Hurricane season has started, extreme heat is here and wildfire smoke is already blanketing many parts of the country. These events are no longer challenges only for operations or safety teams. They’re driving real increases in healthcare claims and exposing gaps in benefits strategy—and should be an increased focus for HR and benefits leaders.

To help employers prepare, Mercer and the National Commission on Climate and Workforce Health have launched a new digital tool: the Climate Health Cost Forecaster. The tool gives employers their first clear line of sight into how climate-related health risks—such as extreme heat, poor air quality, flooding and hurricanes—could increase healthcare costs for their populations over the next decade.

For benefits leaders trying to manage plan design, anticipate cost drivers and align across regions, this kind of data is increasingly essential.

Why rising climate health costs matter for benefits teams

Employers today are already facing rising medical costs, and many are looking for new ways to contain costs without cutting coverage. What’s often overlooked is how climate-related health risks are quietly compounding the problem, especially in industries or geographies with higher exposure, and that these risks are growing.

The Forecaster, built by Mercer, offers customized, ZIP code-level projections based on a company’s workforce size, industry and percentage of employees working in climate-controlled environments. It draws on historical weather data, epidemiological research and Mercer’s proprietary claims database to estimate when and where employers may face increased spending from climate-related health conditions—ranging from heat stroke to respiratory illness to mental health impacts.

Key insights include:

• For employees not working in a climate-controlled environment, the incremental cost of climate-related health impacts is 40% higher on average than for those working in climate-controlled settings.
• Industries like construction, agriculture and utilities may face up to 2x greater exposure to incremental healthcare costs than other sectors.
• Employers with significant headcount in metro areas such as New York, Boston, Phoenix and Charlotte are projected to see 5x higher climate-related healthcare claims.

These aren’t abstract trends—they’re cost drivers that can and should be factored into budgeting, plan forecasting and location-specific health and wellbeing strategies.

From visibility to action

The Forecaster helps bridge the gap between rising environmental risks and rising claims costs. For HR and benefits leaders, it provides a data-backed way to start internal conversations—whether with finance, risk, sustainability, operations or facilities teams—about this emerging dimension of healthcare cost trends and associated mitigation strategies.

The tool also allows employers to model how climate risk could contribute to a 1% or greater increase in annual healthcare spend over the next decade, which could translate to millions in additional costs for many organizations. With this data, companies can benchmark projected exposure, compare across regions, and prioritize interventions that lower risk.

Despite the growing exposure, few companies have addressed this risk strategically. According to research from Mercer, fewer than one in five CEOs say their organizations have a clear plan to protect employees from climate-related health risks. And yet, 76% of employers say severe weather has affected their employees—whether through heat, air quality or severe weather disruptions.

New polling from the Commission and Northwind Climate illustrates how this is transforming into an HR risk: Forty-three percent of employees say an employer’s ability to respond to these threats influences whether they stay long term.

Planning ahead, building resilience

The Forecaster can also support broader strategy conversations—such as where to build new sites, how to evaluate relocations or how to adapt benefits offerings by region. It enables employers to assess which specific perils pose the greatest risk in each location. In some cities, heat is the dominant factor; in others, air quality or flooding are more likely to drive higher costs. These insights can guide smarter, more tailored decisions.

For example:

• In high-heat areas, if not already mandated, companies may consider heat-safety policies, cooling benefits or modified working hours to help employees avoid the hottest times of the day.
• In wildfire-prone areas, employers might offer respiratory education and support for flexible work arrangements.
• In flood zones, business continuity planning may include alternatives for accessing healthcare and other benefits as well as disaster relief.

Proactive investments like these can not only reduce claims and absenteeism but also improve retention and workforce engagement—especially among employees who expect visible action on environmental sustainability.

From insights to innovation: How leading employers are responding

Understanding the risks is essential, but the real opportunity lies in taking action. It is typical for companies to have some policies in place to support climate resiliency; in fact, a recent Mercer survey found that 66% of large employers (those with 500 or more employees) have one or more policies or programs in place to address climate risks for the workforce, up from 53% last year (2024). However, only a few have done a vulnerability assessment to understand which employees are most at risk.

Leading companies are already pioneering policies to safeguard employees and operations from climate disruption.

For example, Adobe introduced a Disaster and Epidemic Time Off policy, granting paid time off to workers affected by events that trigger a state of emergency. Public entities and employers are also offering subsidies for home heat pumps, a greener HVAC alternative that reduces emissions and boosts indoor air quality for employees at home by filtering air and regulating temperature.

Policy is moving quickly in some places. In Spain, a law now gives employees up to four paid “climate leave” days when extreme weather makes commuting unsafe. And in the U.S., Minnesota’s Earned Sick and Safe Time law requires employers to provide leave that covers situations like workplace closures due to weather emergencies.

Rising to the occasion

Innovative companies have the opportunity to meet this moment. Employers can expand disaster response policies—quickly approving pharmacy refills during crises, fast-tracking disability claims, offering emergency relief funds and scaling telemedicine during wildfires or floods. Many are further reducing risk exposure through on-the-ground adaptations: installing cooling stations, updating filtration systems, implementing flexible shift schedules, educating employees on the risks they face and enabling remote work during air quality alerts or heat waves.

These investments yield measurable benefits, including reduced absenteeism, lower claims, stronger talent retention and improved morale. They also demonstrate to employees that the company values their safety and wellbeing. Employers that integrate climate resilience into benefits, facilities and operational planning position themselves to outpace their peers.

New resources for a growing challenge

The Climate Health Cost Forecaster is one of several tools available through the National Commission on Climate and Workforce Health, a cross-sector initiative presented by Mercer and supported by Elevance Health and The Hartford.

In addition to the Forecaster, the Commission provides resources on extreme heat, air quality and climate-related mental health challenges—offering practical steps HR and benefits leaders can take today.

Two additional tools can help employers move from awareness to action. The new Climate and Worker Health Scorecard allows organizations to assess how well their current policies, benefits and preparedness strategies address climate-driven risks. Developed by Mercer with support from the commission, the Scorecard guides teams through a review of the policies and programs currently in place to protect workers from climate-related health risks and support them in weather emergencies, and immediately delivers a report with their score. This process can help employers identify new opportunities to safeguard worker health and wellbeing as climate risks intensify. Explore the Scorecard here.

For those just getting started, check out Managing Extreme Weather and Climate Risks at Work, a playbook designed specifically for HR and benefits leaders. The guide offers a practical, four-step plan to help companies prepare for extreme climate conditions, protect their teams and build long-term resilience.

This summer, the commission is hosting a series of virtual events focused on extreme heat and workforce health. The sessions will feature new research, expert perspectives and strategies to help HR, operations, and Environmental, Health and Safety leaders address the rising risks and costs associated with heat exposure. The next session takes place from 1-2 p.m. ET on July 30. Secure your seat here.

The bottom line for HR and benefits leaders

Climate risks aren’t theoretical; they are already affecting employee health and productivity and impacting medical claims. Nor are they a problem to deal with in the future: Heat waves, wildfires and hurricanes are expected to intensify this summer.

With healthcare costs continuing to rise, benefits professionals need every available tool to get ahead of emerging risks.

Understanding the risks is the first step. Acting on them is where resilience begins.