Employee Benefits Trends to Watch in 2025

2025 is here, and the world of employee benefits is shifting faster than ever. For public sector employers in Arizona—school districts, municipalities, and other public entities—this means rethinking strategies to attract and retain talent in a competitive market. Read on to learn about the key benefits trends shaping the year and see what this means for Arizona’s public sector employers. 

Mental Health and Well-Being Take Center Stage

Mental health continues to dominate workplace conversations. Employees aren’t just looking for a traditional Employee Assistance Program (EAP)—they want real, accessible support. In 2025, expect to see organizations include:

• Virtual therapy platforms like AbleTo or Talkspace, offer accessible, on-demand counseling.
• Wellness programs offer workshops on mindfulness, emotional resilience, and managing workplace stress.
• Wellness apps offer employees the ability to engage with others in their health journey and earn incentives for health-focused activities, behaviors, and fitness challenges.
• Paid mental health days are integrated into PTO policies, giving employees time to recharge.

Why This Matters: Employers who prioritize mental health often see a more engaged workforce. Wellness programs like VSMG’s WellStyles are great examples of how to support employee well-being while addressing organizational goals. 

Benefit Customization To Meet Unique Employee Needs

Employees come from different life stages, family structures, and financial situations. As such, they expect and value the ability to customize their benefits package to their unique needs and circumstances. Forward-thinking public employers that understand a one-size-fits-all approach to benefits isn’t the ideal for their employees are offering:

• Tiered health insurance options, allowing employees to balance coverage and cost.
• Supplemental “Cafeteria-style” benefits that can support out-of-pocket costs related to a future accident, disability, hospitalization, critical illness, or cancer diagnosis
• Wellness perks, like gym memberships or subscriptions to fitness apps like Peloton.
• Alternative benefits such as pet insurance, identity theft, legal assistance, travel assistance, and more. 

Your Opportunity: Public sector employers in Arizona can stand out by designing benefits plans that reflect the diverse needs of their workforce. Learn more about VSMG’s consulting services to start building tailored packages.

Retirement Planning That Makes a Difference

With more employees nearing retirement age, robust retirement support is no longer optional. Public sector employers are addressing this by:

• Offering programs like those provided by NerdWallet that include retirement planning education, financial counseling, and tools to help employees manage their finances effectively
• Adopting automatic enrollment for retirement plans, setting initial contribution rates between 3% and 10% of an employee’s salary, to encourage higher participation rates and foster consistent saving habits among employees.
• Treating student loan payments as retirement plan contributions for the purpose of providing an employer match. This 2024 initiative allows employees managing student debt to simultaneously build their retirement savings.
• Providing easy access to public pension advisors, ensuring employees maximize their retirement benefits.

Takeaway for Arizona Public Employers: Strong retirement planning and savings support reduces financial stress and improves employee retention, especially in the public sector.

Technology to Enhance Benefits Knowledge and Utilization

Benefits administration can be overwhelming, but technology is making it easier for everyone. In 2025, expect more employers to adopt:

• AI to streamline benefits administration and provide personalized support in navigating benefit options, making information more accessible and reducing administrative burdens
• Advanced performance analytics that enables employers and brokers to measure and optimize the effectiveness of benefits, and tailor benefits strategies to meet employee needs more effectively
• AI-powered platforms such as ALEX and Alight Solutions educate employees on their benefit options and recommend personalized coverages to fit their unique needs and budgets.
• Mobile apps for instant access to benefit details, summaries, coverages, claims, and more.
• Virtual benefits fairs that make open enrollment more engaging and informative.

Takeaway for Arizona Public Employers: Advancements in benefits technology can not only enhance your benefits package but also optimize its efficacy, utilization, and participation.

Holistic Wellness Programs to Boost Engagement

In 2025, wellness programs are no longer just about physical health—they’re about the whole person. The best programs focus on:

• Virtual or on-site fitness classes are available through platforms such as One Pass.
• Financial wellness tools to help employees budget and manage debt, like Mint.
• Social platforms like VirginPulse foster connection and camaraderie among teams.

Why It Matters: Holistic wellness programs not only improve employee satisfaction but also help lower healthcare costs for employers. 

Pro Tip: Holistic wellness programs improve morale and help reduce healthcare costs. VSMG’s WellStyles™ program provides Arizona employers with tailored wellness solutions to meet these goals.

Why Staying Ahead of Trends Matters

Employee benefits have become a crucial part of what attracts and retains top talent. For Arizona public sector employers, adapting to these 2025 trends isn’t just about keeping up—it’s about leading the way. By offering benefits that focus on mental health, personalization, and holistic wellness, you’ll create a workplace where employees not only want to work – but more importantly, want to stay.

About VSMG 

Built by and for Arizona public sector employers, VSMG is a leading employee benefits consultant dedicated exclusively to serving Arizona school districts, municipalities, and other public entities for over 20 years. With offices in Phoenix and Tucson, we deliver expert advice, forward-thinking strategies, and cost-effective solutions that help our clients attract and retain top talent.

Ready to tailor your benefits package to support the ongoing well-being of your employees? Reach out to us today!