Each year, new trends emerge that give businesses unique insights into benefits and what trends have been most prevalent. Using benchmarking analysis to look at past trends and the current landscape can help organizations plan a strategic course towards a more successful business.
How Benchmarking Analysis Can Help?
Trends in business benefits benchmarking span many areas, such as medical premiums and contributions, voluntary benefits trends, health plans offered and growth. These findings may help business owners make better decisions about their benefits and can help drive employee engagement.
Health Plan Availability
According to a 2021 SMB Benefits and Employee Insights Report by Ease, the number of health plans offered per employee has decreased approximately 3 percent. The gradual decrease may indicate the need to contain costs. By reducing the number of health plans available to employees, businesses can offer more affordable health care plans to employees, such as high deductible health plans (HDHPs). The overall cost of group health plans is highly dependent on company size. Research shows that businesses with more employees are offered more health plan options than those with fewer employees. Bigger corporations may also have the benefit of risk pooling which makes group insurance a cost-effective option.
Medical Premium Increases
A rise in medical premiums has been widespread since the global health crisis of 2020. Both individuals and families have encountered increased medical premiums, a trend that continues to be a problem in the insurance industry. Research found an increase in medical premiums of almost 6 percent for individuals and 3.74 percent for families. However, the overall rate of inflation in 2020 was minimal. Healthcare prices increased about 1.8 percent in 2020, and hospital services increased about 3 percent. The cost for physician services also experienced a slight increase of just 1.7 percent.
Even through the pandemic, many employers and employees continued to make contributions to medical premiums. The percent that employers cover only made a minor decline, falling from 74.24 percent in 2019 to 73.97 percent in 2020. Businesses with between 101 and 250 active employees saw the highest contribution, while companies with between 1 and 10 active employees saw the smallest contribution. Employer contributions to family medical premiums have remained much unchanged over the last year. Although contributions have not been rising, the overall costs of family medical premiums are on the rise.
The COVID-19 pandemic had a massive influence on the unemployment rate in the U.S. in the past year. By the end of 2019, the U.S. unemployment rate was 3.5 percent, the lowest it has been since 1969. In 2020, the unemployment rate had reached 6.9 percent by October. With a smaller talent pool available, many companies were scrambling to attract top employees. Offering voluntary benefits was an effective way to help breach the gaps found in many employee benefits, such as medical plans. Like trends seen in health plan offerings, the larger the business, the more voluntary benefits are generally offered to employees.
Changes in 2020 also had a significant impact on paid and unpaid leave policies in the workplace. State legislative changes have directly affected how businesses administer leave plans. Employer-paid leave policies are now being offset by state paid family leave benefits when applicable. Many employees are also turning to leave administration vendors to acquire time off without fear of losing their job. Businesses now have the responsibility to review their internal leave processes to ensure that they are up-to-date and meet the employees’ expectations.
Pertinent Benchmark Averages
Below are some of the benchmarking analysis highlighted stats from the pooled benefits data of over 75,000 companies across different industries in 2020:
- Medical premiums rose about 6% on average
- Large groups (over 101 employees) were the most affected, with 7.67% increase for employees and 8.83% for families
- Average Premium (101-250 Employees):
- Average Premium (1-100 Employees):
- Employees prefer PPOs, selecting PPO plans 55% of the time
- Employer Monthly Contribution Averages:
- Medical (101-250 Employees) per:
- Medical (1-100 Employees) per:
- Dental: $27.28
- Vision: $4.30
- Life: $7.74
- Short Term Disability: $10.21
- Long Term Disability: $14.12
- Average Number of Medical Plans Offered: 2.69
- Average Voluntary Benefits Plans Offered: 3.59
Employee: $554; Family: $1524
Employee: $527; Family: $1380
Employee: $519, or 79.53%
Family: $1104, or 72.44%
Employee: $383, or 72.88%
Family: $809, or 58.62%
Speak With An Expert Today About Benchmarking Analysis
Businesses and their employees experienced countless changes to business benefits in 2020, mainly due to the pandemic. With the end of the pandemic nearing, benefits benchmarking analysis helps businesses understand the importance of gaining a competitive edge in a limited job market. Bulking up an employee benefits package is one of the best ways to attract new talent. Businesses can also learn a lot from reviewing other benchmarking data from 2020, including how it has affected medical insurance and small business growth as a whole. For more information about business benefits benchmarking analysis from 2020 or to speak with an insurance professional, reach out to the insurance experts at New City Insurance.