You didn’t imagine it—the cost of health care benefits is increasing and will likely get more expensive as the year progresses.

New data from Mercer finds health care costs are expected to rise by 5.4% this year due to wage increases and higher supply costs. 

Many employers (46%) say they intend to eat the added cost because offering enhanced benefits remains their top strategy to attract and retain qualified talent. 

Just 3% of leaders at large companies say they plan to raise employee cost-sharing in 2023, Fortune’s Paige McGlauflin reports in a piece detailing how employers can accommodate the cost increase without transferring it to employees. Here’s an excerpt from her:

“‘We’ve seen that over the course of the pandemic, large employers have mostly avoided shifting costs to employees by raising deductibles, co-pays, and out-of-pocket limits,’ says Beth Umland, director of employer research for health and benefits at Mercer. While that could change as employers prepare for accelerated health care costs, ‘these new results suggest that cost shifting is still going to be used more as a last resort than the go-to cost management strategy.’

Interestingly, Mercer found that employers are actually providing more affordable options to employees. Fifteen percent offer free employee coverage for at least one medical plan, and 18% use salary-based contributions. Thirty-nine percent of employers offer medical plans with no or low deductibles, and 6% make larger HSA contributions for low earners.”

Read the full story here and learn the top cost-saving strategies employers are deploying in the coming year.

Amber Burton
amber.burton@fortune.com
@amberbburton

Reporter's Notebook

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Having trouble getting employees to use their vacation time? You’re not alone. Only 48% of U.S. workers say they use all their vacation days, according to a Pew Research Center survey.

“Those who don’t take all their time off say it’s because they don’t need it, or they worry about falling behind at work or feel badly about co-workers carrying their load. A few even think vacation time hurts their chances for promotions or could cost them their job.” Bloomberg

Around the Table

A round-up of the most important HR headlines, studies, podcasts, and long-reads.

- Tech giants are obsessed with measuring revenue per employee because they became less efficient when their workforces grew. Insider

- In a potential landmark ruling, a California judge classified a Grubhub driver as an employee rather than a contractor. Gizmodo

- High-income workers are more likely to struggle with work-life balance. MarketWatch

- Most businesses are still short-staffed despite high-profile tech layoffs and a possible banking crisis. Wall Street Journal

- Fake job listings have become prevalent because of how easy it can be to list them online. Watch time: 4 mins CBS News

Watercooler

Everything you need to know from Fortune.

Failure to launch. Richard Branson’s satellite company, Virgin Orbit, will lay off 85% of its workforce—about 675 employees—after struggling to secure funding following a failed January launch. —Michelle Chapman

WFH tradeoffs. Thirty-five percent of employees whose jobs can be done remotely work entirely from home, according to a Pew Research Center study. But many who do so acknowledge it limits opportunities for networking and mentorship. —Jane Thier

Who’s on the dole? Economists are trying to determine why only 25% of eligible recipients enrolled in unemployment benefits. Many theories abound. —Alicia Adamczyk

RTO for now. Open roles at Meta no longer qualify for remote work—at least for now. —Chloe Berger