AI is reshaping employee benefits: A guide for HR teams

Artificial intelligence is arriving in employer-sponsored benefits programs faster than most HR teams were prepared to handle and the gap between deploying a tool and earning employees' trust in it is proving costly.

As the 2026/2027 open enrollment season gets underway, Houston-based Robby White, U.S. benefits line leader at Arthur J. Gallagher & Co., says the conversation among plan sponsors has fundamentally changed. HR leaders are no longer asking whether to use AI in benefits but whether they have the governance, the data quality, and the employee trust needed to make it deliver real outcomes.

The scale of adoption makes that question urgent. Employer-sponsored subscriptions to AI tools surged from 16 percent in 2025 to 33 percent in 2026, the largest single-year increase recorded in the Society for Human Resource Management's (SHRM) 2026 Employee Benefits Survey. But deployment is running ahead of execution.

Only 20 percent of employers report actively operationalizing AI in benefits today, while 72 percent plan to do so within the next two years, according to the WTW 2026 AI Use in Health and Benefits Survey of 312 employers covering approximately 4.6 million U.S. employees.

The three problems HR is trying to solve

White says HR leaders heading into the 2026/2027 season are under pressure on three connected fronts: rising healthcare and pharmacy costs, an overloaded HR function managing routine employee queries, and a workforce that does not fully understand or use the benefits already available to it.

"The conversation has moved beyond using AI simply to automate administrative work," White said. "Employees are weighing healthcare costs, prescription drug exposure, provider access, mental health resources, voluntary benefits and financial wellbeing support, often without feeling confident that they understand the tradeoffs. AI can help translate that complexity into more personalized and actionable guidance based on factors such as life stage, family circumstances, affordability concerns and prior utilization."

For the HR function specifically, White says the value proposition is a clearer, more comprehensive view of how the full benefits portfolio is performing.

"AI can support benefits communications, workforce analytics and post-enrollment analysis while helping employers identify gaps in employee understanding and evaluate how programs interact across a fragmented vendor ecosystem," he said. "Over time, that insight can help HR leaders make more informed decisions about program design, communications and investment."

The broader objective, he adds, is to improve how existing benefits are understood and used, reduce unnecessary utilization and waste, and direct employees toward higher-value resources, without adding new programs that employees cannot navigate. That reframe matters for HR leaders who have spent years expanding benefit offerings only to find utilization rates disappointing.

What HR leaders are getting wrong on AI

White identifies two failures he sees most often among employers moving quickly into AI-enabled benefits. The first is treating AI adoption as a technology implementation rather than a change-management and trust-building effort.

"There's also an important distinction between deploying AI and earning employees' trust in it," he said. "Employers may be moving quickly to operationalize the technology, but employees will not automatically use an AI-enabled tool simply because it is available. Employees need to understand and trust how AI is being used in the benefits process."

He points to the deeply personal nature of healthcare and benefits decisions as the reason that trust must be built deliberately and in advance. Employees want to know what information is being used, who can access it, how recommendations are generated, and critically, whether AI is advising them or making decisions on their behalf. They may also vary significantly in digital comfort, health literacy, and confidence navigating complex benefits systems. HR teams that treat the technology rollout as a communications exercise - rather than a genuine shift in how employees experience their benefits - will find adoption rates fall well short of projections.

The second common failure is timing.

"Another mistake is waiting until enrollment begins to explain the technology," White said. "Employers should test systems well in advance, clearly communicate their privacy practices, prepare HR teams and vendors with consistent messaging, and give employees a straightforward explanation of what AI will and will not do."

A third risk White flags is adopting capability for its own sake.

"One common mistake is adopting a capability because it is marketed as AI without determining whether it solves a meaningful problem," he said. "A disconnected tool can add complexity to an already fragmented benefits ecosystem rather than simplifying it. Poor-quality or fragmented data can also weaken recommendations and quickly undermine employee trust.”

What responsible AI governance looks like for plan sponsors

White is specific about what responsible deployment requires from HR leaders. It starts, he says, with strong data governance, defined privacy protections, and clear accountability - before any tool goes live across the workforce.

"Employers need to understand what information an AI-enabled tool uses, how that information is collected and stored, who is authorized to access it and how recommendations are generated," White said. "Employees should also have meaningful control over their information and confidence that it is being used only for its intended purpose."

That governance framework extends to vendor oversight. Because benefits vendors may handle sensitive health, financial, and personal employee information, HR leaders need to scrutinize vendor relationships thoroughly - examining security and compliance practices, data ownership, permitted uses of analytics, breach-response responsibilities, and how data will be returned or securely destroyed when a contract ends. This is not the responsibility HR can delegate entirely to procurement or IT. The decisions sit squarely within the people function.

"From a compliance and fiduciary perspective, employers should treat AI as part of the broader benefits governance framework, not as a stand-alone technology purchase," White said. "Tools should be evaluated for data quality, accuracy, integration, employee outcomes and their ability to support appropriate oversight."

The Department of Labor's (DOL) Employee Benefits Security Administration sets the fiduciary framework under which employer-sponsored plans must evaluate vendor relationships and data stewardship - HR leaders governing AI tools in benefits are operating within those same obligations.

Making AI work for employees year-round

Beyond compliance and governance, White says the most meaningful shift for HR leaders to target is moving AI out of the annual enrollment window and into a year-round support model that connects employees to the right resource, provider, or benefit at the moment they actually need it.

"Employees should have 24/7 access to the right resources and information at the moment they need them, with a clear path to human support," White said. "That includes benefit counsellors who are available virtually or by phone when an employee wants help interpreting options, validating guidance or working through a more complex decision."

For employees, he says the tangible change is that benefits decisions can become more personalized and less overwhelming. Rather than presenting every employee with the same catalog of plans and programs, AI-enabled guidance can surface options more relevant to an individual's circumstances - explaining tradeoffs involving cost, coverage, prescription drug exposure, and provider access in plain language.

"AI can help employees compare plans, estimate costs, understand coverage differences and identify high-quality or lower-cost care alternatives," White said. "It can also connect them with resources such as mental health support, chronic-condition programs, voluntary benefits and financial wellbeing tools."

The goal, White makes clear, is not to push employees toward AI. It is to create an experience in which AI is useful, transparent, and always supported by human expertise - an experience that HR leaders design, govern, and are accountable for delivering.