By Jennifer Schaefer, MBA, ChFC, CLU, RHU, REBC, SHRM-SCP
Founder & CEO, JS Benefits Group | Forbes Business Council Contributor | Co-Host, Executive Leaders Radio
For most HR teams, benefits season looks the same every year. A few weeks of frantic comparison shopping, a renewal deadline, and then twelve months of silence until the cycle starts again. That “set it and forget it” mindset feels efficient, but it’s quietly draining money from your organization through disengaged employees, missed cost-saving opportunities, and a benefits package that falls further out of step with what your workforce actually needs. Treating benefits as a once-a-year checkbox rather than an ongoing strategy is one of the most expensive mistakes a growing company can make.
The True Cost of Annual-Only Benefit Reviews
An employee benefits strategy that only gets attention once a year is, by definition, reactive rather than proactive. Between renewal periods, employee needs shift, new hires join with different priorities, and market conditions change—yet the benefits package stays frozen in place until the next open enrollment.
This gap has real consequences. According to Gallup, replacing an employee can cost up to two times their annual salary once you account for recruiting, onboarding, and lost productivity. Other research puts the cost of turnover anywhere from 16% to 213% of annual salary, depending on the role. Making matters worse, a replacement employee typically takes about two years to reach the same productivity level as the person they replaced.
Benefits and compensation are consistently named among the top preventable reasons employees leave. In fact, 78% of the reasons employees quit could have been addressed by the employer beforehand. When benefits sit untouched for a full year, small dissatisfactions compound until they become resignation letters.
Why Healthcare Benefits Strategy Falls Short with Annual-Only Approaches
Healthcare is the fastest-moving part of any benefits package, which makes it the worst candidate for a “review once and walk away” approach. A healthcare benefits strategy built around a single annual checkpoint can’t keep pace with rising costs, shifting provider networks, or new plan options entering the market.
The numbers make the urgency clear. SHRM reports that total health benefit costs per employee are projected to rise 6.5% on average in 2026, the steepest increase since 2010. Separately, another study found that overall health benefit costs are expected to climb 6.7%, pushing the average cost per employee above $18,500.
When organizations only revisit their healthcare strategy once a year, they lock themselves into pricing and plan structures that may already be outdated within a few months. Worse, they miss windows to renegotiate with carriers, explore plan design alternatives, or catch utilization trends before they balloon into major cost drivers.
The Hidden Financial Impact
The true cost of annual-only benefits management goes well beyond the premium line on a budget spreadsheet. Consider the layered impact:
- Turnover expenses: As noted above, losing even a handful of employees each year due to benefits dissatisfaction can cost the equivalent of several employees’ salaries in replacement costs alone.
- Lost productivity: Disengaged employees—often a byproduct of feeling undervalued or under-supported—cost the global economy an estimated $8.8 trillion in lost productivity, according to Gallup’s State of the Global Workplace report.
- Compliance risk: Regulatory requirements around healthcare coverage change frequently. An annual-only review process increases the odds that compliance gaps go unnoticed until they trigger penalties.
- Competitive disadvantage: While your organization waits for its next renewal cycle, competitors actively managing their benefits year-round can offer more attractive packages, making it harder for you to attract and retain top talent.
Organizations that treat benefits management as a continuous discipline rather than an annual event are better positioned to catch these costs before they escalate. In fact, SHRM’s 2024 research found that companies offering strong, well-managed benefits packages experience 50% lower voluntary turnover than those that don’t.
Moving Beyond Annual Renewals: A Continuous Approach
Shifting away from the annual renewal mindset doesn’t require an overhaul of your entire benefits program. It requires a change in cadence and mindset. Consider building these practices into your ongoing operations:
- Quarterly check-ins: Review utilization data, claims trends, and employee feedback every quarter instead of waiting for renewal season. This creates multiple opportunities each year to catch issues early.
- Real-time feedback loops: Use pulse surveys or informal check-ins to understand how employees feel about their coverage and benefits options throughout the year, not just during open enrollment.
- Adaptive plan design: Build flexibility into your benefits offering so it can accommodate voluntary benefits, executive programs, or plan adjustments without waiting twelve months for the next opportunity.
- Ongoing carrier and market analysis: Markets shift, and so do carrier pricing structures. Regularly comparing your current plans against market alternatives ensures you’re never overpaying for coverage.
- Professional guidance: Because healthcare and benefits markets are complex and constantly evolving, partnering with dedicated benefits consultants can help identify savings opportunities and coverage improvements that internal HR teams might miss due to competing priorities.
This continuous approach transforms benefits management from a reactive, once-a-year scramble into an active driver of retention, cost control, and employee satisfaction.
From Annual Checkbox to Strategic Advantage
The organizations that get the most value from their benefits programs aren’t the ones with the biggest budgets. They’re the ones that treat benefits management as an ongoing strategic function rather than a once-a-year obligation. Shifting to a continuous employee benefits strategy helps you catch cost increases before they hit your bottom line, respond to employee needs in real time, and build a benefits package that actually supports retention instead of quietly undermining it.
If your current approach to benefits still revolves around a single annual review, it may be costing you more than you realize. Explore how a data-driven benefits strategy can reduce costs and strengthen retention with support that goes beyond the renewal cycle.
About the Author
Jennifer Schaefer, MBA, ChFC, CLU, RHU, REBC, SHRM-SCP is the Founder & CEO of JS Benefits Group, an employee benefits consulting firm specializing in employee benefits strategy, healthcare cost management, benefits technology and the future of work. Jennifer is a Forbes Business Council Contributor and Co-Host of Executive Leaders Radio, where she shares insights on business leadership, workforce strategy and employee benefits.
Jennifer Schaefer | Founder & CEO, JS Benefits Group
Forbes Business Council Contributor | Co-Host, Executive Leaders Radio | The Future of Work
