Comp & Benefits
Employers and commercial insurers are unknowingly financing the federal 340B Drug Pricing Program through lost drug rebates. When employees receive care at 340B hospitals or clinics, manufacturers provide discounts to those providers instead of paying rebates to health plans. An IQVIA study commissioned by the Diabetes Leadership Council found that in 2025, employers and commercial insurers lost $4.8 billion in rebates for diabetes patients, paying 68% of the $7.1 billion total spread revenue for commercially insured diabetes patients. The program has grown rapidly, with discounted drug purchases rising from $53.7 billion in 2022 to $100 billion in 2025, and covered entities increasing from 1,000 in 1992 to over 53,000 in 2023. Contract pharmacy arrangements have also expanded from 1,740 in 2010 to nearly 240,000 today. The article calls for greater transparency and accountability to ensure 340B funds benefit the patients it was designed to serve.
The U.S. Department of Labor finalized a rule on Thursday requiring pharmacy benefit managers (PBMs) to disclose detailed compensation information to self-insured employer clients, including rebates and spread payments. Effective July 2027, PBMs must share data during contract negotiations and every six months, with annual employer audits. The rule aims to lower drug costs by $22 billion over a decade and includes penalties for noncompliance. While employer groups applaud the transparency, PBMs oppose it, citing legal overreach and duplication with the Consolidated Appropriations Act of 2026. The DOL says the rule complements the CAA by providing upfront disclosures.
During open enrollment, workers often hesitate to ask questions about their healthcare benefits due to fear of discrimination or discomfort. HR can help by meeting employees where they are: offering small-group sessions, anonymous email or chat, and office hours. Bringing in third-party concierge or navigation services can make employees more comfortable asking questions while giving employers aggregated data on desired benefits. AI tools can also help navigate plan options. Beyond enrollment, employers should encourage year-round conversations and use data and technology to help workers find cost and quality information for shoppable services like imaging and colonoscopies.
Despite nominal wage increases, spending power declined for middle- and lower-income households in 61% of the 56 largest U.S. metropolitan statistical areas in 2024, according to an analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP). The cost of living rose 4.7% in 2024, above the 3.2% average annual increase since 2005, driven by housing, childcare (up 7.6%) and healthcare (up 2.9%). LISEP Chair Gene Ludwig noted that rising wages alone do not indicate whether people are better off; what matters is whether incomes keep pace with the cost of living. Meanwhile, employer surveys show planned salary increase budgets of 3.2% for merit and 3.5% total in 2027, and many employers are making tradeoffs or shifting healthcare costs to workers. A September Marsh report found more than 4 in 10 workers believe they are more likely to get a raise by leaving and rejoining their company than by staying, up from 18% in 2024. Employees seek protection against unanticipated costs, particularly medical expenses, and value benefits focused on financial security and stability, per Gartner.
The most-clicked story of the week examines whether employees can preserve PTO during ADA-approved leave, with attorneys advising employers to ask three key questions. Allegheny County passed the first countywide paid parental leave policy in the U.S., requiring employers with 15+ workers to provide 12 weeks of leave. The Conference Board reports that rapid AI integration may cause managerial bottlenecks and change fatigue. LiveCareer finds nearly 8 in 10 men hide mental health struggles at work. The EEOC sued CityCare Health Services and Jaco Enterprises for failing to honor conciliation agreements. Dan Rust of Infopro Learning suggests Gen Z isn't more disengaged, just less adept at hiding it.
WTW Senior Managing Director Tim Stawicki states that, facing an 11.1% projected increase in medical benefit costs for 2027, CFOs are actively engaging in cost management. He recommends HR and finance collaborate to control spending through optimizing vendors, anti-fraud measures, and alternative plan designs while meeting legal obligations such as minimum value plans with 60% actuarial value. This article also discusses strategies including plan adjustment timelines, spousal surcharges, and waiting periods.
A compensation planning survey released by professional services firm Marsh on Monday shows that U.S. employers expect a 3.2% merit increase in base salary and a 3.5% increase in total compensation (including merit, promotions, and cost-of-living adjustments) for 2027, roughly in line with actual increases over the past three years. If the forecast holds, it would mark the fourth consecutive year of modest pay raises. The survey also found that economic uncertainty dominates compensation decisions, with nearly 60% of employers saying the economy will have at least a moderate impact; meanwhile, 64% of surveyed companies have provided or plan to provide off-cycle pay adjustments, while AI's use in compensation management remains in its early stages.
A Gartner survey of over 10,000 employees in May reveals that employees increasingly seek financial protection against unexpected expenses, especially medical costs, while placing less importance on paid leave and work-life balance. Despite ongoing employer investment, most health benefits are not recognized by employees.
Kitchenware and home goods retailer Williams-Sonoma announced in its second-quarter earnings report that it will share part of the approximately $200 million in invalidated tariff refunds it received with suppliers and employees. The company plans to use $47.5 million to compensate suppliers for discounts provided during the response to IEEPA tariffs and set aside $10 million for one-time contributions to certain employees' 401(k) accounts. CEO Laura Alber stated that this move recognizes the team's outstanding performance in responding to tariffs.
The latest Korn Ferry survey shows that U.S. companies plan to increase base salary budgets by an average of 3.3% in 2027, with a median increase of 3%. Despite economic uncertainty, most companies still plan to give raises to the majority of their employees. The survey also covers topics such as incentive spending, the impact of artificial intelligence, and talent development.