Benefits Cost-Saving Strategies for Mid-Size Employers in 2026

Rising healthcare costs and higher renewals have made cost-saving strategies an ongoing priority for employers. But rather than making broad cuts to benefits, many mid-size companies are becoming more selective about their investments.

According to Sequoia’s 2026 Benefits Benchmarking Report, Mid-Size Edition, employers with 100 to 499 employees are focusing on the biggest drivers of benefits spending — from healthcare and wellbeing programs to leave administration.

The goal isn’t just to spend less, but to get more value from every dollar while keeping costs in check.

Here’s how mid-size employers are managing benefits costs in 2026.

Targeting Healthcare’s Fastest-Growing Costs

Healthcare is still the top area of focus for employers looking to manage benefits costs. Seventy percent say lowering healthcare costs is a priority over the next two years, up from 53% in 2025.

Rather than pursuing broad plan redesigns, employers are concentrating on specific cost drivers. More than one-third (36%) prefer generics and biosimilars in their plans, making them the most common pharmacy management strategy. Looking ahead, tighter oversight of GLP-1 medications for weight loss is among the most common pharmacy changes employers expect to make.

Cost–saving strategies are also influencing plan design. Thirty percent of employers are sunsetting programs with low utilization or limited perceived value, while 29% are increasing employee contributions and cost sharing for some or all plans.

At the same time, employers aren’t relying solely on cost shifting. Thirty-seven percent report lowering employee contributions as an affordability strategy, up from 21% last year, suggesting many are balancing cost management with efforts to ease employees’ financial burden.

Evaluating Wellbeing Program Value

Employers continue to invest in wellbeing, but they’re becoming more selective about their programs.

Three-quarters of employers are maintaining their current wellbeing offerings rather than expanding them. At the same time, emotional wellbeing offerings declined from 91% to 77%, while physical wellbeing programs fell from 83% to 67%.

Employers are also paying closer attention to program performance. Eighty-nine percent track utilization, and 86% gather employee feedback to evaluate program effectiveness. Those metrics suggest employers are using participation and employee feedback to guide investment decisions.

Simplifying Leave Administration

Cost-saving efforts extend beyond healthcare spending. Employers are also looking for ways to reduce the administrative burden of managing leave.

More than half of employers (55%) say tracking and administering leave is a challenge. Another 51% cite compliance requirements, while 46% point to the difficulty of coordinating short-term disability, long-term disability, and company leave programs.

As a result, 39% of employers are redesigning or simplifying leave policies, up from 29% last year. Only 15% plan to add or expand leave policies over the next 12 months.

Regulatory requirements have also overtaken employee demand as the leading factor influencing leave decisions, cited by 44% of employers.

Benchmarking Benefits Performance

The data shows how mid-size employers are managing benefits costs. The next step is to understand how your strategy compares.

Benefits benchmarking gives you a clearer view of how your programs stack up against similar employers, helping you uncover opportunities to improve efficiency, evaluate your investments, and make more informed decisions.

Schedule a complimentary benefits benchmarking consultation with a Sequoia advisor to receive customized insights based on the latest market data.

Dylan Hughes — Dylan has more than 7 years of experience delivering market insights on compensation and benefits with a primary focus on benchmarking. He leads the market insights program at Sequoia, which provides the latest analytics, market trends, and benchmarking data.