Employee Benefits Trends You Need to Know in 2026
Are You Prepared for These Employee Benefits Trends?
As we step into 2026, California employers are facing a seismic shift in the employee benefits landscape. Between rising healthcare costs, evolving workforce expectations, and a new wave of compliance mandates, HR leaders and business owners must act strategically to stay competitive and compliant.
This year, several key California laws take effect, introducing new compliance responsibilities and financial considerations for employers of all sizes. Add in rapidly emerging trends in benefits personalization, mental health, and work-life integration, and it is clear: 2026 is not the year to take a "wait and see" approach.
At
AEIS, we believe knowledge is the first step to preparation. Here is what you need to know and what to do next.
Top Employee Benefits Trends Expected in 2026
Employers who want to attract and retain top talent must be proactive. In 2026, we anticipate the following trends will dominate the conversation:
- Cost containment through alternative funding models
- Personalized benefit plan designs using AI and data analytics
- Heightened compliance enforcement, especially in California
- Stronger demand for holistic wellness (mental, financial, and physical)
- Increased emphasis on flexible work benefits
These are not future projections; they are already reshaping how employers think about total compensation. Let us break down the most urgent regulatory shifts and how they affect your bottom line.
Federal Regulatory Shifts: The Impact of the One Big Beautiful Bill Act (OBBBA)
The One Big Beautiful Bill Act (OBBBA) is expected to influence benefits strategies in 2026. IOBBBA will:
- Standardize reporting requirements for employer-sponsored health plans
- Create new cost transparency mandates for TPAs and providers
- Require mental health parity audits for employers with 50+ employees
For California employers, this could mean enhanced scrutiny on mental health offerings and increased
administrative work. Preparing now can prevent noncompliance penalties later.
Key California Compliance Mandates Effective in 2026
IVF Mandate (SB 729)
Effective January 1, 2026, SB 729 requires California health plans to cover in vitro fertilization (IVF) procedures, classifying infertility as a medical condition rather than a lifestyle choice. Employers offering fully insured plans must:
- Ensure IVF coverage is included in all eligible plans
- Prepare for potential premium increases
- Update plan documents and employee communications
Self-funded plans are not required to comply but may face pressure from employees seeking parity. This mandate can significantly impact budgets, particularly for mid-sized businesses.
The "Stay-or-Pay" Ban (AB 692)
AB 692 prohibits California employers from using clawback provisions that penalize employees for leaving before a certain tenure, effective January 1, 2026. This includes repayment of sign-on bonuses, relocation costs, or tuition reimbursement.
What this means for employers:
- Review offer letters and employment agreements
- Adjust benefit-related incentives to avoid potential legal exposure
- Reframe retention strategies around benefit quality rather than penalty
Workplace Know Your Rights Act (SB 294)
SB 294 requires employers to provide annual notices summarizing all employee rights under California and federal employment law. The first notice must be distributed by February 1, 2026.
This includes rights related to:
- Leave policies
- Pay transparency
- Harassment and discrimination protections
Noncompliance can result in fines and employee claims. Now is the time to work with a trusted partner to ensure compliance-ready documentation.
Pay Transparency 2.0 (SB 642)
Building on existing legislation, SB 642 expands pay transparency rules starting July 1, 2026. Employers must:
- Provide pay range data in all job postings
- Report annual compensation bands by job title and location
- Document internal promotion decisions
This law aims to close gender and racial pay gaps but also introduces new compliance layers for HR teams.
Managing Rising Costs for Mid-Market Firms with Strategic Funding
In 2026, California mid-sized firms (50 to 250 employees) face a familiar challenge: rising premiums. But with smart funding strategies, these increases do not have to derail your benefits budget.
Consider these approaches:
- Health Reimbursement Arrangements: Combine predictable, fixed monthly costs with claims-based savings
- Level Funded plans: Gain more control over plan design and get refunds or credits for plan premiums in years with ideal claims
- Professional Employment Organizations (PEO’s): Enterprise level, large-group-like benefits with additional HR and administrative resources
AEIS works with employers to model cost scenarios and implement funding structures that balance risk with predictability.
AI-Driven Insights Moving Beyond "One-Size-Fits-All"
Today’s small group employers (under 100 employees in CA) get little to no data about employee claims, making it difficult for employers to tailor their benefits programs to the need of their employees. AI-powered tools now enable:
- Predictive analytics for plan utilization based on actual claims data
- Insights into real cost trends of Rx drugs and chronic conditions within the member population
- Benchmarking of unique member-level data to into aggregated demographic and morbidity scores
Implementing these tools gives employers a massive leg up in negotiating costs with insurance carriers and empowers employers to take a proactive approach to health plan design in a way that simply wasn’t possible in the past.
Holistic Wellness Revolution: Mental, Physical, and Financial
The definition of wellness has evolved. Employees now evaluate benefits through a holistic lens that includes:
- Mental health access (therapy, coaching, EAPs)
- Physical wellness (fitness stipends, chronic disease support)
- Financial wellbeing (student loan assistance, HSAs, retirement education)
In 2026, employers who ignore holistic wellness will likely see higher turnover and lower engagement.
Flexibility & The Modern Work-Life Integration
Flexibility is no longer a perk; it is an expectation. Employers are expanding beyond remote work to offer:
- Customizable hours
- Compressed workweeks
- Unlimited or flexible PTO
- Caregiver and parental support
These benefits directly impact talent attraction and retention. Building flexibility into your benefits strategy is essential in 2026.
Preparing Your 2026 Benefits Strategy
With deadlines approaching and employee expectations rising, your 2026 strategy must align compliance, cost control, and culture. Here is how to get started:
- Conduct a compliance review focused on SB 729, AB 692, SB 294, and SB 642
- Analyze current plan performance and funding structure
- Engage employees to understand their evolving needs
- Benchmark against competitors to stay ahead in recruitment
- Partner with a benefits expert who understands California regulations and mid-market challenges
At AEIS, we specialize in translating complex mandates into clear strategies that protect your business and support your people. Let us
build a plan that turns change into opportunity.
