Small businesses in the U.S. are facing a year like no other. Costs are up, and employee expectations keep shifting. We often hear from clients, “How can we keep our benefits package competitive, when every dollar is under review?”
Healthcare remains the single largest benefit expense, and all signs point to more to come. The latest employer health care strategy survey warns of a 5% to 9% hike in costs for 2026—pharmacy spending and specialty drugs at the heart of it, along with new medications, rising cancer rates, and demand for mental health care. Some estimates suggest increases could reach 10% for employers nationwide, forcing difficult choices about what to offer and what to cut (IFEBP survey of U.S. employers).
But higher bills don’t always mean smaller benefits. In our experience at EWS Limited, targeted strategies, clear communication, and modern tools allow small businesses to withstand rising costs—and even turn benefits into an asset for hiring and retention. In this article, we share eight tested tactics to beat back cost anxiety and help your team thrive in 2026.
Keeping benefits strong, even when budgets tighten, is possible.
The hardest part about benefit planning is the “what if?” Healthcare costs don’t rise evenly; spikes often hit in years of innovation or crisis. We always recommend using scenario modeling well before open enrollment.
We sometimes recommend sharing these scenarios with department leads, finance, and even a few trusted team members. This transparency can foster trust.
Working with a 30-person agency, we modeled what a 7.5% cost increase would mean if they left benefits unchanged. It shaved $18k from their annual profit. Instead, the firm raised individual deductibles, but then added free diabetes support and coaching, serving a small group with chronic conditions. No one lost core coverage, while high-cost risks were addressed directly.
It’s not just about what benefits cost, it’s about who needs support most.
Next, plan design is more than numbers on a page. Small businesses can stretch dollars further by questioning, “Are we paying for the right mix?”
EWS Limited has helped several clients introduce tiered networks. Staff who preferred “any doctor” at first often discovered their main providers were already in the preferred group.
Analyzing impact on take-home payYou can tweak your health plan until it’s mathematically perfect, but unless the end result is fair for every role, consequences ripple. We always bring the conversation down to take-home pay.
This approach helps uncover unwelcome surprises. If your lower-paid staff see losses far exceeding top earners, consider stipends, HSAs, or FSAs as a cushion.
Benefits feel different at every pay level—run the numbers for everyone.
Many cost-saving plans simply shift more bills to the worker. Instead, we suggest rebalancing some of those costs into prevention, especially for high-dollar conditions such as diabetes, hypertension, and cancer.
With one food manufacturer we worked with, high cholesterol and diabetes claims drove half of all annual costs, even though just a fifth of employees were affected. A voluntary support program, offered through the benefit portal, provided group coaching. After two years, renewal rates improved, and absenteeism dropped by 12%.
The push for better mental health support is reshaping benefits. Mental health needs aren’t new, but the demand for services has exploded, especially among younger staff. According to recent research, mental-health-related absenteeism tripled from 2017 to 2023, and now 1 in 10 leave requests are linked to mental health.
Strong evidence connects ongoing mental health support to higher engagement, faster return from leave, and better company culture. The trick is in the execution—and in the measurement.
In partnership with several Series B and C technology businesses, we’ve seen mental health claims rise sharply, but voluntary use of EAPs keeps stress lower. One HR director shared with us that her team’s morale rebounded after she moved from one-size-fits-all webinars to confidential teletherapy.
Offering help is good. Tracking its use—and its results—is even better.
Parents and caregivers now outnumber the “classic solo worker” in many small businesses, and flexible, family-first perks have soared to the top for Millennials and Gen Z. Notably, inclusivity matters as much as the benefit itself.
We always tell clients: what your team needs may be as varied as their lives. In our work with EWS Limited, we’ve found that benefits chosen are best when molded from direct employee feedback.
One of our most successful case studies involved a 50-person IT startup polling its team on non-traditional benefits. Flexible leave and access to fertility clinics outpolled salary bumps! This, in turn, cut voluntary turnover in half the next year.
For more on creating inclusive benefit programs, we recommend the insights at this guide to inclusive recruitment.
Flexible Spending Accounts (FSAs) are a cost-effective, tax-friendly way to add value in 2026. For 2026, FSA limits are higher than ever: Health FSA up to $3,300, and Dependent Care FSA to $7,500.
Higher FSA limits mean more take-home pay, without extra employer cost.
To use this opportunity:
Participation in FSAs often climbs when explained simply. We’ve witnessed businesses double their enrollment after just one interactive session at a team meeting.
“Voluntary” benefits—those employees pay for themselves—can add value without breaking the budget. But too many options cause paralysis. We often recommend offering between three and five voluntary benefits, allowing room for employees to choose what fits their needs.
We’ve found that straightforward digital enrollment boosts participation rates. Employees appreciate seeing cost comparisons at a glance.
When your company crosses state lines, benefits compliance becomes a bigger challenge. States such as California (paid family leave) and Colorado (mandated coverage for reproductive health) often have stricter rules than federal law. Even small employers can stumble if they assume one policy fits all.
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