The Advisor's Edge - January 2026
Re-thinking benefits strategy in 2026
The Wellness Abandonment Tax
Did we forgo one of our most effective tools?
This time of year always feels deeply contemplative. Invariably, I carve out a few hours to complete a process of reflection before I begin to set goals and targets for the year ahead.
These aren’t resolutions. Resolutions feel like hope. This is a process of asking what worked, what didn’t work, and who do I want to become in work, community, relationships, physically, and spiritually.
While I’m largely ignorant as to whether this practice of reflection is commonplace, I assume you also do something similar - if the number of ads for planners, coaching, and other related tools that appear in my various feeds are any evidence.
More likely than not, you may still be reeling from one of the most difficult renewal seasons ever. You are likely asking yourself, “how do we prevent this from happening again next year?”
I assure you, I too am asking that question.
Most employers responded by raising deductibles, tightening formularies, looking at alternatives like unbundling and captives, and, as always, negotiating harder with carriers. These tactics matter. But they're addressing symptoms, not causes.
What gets left out of these strategies arguably might be the most effective answer. The best way to keep healthcare costs affordable is, and always has been, to use less healthcare.
And right now, companies that ignore employee wellbeing aren’t just missing an opportunity. They’re paying a hidden tax that compounds every renewal cycle.
What You’re Already Paying
When employees are stressed, burned out, and struggling with their health, it doesn’t show up as a single line item. Instead, numerous studies suggest it bleeds across your entire budget:
Presenteeism (employees present but unproductive): up to $12,000 per employee annually
Burnout: $4,000-$20,000 per employee, depending on role
Turnover: 50-200% of salary to replace each departed employee
Absenteeism: $4,080 per employee annually
For a 500-employee company with moderate burnout levels, that’s $2-6 million in annual hidden costs.
And every single one of these costs feeds directly into your healthcare trend. Burned-out employees get sick more often. They delay care until problems become expensive. They develop chronic conditions that require ongoing treatment.
The Business Case
The ROI for health and performance programs ranges from $3 to $6 for every dollar invested. Johnson & Johnson saved $250 million over six years through wellness initiatives, generating $2.71 for every dollar spent.
Companies with comprehensive wellness programs experience:
14-19% lower absenteeism rates
25% less employee turnover
One-third less voluntary turnover overall
Mental health support specifically returns $1.50 to $4.00 for every dollar invested.
Here’s what connects directly to your renewal challenge: lower utilization drives lower trend, which creates more manageable renewals. When your workforce is healthier, they need less healthcare.
What Actually Works
Effective health and performance programs are holistic, addressing physical health, mental health, financial wellbeing, and work-life integration. They’re not token gestures. They’re strategic investments in your workforce’s capacity to perform.
For self-funded employers, you have a significant advantage: data access. You can see exactly where costs are concentrated and implement targeted interventions. If musculoskeletal issues are generating claims, focus on direct-contract programs, ergonomics, and preventive care. If mental health medications drive your pharmacy spend, examine your wellbeing resources and promote activities that create community and connection.
The Choice You’re Making
You’re not choosing whether to spend money on employee wellbeing. Your employees’ health status is driving costs whether you’re investing in it proactively or not.
What you’re actually choosing is how to spend that money:
Option A: Invest $500 per employee proactively in wellness programs. Get $3-$6 back through reduced costs and higher productivity.
Option B: Pay $4,000-$12,000 per employee reactively through presenteeism, burnout, and turnover. Then face another brutal renewal next year.
The wellness abandonment tax comes due every payroll period. And it shows up again at renewal when your carrier tallies up another year of claims.
When your people feel better, they do better. They use less healthcare. Your renewals stabilize.
It’s not complicated. It’s profitable. And it’s the most sustainable strategy for the challenge you just survived.
Want to dive deeper into the data behind the wellness abandonment tax? Read the full article The Wellness Abandonment Tax.
HUB Can Help
Did you know that your partnership with HUB includes access to our Health and Performance Team? HUB’s Health and Performance team offers comprehensive strategic guidance across a broad spectrum of wellbeing areas to help organizations and their employees thrive. In addition to our strategic vertical consulting work, we provide tactical support through a variety of service verticals, such as biometric screenings, health fairs, and other wellness initiatives that engage employees and
provide actionable insights.
Please let me know is you’d like to discuss this topic further.
News You Can Use
Partnership Article: Why the traditional fully insured model wasn’t built for the modern healthcare environment: Read it here.
HUB recently released our Outlook 2026
HUB 2026 Outlook highlights insights and expertise across employee benefits, specialty industries, retirement, private client and personal insurance. This year’s theme, "From Reactive to Ready: How Risk Management Maturity Leads to Resilience and Profitability," reflects the growing need for smarter, enterprise-wide risk management. As risks become more complex, costly, and interconnected, organizations that invest in risk maturity are better positioned to protect profitability, strengthen resilience, and support workforce vitality. Check out the full report here: HUB Outlook 2026.
The December Issue of HUB’s In Compliance Newsletter was released on December 22, and includes the following topics:
Newly released federal guidance shines some helpful light on the handling of HSAs with telehealth and DPC arrangements.
Another dismissal handed down on the initial and largest case alleging breach of fiduciary duty for a health and welfare plan.
A review of the loss of government health plan subsidies and when that triggers a qualifying event.
In the final installment in a series about DCAPs, we review the most common reasons, and resolutions, for when a plan fails discrimination testing.
Our annual article summarizing to-do items for benefit plans in 2026.
Worth Sharing
As a veteran of the U.S. Army Reserves, I was pleased to learn that HUB has received recognition as a Military Times Best for Vets Employer. We join USAA, Zurich North America, Travelers, The Cigna Group, Liberty Mutual, Blue Cross Blue Shield of South Carolina, Progressive, and Armed Forces Mutual as one of nine insurance industry companies to make this list. The 2025 ranking is now LIVE and available at: bestforvets.militarytimes.com/employers.
Some of you know that I’m a big fan Peter Atia’s book, Outlive: The Science and Art of Longevity. As we think more about the “wellness abandonment tax” and set our own health and wellbeing goals, I want to share a resource that may be worth examining. My wife and I will be joining Fuction in 2026.
While it’s too early to provide any sort of endorsement or personal testimony, I’ve had a few clients ask how they could incorporate ideas from Outlive into their own lives. This seems to be a promising possibility.
Function facilitates access to over 160 health screening tests, and enables members to monitor early indicators of 1000s of diseases and health conditions.
