular among employees, the report also found that companies are slow to adapt, as only 42% plan to offer such benefits. The report listed complex governance, cybersecurity concerns, and delivery challenges as possible reasons for the slow adoption of this movement.
Integrating mental health & wellness support
As a result of rising employee burnout, anxiety, and depression, mental health and wellness support is one of the top benefits employees look for in a personalized package, according to a report by the Society for Human Resource Management.
Employers can enhance mental health coverage within health plan spending accounts through:
- Comprehensive wellness programs: Offering access to counseling services, stress management workshops, and mindfulness training fosters a supportive work environment.
- Flexible spending for mental health services: Allowing employees to use HSAs and FSAs for therapy sessions, mental health apps, and wellness retreats provides greater accessibility to mental health care.
Supporting employees’ well-being through smarter health benefits
Offering health plan spending accounts gives employers greater control over their healthcare expenses while enabling employees to personalize their healthcare coverage to meet individual needs. This can lead to improved employee satisfaction and a healthier workforce.
Marsh McLennan Agency’s expert team helps companies of all shapes and sizes navigate the complexities of health plan spending accounts. Connect with a Marsh McLennan Agency representative to explore how we can help your business.
