The Benefits Disconnect: Why Employers and Employees Disagree in 2025

Overview:

According to the State of the Workplace 2025 report,*

• Health insurance: Employers doubling down (56% “Extremely Important”), employees may see as baseline (44%, down from 57%).
• Paid Time Off (PTO): Shared priority — 50% employers, 58% employees.
• Mental health: Both sides rising — 37% employers, 43% employees “Extremely Important.”
• Fertility & family: Rising recognition — employee “Not Important” for fertility down to 19%; parental leave up to 37% employer priority.
• Wellness & perks: Strong growth — 31% employers say wellness programs “Extremely Important”; employee dismissals of perks cut in half.
• Takeaway: Core health insurance may be expected; real differentiation comes from PTO, mental health, family benefits, and wellness.

The workplace benefits conversation is defined less by what is offered than by how it is valued. Employers and employees continue to talk past each other when it comes to benefit priorities. Health insurance benefits—long considered table stakes by workers—are escalating priorities for employers. Meanwhile, employees may increasingly see those core offerings as baseline expectations rather than differentiators. At the same time, latest categories such as mental health, fertility, and wellness are where employees are shifting their attention—and where employers are finally starting to catch up. PTO stands out as an exception where the two sides share common ground.

These different perspectives suggest an important insight: benefits are not just about coverage but about perception. For small and midsize business (SMB) owners, understanding where expectations align—and where they diverge—is critical to offering packages that attract, retain, and engage talent.

Health Insurance: Employers Double Down, Employees Shift Focus

The most striking disconnect emerges in core health benefits. Employers are reinforcing their commitment to medical, dental, and vision insurance, concentrating their ratings in the “Extremely Important” category. For example, 56% of employers rated medical insurance as “Extremely Important” in 2025, up from 43% in 2024. Similarly, 44% elevated dental insurance to “Extremely Important,” up from 39%, and 39% did the same for vision insurance, up from 31%. This shift toward the top underscores how important employers may perceive these benefits to be in recruitment and retention strategies.

Employees, however, are drifting the other way. For medical insurance, only 44% of employees now rate it “Extremely Important,” down sharply from 57% in 2024. Dental insurance saw a similar dip, with just 38% calling it “Extremely Important,” down from 49% the year prior. Vision insurance followed suit, with “Extremely Important” ratings flattening, while “Somewhat” and “Moderately Important” categories grew. These changes suggest that employees may see core health benefits less as a differentiator and more as a baseline expectation—something they assume will be there, not something that wins their loyalty.

For small businesses, this has big implications: simply offering health coverage, even robustly, may not deliver the same competitive advantage it once did. Employees may expect it; they notice only when it’s missing or subpar.

PTO: The Rare Point of Agreement

Paid and sick time emerges as one of the few areas of alignment between employers and employees. Employers pushed ratings of PTO as “Extremely Important” to 50% in 2025, up from 43% in 2024, while employees held steady at a strong 58% rating it “Extremely Important”. Employees also increased their recognition in the “Moderately” and “Somewhat Important” categories, potentially showing broad appreciation across the spectrum.

This consistency suggests PTO remains a common priority: workers may see it as vital to their wellbeing, while employers may recognize it as a visible way to demonstrate care. For small business owners, PTO policies represent low-hanging fruit. Clear, competitive PTO offerings may help bridge trust gaps, potentially with less impact on a costs compared to expanding medical coverage.

Mental Health, Wellness, and Fertility: Where Employees Lead, Employers Catch Up

If health insurance is the baseline, mental health support is becoming more desirable. Employers rated mental health as “Extremely Important” at 37% in 2025, up from 28% in 2024. Employees, however, have been ahead of the curve: 43% call it “Extremely Important” in 2025, up from 39% in 2024. Growth across “Moderately” and “Somewhat Important” categories further shows broadening appreciation. Here, employers are narrowing the gap, signaling that they may now recognize mental health as a mainstream workforce need, not a niche benefit.

Wellness programs and perks show a similar trajectory. Employers raised “Extremely Important” ratings for wellness programs to 31% in 2025, up from 22% in 2024, and for wellness activity perks to 31%, up from 24%. Employees, meanwhile, also boosted their interest—25% rated wellness programs “Extremely Important,” up from 20%, while “Not at all Important” responses declined for wellness perks and other lifestyle benefits. The steady rise suggests wellness may no longer be a nice-to-have but part of a broader expectation for workplace support.

Fertility coverage reveals a particularly striking change. Employers elevated their view, with 29% rating it “Extremely Important,” up from 25%, and employees dramatically shifted from dismissiveness to recognition. “Not at all Important” responses plummeted from 31% in 2024 to 19% in 2025, while “Extremely Important” grew from 21% to 27%. This shift highlights how conversations around family planning may be reshaping employee priorities.

For SMBs, these emerging benefit categories offer opportunities to differentiate. Employees pay close attention to mental health and wellness offerings. Even modest investments in these areas can deliver outsized returns in engagement and retention.

Life, Parental Leave, and Childcare: Growing but Uneven Priorities

Beyond health and wellness, employers are also elevating their prioritization of life insurance and family-related benefits. 40% of employers now rate life insurance as “Extremely Important,” up from 31% in 2024, while employees are softening slightly at the top but expanding in “Moderately Important” (35% in 2025 vs. 29% in 2024). The misalignment seems to be one of intensity rather than direction: employers are advancing, while employees show consistent but less fervent.

Parental leave shows stronger alignment. Employers grew “Extremely Important” ratings from 32% in 2024 to 37% in 2025, while employees reduced their outright dismissal of it (down to 11% “Not at all Important”) and expanded recognition across “Moderately” and “Somewhat Important.” Similarly, childcare assistance is on the rise for both groups, with declines in “Not at all Important” categories and increases across positive tiers.

These areas demonstrate a subtle but critical point: employers are beginning to embrace family-centric benefits as workforce necessities, while employees are rewarding those investments with rising appreciation. For small businesses competing for talent, these benefits may prove pivotal.

Perks and Lifestyle: From Discounts to Pet Insurance

The benefits conversation is also expanding into lifestyle categories. Employee discounts, education reimbursement, and even pet insurance are gaining traction. Employers rated employee discounts as “Extremely Important” at 32% in 2025, up from 27%, while employees boosted their “Moderately Important” ratings from 29% to 36%. Education reimbursement is another area of shared growth, with both employers and employees raising its value in 2025.

Perhaps most surprisingly, pet insurance is finding its footing. Employers rating it “Extremely Important” rose to 24%, up from 17%, while employees reduced dismissiveness (20% “Not at all Important,” down from 33%) and pushed growth into “Moderately” and “Extremely Important” categories. These shifts suggest that diverse workforces may increasingly look for benefit options that reflect not only conventional but also evolving lifestyles.

For small businesses, lifestyle perks are a double-edged sword. They rarely outweigh core benefits in importance, but they can reinforce culture and differentiate the workplace experience. Flexible, low-cost perks—discount programs, stipends, or pet-related support—may deliver disproportionate goodwill.

What This Means for SMB Owners

For small and midsize businesses, the 2025 benefits disconnect offers three insights:

1. Core Health Benefits Is Baseline, Not Differentiator

Employees may expect medical, dental, and vision insurance. Employers may see these as escalating priorities, but employees treat them like utilities: essential but unremarkable. Small businesses should aim to offer competitive coverage but health insurance alone may not be enough to drive retention.

2. Differentiation Lies in Emerging Benefits

Mental health, wellness, fertility, and family-related support are where employees are paying close attention. Employers who invest here—potentially at lower relative cost than health insurance—may win engagement. Even incremental steps, such as offering mental wellness stipends, flexible parental leave, or subsidized wellness programs, may build trust and loyalty.

3. PTO Remains a Trusted Bridge

Time off continues to unite both sides. For small businesses, competitive time plans may provide an effective way to demonstrate value. Clear communication and flexibility in time off may reinforce culture and help reduce burnout.

From Coverage to Culture

The 2025 benefits landscape highlights a key theme: employees and employers may not align in what they prioritize  most. Employers are doubling down on traditional health benefits, while employees increasingly treat them as baseline expectations. Instead, employees look to mental health, wellness, fertility, and family benefits as signals that an employer understands their needs in an evolving workplace. PTO stands out as a shared priority, even as differences emerge in other areas.

For small business owners and HR teams, the path forward is about balance. Health insurance coverage must remain strong, but true differentiation will come from thoughtfully expanding into emerging benefit areas. By listening to employees, prioritizing flexibility, and investing in benefits that reflect real-world needs, SMBs may be able to bridge the disconnect—and turn benefits from a compliance checkbox into a culture-defining advantage.

* This article draws from the TriNet State of the Workplace 2025 report and reflects TriNet’s perspective based on survey data from over 1,000 participants. The findings offer insights into employer and employee views within the U.S. small business community, highlighting trends in engagement, wellbeing, AI use, and benefits understanding. Data may not represent all industries or regions, and while accuracy is a priority, applicability may vary by organization.  

 This content is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. It may contain links to third-party sites or information for reference only. Inclusion does not imply TriNet’s endorsement of or responsibility for third-party content.