Employers are spending $3 trillion annually on employee benefits that many workers fail to understand or use, resulting in massive financial waste and lost opportunities, according to a new report from Nayya.
The 2025 Benefits Value Gap Report surveyed 500 employees eligible for benefits and found that only one in 10 accurately understands the true financial value of the benefits offered. About 70% of employees keep their benefits unchanged year after year—even after significant life events like medical diagnoses or salary changes—causing them to miss out on potential savings and better coverage.
“If employees can’t use or understand their benefits, why offer them at all?” said Sina Chehrazi, founder and CEO of Nayya. “It’s not just a communication problem—it’s a systemic failure.”
Widespread misunderstanding
The report reveals a deep disconnect between what employers pay for benefits and how employees perceive their worth. On average, employers spend about $16,501 per employee annually on health benefits, yet one in four workers believes those benefits are worth just $1,000 or less. Nearly half of all respondents said they cannot confidently explain key components of their coverage, including health savings accounts (HSAs) or flexible spending accounts (FSAs).
About 40% of employees surveyed don’t view their benefits as part of their overall compensation at all, further highlighting the gap between employer investment and employee understanding.
Low utilization drives wasted investment
Voluntary benefits such as accident insurance, hospital indemnity, and legal plans have especially low utilization rates—below 30%—indicating significant financial losses for employers. Administrative inefficiencies also contribute to the problem, with employers spending between $50 and $70 per employee each month solely on managing enrollment and benefit administration.
The report highlights that pharmacy benefit costs alone are projected to rise by 9% to 11% this year. Pharmacy benefit managers, initially created to control drug prices, now inflate costs by as much as 30% through complex rebate schemes and opaque contracts, the report said.
Call for systemic change
To address these inefficiencies, Nayya recommends employers shift their approach to offering benefits, emphasizing personalized, AI-driven experiences. Such solutions could help employees better understand their options and significantly improve utilization rates.
“The system is bloated, broken, and confusing by design. But it doesn’t have to be this way,” said Sarah Liebel, president and COO of Nayya. “With intelligent guidance and personalization, benefits can finally do what they were always meant to do: help people make better decisions, reduce financial stress, and live healthier lives.”
Nayya’s platform, which leverages AI to simplify benefit choices, has seen over 1,000% user growth in the past three years and now supports more than two million employees.
“The benefits system isn’t serving employees,” Chehrazi added. “We need a radical rethink—and that starts with treating employees like consumers, not paperwork processors.”
