Copyright © HT Digital Streams Limited All rights reserved. Companies are phasing out benefits like telemedicine, which were indispensable during the pandemic but no longer essential, as they seek to cut unnecessary costs. (iStockphoto) Summary The move comes as employee costs escalate and health insurance premiums balloon, prompting companies to redesign their benefits programs to fit the needs of a multigenerational workforce and ensure financial discipline. Indian companies are rethinking the benefits they offer their staff, such as health care, retirement plans, wellness benefits and leave, as they try to control budgets while retaining top talent without compromising on employee experience. The move comes as employee costs escalate and health insurance premiums balloon, prompting companies to redesign their benefits programs to align with the needs of a multigenerational workforce and ensure financial discipline. “Rising costs—driven by medical inflation at 11% more than general inflation—force organizations to optimize benefits strategies without compromising employee experience. The real cost of benefits depends on utilization, which is a recalibration of what remains standard versus what becomes flexible,” said Vinod VK, head of health and benefits, India, WTW, a global consulting and solutions company. Companies are phasing out benefits like telemedicine, which were indispensable during the pandemic but no longer essential, as they seek to cut unnecessary costs, he said. WTW’s Benefits Trends Survey 2025, shared exclusively with Mint, shows that 55% of the more than 500 employers studied in India highlighted the pressure of rising benefit costs on budgets as a “key business issue”. Some 38% said that financial constraints limit their ability to deliver wellness programs, while 34% admitted that a tighter budget affects the health benefits offered to employees. To be sure, technology is reshaping employee profiles, prompting companies to look at their benefits programs through a new lens. According to a C-suite executive at one of the top three private banks in India, employee costs along with the advent of artificial intelligence (AI) have pushed them to rethink what benefits will work for the firm. “AI has forced the banks to re-check whether certain profiles are necessary. In that case, the kind of benefits offered also change,” said this CEO, who did not want to be named. The new labor codes also instruct firms to ensure annual health examinations for employees over 40. “That benefit will increase our expenses and therefore one has to look at which benefits stay and which go away,” added the CEO. In its 2025–26 Benefits Scorecard, Mumbai-based Prudent Insurance Brokers said that while more firms are switching to flexible benefits to offer employees greater choice, scaling these programs remains difficult due to year-round engagement needs, inconsistent participation and rapidly changing workforce expectations. “It’s more than just flexibility; it’s about building a benefits ecosystem that is intuitive, inclusive and deeply personal,” it said, adding that “forward-thinking companies” are adopting choice-based and personalized benefits programs, including both insurance and non-insurance options, often powered by wallet-based solutions. These may include wellness plans that cover physical fitness, elder care, pet care, pregnancy care, financial wellness, health screening plans, health coach, women’s specific wellness and disease management. In November, the government consolidated the country’s employment statutes into four codes guaranteeing minimum wages, early gratuity, social security and occupational safety, likely to increase costs for employers. Pradeep Chauhan, founder and chief economic officer of Finfinity, a fintech focused on employee financial well-being, said legacy firms are looking at ways to introduce benefits that deepen employees’ connection to their workplace. For example, refining medical plans to focus on high-impact care, directing wellness efforts to common medical needs, giving employees more choices within the same budget, or financial guidance tools that help employees manage their money better, without the companies incurring any extra costs. “Today’s flexible hiring market gives employers more room to explore new approaches with less risk. This transition gives companies the opportunity to redesign benefits in a way that is practical, mutually beneficial and aligned with real needs,” Chauhan told Mint. Companies are also tailoring health insurance benefits and offering them to those who need them, in a reflection of the multi-generational workforce profile. Many young employees still have their parents working and may not need separate or additional health care insurance. A Coin analysis shows that employee costs for the Nifty 500 firms were 15% of net sales in the September quarter, up from 15.4% in the same period last year. Employee costs fell to 14.4% at the end of March, before rising again over the next three months. Anand Rathi Insurance Brokers highlighted that companies are “scuttling benefits that have become expensive or ineffective”, mainly in group health insurance. This comes on the back of rising medical inflation and high claim ratios forcing the introduction of co-payments, room rent limits, sickness-wise sub-limits and employee-funded co-payments. A co-payment is a fixed amount that the beneficiary must incur, with the insurer paying the rest. Outpatient and wellness benefits are being redesigned as they often lead to excessive, unnecessary use. As a result, many employers are moving to models with restrictions or compensation to combat abuse. Parental covers, maternity limits and dependent cover are also being restructured as they are the key contributors to premium escalation. “The shift to an employer’s market certainly gives organizations more confidence to tighten or redesign their benefits, but the real pressure comes from rising healthcare costs and unsustainable premium increases,” says Milind Tayde, head employee benefits, Anand Rathi Insurance Brokers. London-based Howden Insurance Brokers said in a November 19 report titled ‘The Changing Face of Employee Health’ that globally, 93% of businesses expect medical costs to rise, even as health and wellness emerge as a top priority for employees. As a result, more than two-thirds or 67% of businesses are investing in preventive health care to cope with rising medical inflation. Around 61% of employees are more likely to stay with an employer that offers a good healthcare package, and 47% see this as an important factor in looking for a new role, the report said, adding that while “this highlights the need for businesses to address their healthcare offering, it is challenging to navigate in a high-cost environment”. Get all the industry news, banking news and updates on Live Mint. Download the Mint News app to get daily market updates. more topics #employment Read next story
