If you’re an HR or benefits leader, the countdown to January 1, 2027, has already begun. And if you’re at a bigger company, it started last year. But what all of us benefits decision-makers have in common, whether we’re at small start-ups, large enterprises, or in the government or nonprofit sectors — we all want to create the most impactful benefits strategy we can. And to do so, we must root our planning in first principles thinking and ask ourselves: What are we solving for?
We aren’t just trying to check boxes to offer coverage. And while the industry is abuzz about solving the "affordability crisis” — we can’t magically make healthcare cheaper.
What we can do is make it easier for employees to pay for it.
As The Wall Street Journal recently noted, skyrocketing health insurance premiums are forcing leaders across the C-Suite — not just CHROs, but CFOs too — to act fast to dull the financial pain. Whether you’re managing a large portfolio or a lean team, if you wait until next year to address how your people actually pay for care, you’re already behind.
The two modes of the benefits decision-maker
As you kick off your benefits review and planning process, you have to decide which mode you are in. Throughout my career I’ve seen HR leaders generally fall into one of two camps during benefits planning:
- The “rinse and repeat” year: Things are generally working. You might add a new perk employees want or negotiate better rates with your broker, but you keep your core offerings and premium coverage the same.
- The “rethink everything” year: Premium hikes have finally broken the budget. You realize you can no longer afford to pay massive amounts for healthcare, and you have to fundamentally change your benefits philosophy to survive.
If you find yourself in the rethink camp for 2027, you’re trying to balance competing goals: doing right by your employees, while containing the company's costs.
This is where cost smoothing becomes the missing piece of the puzzle. (Wait, what’s “cost smoothing?” I can’t wait to tell you! Keep reading my friends … )
The point-of-care crisis: Why employees delay care
As we look toward the next plan year, we have to face a hard truth: The math around our current benefits often isn’t working for our people.
Consider this real story from our recent Hidden Lives of Workplace Insured Americans report: A 42-year-old employee, whose parents both died in their 40s from heart attacks, began experiencing chest pain. The doctor ordered a stress test, but it required $250 upfront. Without the cash on hand, the employee skipped the test entirely.
This is the point-of-care crisis. The research shows that:
- 40% delayed medical care specifically because they couldn’t afford the out-of-pocket costs.
- 38% of those employees saw their health physically deteriorate as a result of waiting.
- Employees dealing with the consequences of delayed care lose an estimated average of 6.3 hours of productivity every week.
As healthcare costs continue to rise, many employers have turned to High-Deductible Health Plans (HDHPs) as a necessary tool for cost containment. But rather than viewing these plans as a financial compromise, I look at them through a different lens.
As I shared in a keynote at the Society for Human Resource Management Annual Conference last year, I prefer to think of HDHPs as “Low Premium Plans.”
When framed this way, they’re actually a great tool to prevent employees from being overinsured and needlessly throwing away too many of their hard-earned dollars into insurance premiums. However, even with the best intentions, moving employees to these employees can trigger HR guilt.
We know we are saving the company money and lowering monthly premiums, but it’s hard to ignore the fact that we’re simultaneously exposing our people to higher out-of-pocket costs at the point of care.
What is cost smoothing — and why it matters
So what is cost smoothing? It’s the ability for employees to pay for out-of-pocket medical costs over time, interest-free — removing the financial shock of unexpected healthcare expenses.
Cost smoothing fixes the fundamental flaw of the HDHP and alleviates HR guilt by allowing employees to pay for out-of-pocket costs over time, interest-free. In fact, cost smoothing is becoming a new standard of care following the 2025 rollout of the Medicare Prescription Payment Plan (M3P).
By allowing seniors to spread their drug costs over the calendar year, the government has acknowledged a fundamental truth: Access to care is only real if it’s affordable.
When an employee gets an unexpected medical bill, they might have the cash to pay it eventually, but they don't have it today. Furthermore, they shouldn't have to drain their tax-protected, long-term HSA savings just to cover a sudden expense. Cost smoothing acts as an intermediary device that bridges the gap between the immediate need for care and the employee's long-term savings.
- For the company: It acts as an enticement to kickstart your multi-year migration, making it far easier to transition employees to lower-premium plans.
- For the employee:It removes the fear of the big bill, ensuring that the sticker price of a visit doesn’t stop the visit from happening.
- For the CHRO: It’s a tool that allows you to responsibly lower company costs without feeling like you’re pulling the rug out from under your workforce.
And even if you are in a benefits cycle where you’re not planning to make major changes to your plan design, adding a cost smoothing benefit is a way to improve the employee experience without the headache of a full-scale benefits migration.
Why the clock is ticking for 2027 benefits planning
When we return to those first principles, the path forward becomes clear. Ultimately, the answer to “what are we solving for?” isn’t a miraculously affordable healthcare system — it’s a benefits package that keeps your business costs low, while making it fundamentally easier for your people to access and pay for healthcare – and have more peace of mind.
Achieving that balance can take time, which is why you can’t afford to wait.
By introducing cost smoothing now, you aren't just tweaking a plan — you’re realigning your benefits philosophy with the reality of your employees' lives.
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