What is the story about?
Indian companies are recalibrating employee benefit structures amid rising healthcare costs and changing workforce expectations, according to the Future of Benefits 2026 report released by Marsh McLennan’s Mercer Marsh Benefits (MMB) India.
The study is based on inputs from more than 700 employers and over 82,000 employees across 14 industries.
Medical trend at 9.9%
The report projects India’s medical trend rate at 9.9% for 2026, reflecting sustained cost pressures. In response, 41% of employers increased the sum insured under health insurance plans in the past 12 months.
Among companies following fixed coverage models:
Cost-control measures are also being used. Nearly 40% of organisations apply co-payment structures, while 45% use room rent restrictions and 37% apply dependent coverage controls.
Parental insurance shifts to shared funding
The structure of parental insurance is changing. Currently:
Co-sponsorship has risen from 4% three years ago to 29%, according to the report.
OPD coverage expands
Outpatient (OPD) benefits are becoming more common. 43% of employers now offer OPD coverage, and three out of four among them sponsor the benefit.
OPD components typically include:
The share of employers offering higher OPD limits has increased between 2023 and 2026. The report notes that household primary care expenses average about ₹42,800 annually for a nuclear family and suggests OPD limits in the ₹40,000–₹50,000 range for alignment.
Flexible benefits adoption rises
Flexible benefit programs have expanded, with one in three organizations currently offering flex models, and 23% planning to introduce them. Adoption has increased 55% between 2023 and 2026.
Among employees:
Common flex options include enhanced health insurance (79%), OPD insurance (54%), parental cover (53%), and life or accident top-ups (26%).
Core insurance coverage remains widespread
Group risk protection remains prevalent:
Twenty-six percent of employers reported introducing voluntary options to enhance life cover for employees or dependents.
Wellbeing programs broaden
The report states that 62% of organisations have defined health and wellness strategies, with 84% offering annual health check-ups and 73% providing employee assistance programs (EAPs).
Chronic disease management, women’s health initiatives and onsite health infrastructure are also being incorporated in some sectors.
Employee incidence rates have increased from 5.4% in 2023 to 5.8% in 2026.
Technology adoption grows
About 55% of organisations use benefits technology platforms, and one in four have begun using AI-driven tools for compensation and benefits management.
However, managing benefits data remains a challenge. Over half of respondents cited manual reporting and communication complexity as key issues, while spreadsheets continue to be widely used for analysis.
Employee feedback highlights gaps
From the employee perspective:
The report says that companies are moving toward shared-funding models, preventive care frameworks and flexible benefit structures while managing rising healthcare costs and regulatory changes.
ALSO READ | Ayushman Bharat scheme: Delhi extends PM-JAY health insurance cover to widows, people with disabilities
The study is based on inputs from more than 700 employers and over 82,000 employees across 14 industries.
Medical trend at 9.9%
The report projects India’s medical trend rate at 9.9% for 2026, reflecting sustained cost pressures. In response, 41% of employers increased the sum insured under health insurance plans in the past 12 months.
Among companies following fixed coverage models:
- 35% offer up to ₹5 lakh
- 14% offer ₹5–7 lakh
- 9% offer ₹7–10 lakh
- 8% offer above ₹10 lakh
- 34% follow graded structures
Cost-control measures are also being used. Nearly 40% of organisations apply co-payment structures, while 45% use room rent restrictions and 37% apply dependent coverage controls.
Parental insurance shifts to shared funding
The structure of parental insurance is changing. Currently:
- 41% of employers fully sponsor parental coverage
- 29% follow co-sponsored models
- 30% require employees to pay premiums
Co-sponsorship has risen from 4% three years ago to 29%, according to the report.
OPD coverage expands
Outpatient (OPD) benefits are becoming more common. 43% of employers now offer OPD coverage, and three out of four among them sponsor the benefit.
OPD components typically include:
- Dental (74%)
- Vision (71%)
- Diagnostics (72%)
- Teleconsultations (65%)
- Pharmacy expenses (60%)
The share of employers offering higher OPD limits has increased between 2023 and 2026. The report notes that household primary care expenses average about ₹42,800 annually for a nuclear family and suggests OPD limits in the ₹40,000–₹50,000 range for alignment.
Flexible benefits adoption rises
Flexible benefit programs have expanded, with one in three organizations currently offering flex models, and 23% planning to introduce them. Adoption has increased 55% between 2023 and 2026.
Among employees:
- 85% indicated willingness to spend out-of-pocket to enhance benefits
- 47% spend up to ₹15,000 annually on additional flex purchases
- 33% spend ₹15,000–₹25,000
- 20% spend above ₹25,000
Common flex options include enhanced health insurance (79%), OPD insurance (54%), parental cover (53%), and life or accident top-ups (26%).
Core insurance coverage remains widespread
Group risk protection remains prevalent:
- 92% of organisations offer Group Personal Accident insurance
- 87% offer Group Term Life insurance
Twenty-six percent of employers reported introducing voluntary options to enhance life cover for employees or dependents.
Wellbeing programs broaden
The report states that 62% of organisations have defined health and wellness strategies, with 84% offering annual health check-ups and 73% providing employee assistance programs (EAPs).
Chronic disease management, women’s health initiatives and onsite health infrastructure are also being incorporated in some sectors.
Employee incidence rates have increased from 5.4% in 2023 to 5.8% in 2026.
Technology adoption grows
About 55% of organisations use benefits technology platforms, and one in four have begun using AI-driven tools for compensation and benefits management.
However, managing benefits data remains a challenge. Over half of respondents cited manual reporting and communication complexity as key issues, while spreadsheets continue to be widely used for analysis.
Employee feedback highlights gaps
From the employee perspective:
- One in three report limited flexibility in benefit selection
- One in two feel their health insurance may not provide adequate protection
- Nearly 70% find benefits communication cluttered
The report says that companies are moving toward shared-funding models, preventive care frameworks and flexible benefit structures while managing rising healthcare costs and regulatory changes.
ALSO READ | Ayushman Bharat scheme: Delhi extends PM-JAY health insurance cover to widows, people with disabilities
