After several years of absorbing rising healthcare costs in the wake of COVID-19, many organizations are reaching a tipping point. As benefit expenses continue to grow, HR teams are now faced with a difficult challenge: how to shift a portion of those costs back to employees without damaging trust or morale.
Employees may be surprised or even frustrated by premium increases, especially if rates have held steady for the past few years. But behind the scenes, employers have often been shielding their teams from inflation and industry-wide cost hikes. Now, with continued economic pressure, many companies have no choice but to begin sharing more of the financial responsibility.
So how do you communicate this without backlash? The answer lies in context, transparency, and proactive communication. Developing a strong Total Rewards Communication strategy plays a key role in ensuring that employee frustrations are mitigated.
Instead of simply announcing premium increases, use Total Rewards Communication to reframe the story. Help employees see the full value of what they’ve received over time, not just the new cost.
Consider these messaging points:
● "For the last few years, the company absorbed multiple rounds of cost increases to minimize employee impact."
● "Health insurance costs have risen significantly year over year due to inflation, increased claims, and medical advancements."
● "Even with the new increase, your contribution as an employee may still be lower than what peers at similar organizations are paying."
● "You’re still receiving a robust, competitive benefits package that includes both direct and indirect value, including wellness programs, PTO, and retirement matching."
When employees only see a premium increase without this context, frustration is understandable. But when they understand that their employer has been subsidizing that cost for years, the narrative shifts from blame to appreciation.
A well-designed Total Rewards Statement can show employees just how much their company contributes toward their overall compensation, including health insurance, paid time off, employer retirement contributions, and more.
To make your communication more effective:
● Highlight employer-paid portions of benefits for the past few years.
● Show a side-by-side breakdown comparing this year’s contribution to prior years.
● Emphasize that while premiums may be going up, the company’s share remains substantial.
This level of personalization helps employees see the full picture, and builds trust even when delivering less-than-ideal news.
Cost-sharing conversations are never easy, but the way you communicate matters. Be empathetic in tone and transparent in your reasoning. Give employees time to process the change, ask questions, and explore their options.
Ways to deliver this message effectively:
● Use personalized Total Rewards Statements 4–6 weeks before Open Enrollment to build context.
● Offer Q&A sessions, manager toolkits, and explainer videos that walk employees through the “why” behind the increases.
● Frame the change within your overall benefits strategy and total compensation philosophy.
At a time when employee loyalty and satisfaction are tied closely to how well companies support their people, transparency is a competitive advantage. Even difficult news can be well received when employees trust that they’re getting the full story.
With Total Rewards Communication, HR teams have a powerful tool to not only share facts but to shape understanding, turning potential resentment into recognition.
Explore how backstitch can help enhance your Total Rewards Communication Strategy.