7 Employee Benefits Trends to Watch in 2026

Offering employee benefits is a must-have strategy for small businesses in the U.S. competing for talent. The challenge is keeping up with an ever-changing landscape of program offerings and employee expectations. We've compiled the key employee benefits trends you should consider during your annual benefits planning. These include practical strategies for managing rising costs and staying compliant across multiple states. We've also covered how technology and outsourcing can help you access better rates and reduce your administrative burden.

Trend 1: Rising Healthcare Costs

Healthcare is one of the most sought-after employee benefits you can offer. The majority of employees in the U.S. rely on their workplace for health insurance. It's also a benefit affected by inflation: healthcare premiums are expected to climb between 5% and 9% in 2026. Pharmacy costs, particularly specialty drugs, drive much of this inflation. Since your small business is already managing tight margins, you may face difficult choices between maintaining competitive benefits and controlling costs. Here are some practical strategies that can help you cushion the blow:

• Model Multiple Scenarios: Calculate how a premium increase of 5%, 7.5%, and 10% would affect your budget.

• Analyze Employee Impact: Quantify the effects of various design changes on your employees' take-home pay.

• Consider Tiered Networks: Consider cost-effective providers and explore alternative ways to deliver access to high-quality benefits.

• Evaluate Population Health Programs: Focus on preventive care and target chronic conditions that drive your highest claims.

Remember that there's no one-size-fits-all approach. Many small businesses find success combining moderate plan adjustments with targeted wellness initiatives. For example, a 30-employee marketing firm might implement a higher deductible while adding diabetes management support for the company's three employees with the condition.

Trend 2: Prioritizing Mental Health

Rising focus on mental health programs is one of the most significant employee benefits trends in workplaces. Supporting your employees' mental health improves productivity, strengthens company culture, boosts employee engagement, and drives overall business success.

Employees can now opt to use teletherapy when available, with measurable impacts on feelings of support. Even as a small business, you can create strong mental health support programs within your budget. Start with an Employee Assistance Program (EAP) and the resources already available in your medical plan. Track the following mental health metrics quarterly:

• Time to First Appointment: How quickly can employees access care?

• Utilization Rates: What percentage of employees use mental health services?

• Manager Referrals: Do leaders encourage struggling team members to use support services?

• Employee Feedback: How satisfied are employees with the available resources?

Trend 3: Increasing Demand for Family Benefits

Today's multi-generational workforce requires inclusive benefits packages that address a wide variety of life stages. Family-forming and caregiver benefits continue to grow in demand, alongside traditional maternity leave. Millennials and Gen Z employees increasingly factor reproductive health coverage and eldercare support into their job decisions.

Small businesses can compete without matching the benefits packages of larger organizations. Gather insights from your team about their caregiving responsibilities to shape your benefits priorities. Focus on solutions that address your team's specific needs. Here are some cost-effective family benefit options:

• Fertility Consultations: Virtual appointments cost less than full IVF coverage.

• Caregiver Resources: Navigation services help employees find elderly care.

• Flexible Leave Policies: Allow time off for various family needs.

• Adoption Assistance: Even modest contributions show your support.

Trend 4: New 2026 FSA Limits Affecting Financial Well-Being

The IRS announced significant increases to the Dependent Care Flexible Spending Account (FSA) limits for 2026. The new $7,500 household limit offers your small business a cost-neutral way to enhance compensation packages. It's a win-win: employees save on taxes while you reduce your payroll tax obligations. Here's an overview of the changes and next steps:

• Update Your Plan Documents: Make sure your documents reflect the new limits before open enrollment begins.

• Adjust Your Payroll Systems: Check that the deduction capabilities match the new maximums.

• Educate Your Employees: Calculate their potential tax savings at different contribution levels, and inform them of these changes.

• Review Employee Participation: Set goals for increased FSA enrollment, and prepare for the enrollment season.

Trend 5: Personalizing Benefits with Voluntary Options

Offering voluntary benefits enables your employees to customize their coverage without increasing your costs. These extra options help close gaps in your core medical plans, offering greater flexibility for those who need it. Popular voluntary benefits for small businesses include supplemental life insurance, accident coverage, critical illness plans, and identity theft protection. Choose options that match your workforce's needs and follow these best practices:

• Avoid Going Overboard: Offer at most three to five voluntary products to avoid overwhelming your team.

• Ensure Payroll Compatibility: Confirm that you can process the deductions seamlessly.

• Review Carrier Stability: Choose established providers with strong service and positive reviews.

• Monitor Enrollment: Track take rates to identify high-value options and adjust them as needed.

Digital enrollment platforms make voluntary benefits more accessible. Employees can compare options and enroll online, reducing your HR administration time. Consider how partnering with a professional employer organization (PEO) can streamline both core and voluntary benefit offerings.

Trend 6: Managing Multi-State Compliance Risks

Having employees in different parts of the U.S. or the world creates compliance challenges for growing businesses. Each state has different rules for payroll taxes and benefit eligibility. A five-person company with employees in three states faces different requirements than a single-location business. For example, California mandates paid family leave contributions, while Colorado requires reproductive health coverage. Streamline your compliance management with the following strategies:

• Create State-Specific Checklists: Document requirements for each employee location, and update them regularly.

• Standardize Where Possible: Aim to adopt policies with the highest common denominator.

• Partner With Experts: Consider benefits solutions designed for multi-state operations and expert support.

• Document Everything: Maintain clear records of policy decisions and implementations.

Trend 7: Using Technology for Benefits Management

Small businesses seeking HR solutions can turn to modern platforms that automate benefits enrollment, simplify plan administration, comply with state regulations, and provide employee self-service. Outsourcing provides access to expert knowledge and time-saving tools. Here's how to evaluate your needs to find a fitting solution:

• Identify Your Challenges: Which HR tasks are most time-consuming or overwhelming? Make a list of key features you'd like, such as payroll processing, compliance management, access to benefits, integrations, and expert support.

• Weigh Your Options: Which HR solutions are best for your business? HR software, such as an HRIS, can check many boxes. A PEO offers benefits administration and strategic consulting.

• Set a Budget: What are the different options and price points? Evaluate each option based on your team’s needs and the overall impact on employee satisfaction and retention.

• Assess the Value: Determine the return on investment, accounting for time savings, fewer errors, setup costs, monthly costs, and scalability.

Formulating Your Benefits Strategy with Justworks

The right tools can help you manage employee benefits trends and expectations. See how solutions such as Justworks PEO can help you run payroll, HR, and benefits easily.* Get started with Justworks today.

*Please note that benefits and perks accessed through Justworks may vary by location and health insurance provider. Please contact Justworks for more information about the options available in your area.