As another benefits renewal season gets underway, many employers are facing a perennial question: what does it really mean to offer a competitive employee benefits package in the modern era?
The old mainstays like health insurance, a retirement account, and maybe some paid time off are likely no longer enough. “Traditional benefits like health insurance and 401(k) matching are now considered baseline expectations rather than differentiators,” David Garcia, co-founder and CEO of employee screening service ScoutLogic, told HR Daily Advisor earlier this year. “Companies that truly want to stand out need to think creatively about what modern employees actually value in their lives both inside and outside of work.”
But what does that mean?
In short, employees today are looking for flexibility, personalization, and a sense that their employer understands their total wellness in and out of the workplace.
“There’s now a greater emphasis on building comprehensive benefit strategies to improve overall employee well-being,” says Rachel Fox, VP of Sales & Partnerships at Sunny Day Fund, which works with employers to offer emergency savings accounts.
A modern employee benefits package in 2026 goes beyond health insurance and retirement plans. Employers are prioritizing mental health support, financial wellness, telehealth access, and flexibility to meet evolving employee expectations. For small and mid-sized businesses, partnering with a PEO can help balance rising benefits costs with competitive offerings that attract and retain talent.
Few trends illustrate this evolution better than telehealth. What began as a pandemic-era convenience has become an increasingly expected part of the benefits strategy. Although telehealth utilization is lower today than at the height of the pandemic, it has stabilized at a utilization rate at least 10x to 20x higher than before the pandemic. And it’s continuing to rise. For example, telehealth usage rose 2.3% in just the first half of 2024.
More than two-thirds (68%) of telehealth claims during that period were tied to mental health. That by itself is notable. Mental wellness offerings now feature more regularly in employee benefits packages. 76% of employers now offer or plan to offer digital behavioral health resources, 51% provide or plan to provide live resources, and 39% train or plan to train managers to recognize mental health concerns, according to Mercer’s 2026 benefit strategies report. Among the specific services offered: in-person counseling at work sites (35%), coaching via text (34%), and therapy via text (31%). "
Similarly, financial health has become another frontier of the modern employee benefits package. “When financial wellness is not proactively addressed, employees’ financial issues can translate into organizational productivity problems and contribute to stress, burnout, and turnover,” says Sandy Torchia, U.S. vice chair of talent and culture at advisory firm KPMG.
Certainly, the connection between money, stress, and productivity is well documented. Aon’s 2025 Employee Sentiment Study found that 88% of employees report regular financial anxiety, with financially stressed employees losing 8.1 hours of productivity per week. Yet only 11% of workers receive financial education from their employer, and more than half (53%) say they need more help saving for retirement or long-term needs.
That gap presents an opportunity for enterprising employers. Financial benefits have become a way for employers to stand out by offering benefits in an area where few others do. For example, only 4% of respondents to a Society for Human Resource Management (SHRM) survey said their employer matches 401(k) or 403(b) contributions based on student loan repayment. For employers that can afford student loan repayment benefits, that become an easy way to differentiate.
“The link between financial stress, mental health, and healthcare costs is undeniable,” Fox told HR Dive. “Strategically addressing those three, interconnected wellness pillars in the benefit stack is key to addressing the needs of a diverse workforce.”
Beyond dollars and doctors, employees are also evaluating how their benefits strategy supports their lives outside of work. Research from Robert Half found that family-focused benefits like IVF coverage, adoption assistance, and eldercare remain “increasingly valued but still under-offered.” Meanwhile, 88% of companies now offer hybrid work arrangements to at least some employees, but only 25% make them available to all employees.
Once again, that’s a gap that represents a big opportunity. “Flexibility remains a top priority for job seekers,” writes Katie Merritt, senior research and data manager at Robert Half, “and a key retention tool for employers.” In fact, Merritt suggests that not making flex options universally available in some form can erode trust and backfire by leading to increased turnover.
At the same time, employers (especially small and midsize firms) must be mindful of the sheer cost during benefits renewal. Benefits costs are climbing even as employee expectations are expanding. For example, industry analysts are projecting that the total cost of health benefits will rise as much as 9% on average in 2026, the biggest jump in 15 years.
“We had a couple of years where the health care cost trend wasn’t as high, and now it’s shooting up again,” says Kimberly Landry, associate research director at LIMRA, a trade association in the financial services sector. “It’s clearly a huge challenge for employers and employees.”
Still, employers can’t simply cut their employee benefits package to contain costs; it’s too important to attract and retain workers. Nearly three in four employees say they’d stay in a role if their employee benefits package were better tailored to their personal needs. That puts HR leaders in a balancing act: controlling expenses while using benefits as a core retention tool.
So, what does all this mean for today’s SMB? For small and mid-sized businesses, the challenge is often less about intent than execution. Designing an innovative employee benefits package that balances affordability and impact requires scale, expertise, and vendor access that smaller employers rarely have on their own. It’s the logistics of assembling such a benefits package that challenges most smaller employers.
The best option here is to get help, especially from a partner like a Professional Employer Organization (PEO). A PEO can help businesses pool their employees with others to gain access to Fortune 500-level benefits, negotiate better healthcare rates, and design benefits strategies that are both cost-effective and cutting-edge.
During benefits renewal season, that partnership becomes particularly valuable. A PEO can help employers:
Heading into 2026, one theme is clear: employees want more than just perks. Instead, they’re actively looking for meaningful support that helps them thrive. Whether that means on-demand therapy, student loan matching, or flex-work options, the modern employee benefits package is deeply personal.
For employers, those who treat benefits renewal as a chance to innovate, not just renew, will be the ones best positioned to attract and keep top talent in 2026 and beyond.
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