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A Small- To Medium-Sized Business Employee Benefits Report

June 27, 2022, by New City Insurance

diverse team in officeEmployers and employees alike acknowledge the importance of benefits, especially when it comes to retention, loyalty, and morale. According to a study published by Willis Tower Watson, 78 percent of employees reported that they were more likely to stay with an employer that offered a great employee benefits program.

Small- and medium-sized businesses account for approximately 99.9 percent of companies in the US, according to the Small Business Administration (SBA). Unfortunately, many of these companies continue to struggle with high turnover rates. Staying competitive in a saturated job market requires modern businesses to reevaluate their benefits offerings.

Small- to Medium-Sized Businesses’ Insight on Benefits

Competition for talent remains high as labor shortages continue post-COVID-19. According to a monthly jobs report published by the National Federation of Independent Businesses, 49 percent of small company owners reported that they had job openings that they could not fill. Due to budget restraints, many small- and medium-sized businesses cannot compete with benefits packages offered by larger employers.

Despite financial challenges, companies throughout the country are making immediate changes to find and keep workers. A 2022 Small Business Index revealed that 37 percent of small businesses plan to increase staff this year and 60 percent said that they have already started to implement new changes to improve employee retention. Some of these changes include increasing wages, offering more work schedule flexibility, and providing employees with additional opportunities to learn and grow in their roles.

Benefits are one of the biggest motivators for employees and a priority for many job seekers. To keep up with the competition, many small- and medium-sized businesses are developing compensation strategies to help keep their workforce motivated, healthy, and productive. Offering a comprehensive employee benefits package is an important component of any employee retention strategy.

Here is a closer look at some of the latest insights on benefits from small- and medium-sized businesses:

Medical Insurance

employee medical insurance conceptOffering group medical insurance is becoming more expensive, causing many employers to worry about how they will sustain these benefits in future years. These concerns are particularly common among small company owners who have tighter financial restrictions and fewer resources at their disposal than larger corporations.

Annual group health insurance premiums have reached an average of $7,739 for single coverage and a whopping $22,221 for family coverage, according to the Kaiser Family Foundation (KFF). Premiums run even higher for certain types of health insurance plans, including health maintenance organization (HMO) plans and preferred provider organization (PPO) plans. In certain industries, such as communications, transportation, and utilities, as well as in certain parts of the country like the Northeast and Midwest, premiums are especially high.

While the cost of medical premiums across the board saw an overall decrease in 2021 due to the rate of inflation, there was also a 7 percent increase in the Consumer Price Index, according to a 2022 Ease SMB Benefits and Employee Insights Report. This increase is the highest it has been in more than 40 years. To help offset these growing medical insurance costs, many employers are looking toward alternative solutions like Health Reimbursement Arrangements (HRAs).

Health Plans Offered

While the cost of medical insurance premiums for small- and medium-sized businesses may be on the rise, many organizations have remained consistent in the types and number of health plans they offer. HMOs are one of the most prevalent types of health care offered by today’s employers. This type of plan remains popular due to its relatively low cost compared to traditional fee-for-service plans.

Fee-for-service health insurance plans also referred to as indemnity plans, provide employees with the freedom to choose their own physicians and medical facilities. However, there are some downsides to these plans. Insurance companies typically require patients to fulfill an annual deductible before they pay a specified coinsurance rate. Coinsurance rates are typically 80 percent/20 percent or 70 percent/30 percent. The insurance company is responsible for the higher percentage.

The cost of health insurance plans are also dependent on participation rates. According to the Ease Insights Report, participation in high-deductible health plans has increased since 2018 by more than 65 percent. In 2021, PPOs and HMOs accounted for over 85 percent of health plans. The report also revealed that almost 50 percent of small business employees choose to waive their coverage.

Voluntary Benefits Trends

banknotes and icon with text voluntary benefits on a notebook backgroundWhile the physical and mental health of employees is of the utmost importance, many employers understand the value of offering certain nonmedical benefits. Offering voluntary benefits is an effective way to attract and retain workers, especially after the pandemic. There are many types of voluntary benefits that can be offered to workers without significantly impacting the company budget.

Certain “nontraditional” benefits like financial wellness, hospital indemnity, cancer insurance, pet insurance, and legal services are becoming more common in small- and medium-sized business benefits offerings. Other essential benefits like dental care and vision insurance coverage are also commonly found in benefits packages.

In 2018, just 36 percent of employees found voluntary benefits to be important to their talent and rewards strategy, according to a Willis Towers Watson Survey. This number has increased to 94 percent, meaning the majority of employers now see voluntary benefits as a critical component of their employee benefits package.

Another area in which voluntary benefits have changed is with remote health services. Since the start of the pandemic, remote health services have significantly expanded to address the rise of employee stress, anxiety, and depression rates. Employers are helping to combat these types of issues by making remote health services more affordable and accessible to their employees.

Employees are Expecting More for Their Benefits

Employers across the country are looking to fill more than 11 million job vacancies, according to the Bureau of Labor Statistics. While increasing wages is one way to attract talent, many employers are finding that benefits gain more attention. However, providing health insurance alone is not sufficient. Today’s workforce expects a more comprehensive employee benefits package.

While not all small- and medium-sized businesses are able to offer all the benefits that they would like to, many are expanding their benefits offerings to keep their employees happy, healthy, and productive. One of the most sought-after benefits is remote work opportunities. While COVID-19 made remote work necessary for many industries in 2020, most employees have since returned to the office.

employees checking their annual benefitsHowever, employers that allow their employees to work at home either part of the time or all the time have seen positive results. Other highly sought-after employee benefits include healthcare, paid time off, flexible hours, paid family leave, and free food in the office. The idea of a four-day workweek is also gaining a lot of attention since Microsoft Japan recently allowed their employees to work just four days a week while still receiving their full five-day paycheck.

Work with New City to Give Employees the Best Benefits

Creating a great employee benefits package can help make a workforce feel more appreciated for their dedication to your company. Employee benefits can also help employees provide for their families, individual health, and their financial future.

New City Insurance is an experienced employee benefits consulting firm that specializes in benefits consulting, compliance, insurance, and tech services. To learn more about how small- and medium-sized businesses can provide their employees with the best benefits, request a consultation with a benefits professional at New City Insurance today.

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New City Insurance
New City Insurance
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Carol Zhang
Carol Zhang
04:29 06 Mar 22
As a rapidly expanding national media organization, the employee benefits strategy and administration that New City has provided us during our growth has been invaluable. They have been proactive about informing us of the different benefit strategies available to us as we grow as well as managing the additional compliance laws and reporting requirements at each stage of our growth.
Claudia Villalobos
Claudia Villalobos
20:14 03 Mar 22
New City Insurance made navigating through all the health insurances super EASY. Their documents are highly informative, professional, and easy to work with. Thank you for making the process of choosing a health plan so simple. You guys are THE BEST!
Philippe Salas
Philippe Salas
17:02 22 Feb 22
I never expected to have a good time talking to an insurance salesman, but let me tell you Brendan was quite the treat. He was very helpful explaining the options and has a wonderful sense of humor. I hope to speak with him every time I call.
Jennifer Polito
Jennifer Polito
17:15 09 Feb 22
Super easy enrollment process. Fast and friendly customer service. If you are looking for an insurance company that is there for you every step of the way I highly recommend New City Insurance.
Rocky Salas
Rocky Salas
23:46 07 Jan 22
So friendly, I hope to speak to him again in all my future insurance needs.
Rocky Salas
Rocky Salas
23:38 07 Jan 22
So friendly and soft spoken. I hope to speak to him again in all my future insurance needs.
Jose Brena
Jose Brena
13:20 06 Jan 22
Eric Calciano has been extremely helpful in finding and selecting the right insurance coverage for our company. With many options out there Eric assisted us on getting a low cost provider saving more than 20% than from our competitors and providing excellent coverage for our employees.
Anastasia Beaverhousen
Anastasia Beaverhousen
17:05 28 Dec 21
Signing up for insurance was quick and easy. Felicity Sundsboe
SFCC
SFCC
22:08 29 Nov 21
Jeff Stoltey and his team provide excellent customer service. Jeff has always provided my company SFCC with straightforward options. I went to a larger insurance company only to RUN BACK to Jeff at New City Insurance. I recommend them to anyone needing insurance without hesitation.
Kevin Luby
Kevin Luby
19:13 22 Oct 21
Quick, easy & informative. We were able to secure quality insurance for our small business on a tight deadline. Thanks for the help New City.
Theresa Ruybol
Theresa Ruybol
19:30 01 Jul 21
Eric was so great with us. He was very patient and kind as we are a newer smaller organization who is growing rapidly. With that said, we had made our inquiry, he had great rapid response and mostly had to wait on me. Any request that we made and/or questions we had, he was great answering and helping us understand. Then when we were ready for all documents and to move forward, Brendan helped with getting that together and the two of them worked their magic on New City's end to notify me of what was needed, assist me in that process and confirming that all was complete and approved for the coverage. I just want to say thank you all again so much, as insurance has always been confusing to me, and you all made that process go a lot smoother.Thank you
Andrea Ordendorff
Andrea Ordendorff
21:06 07 May 21
I've been working with both Clayton and Brendan for well over a year. As the purchase of our dental practice was delayed well over 14 months they both patiently supported me and continued to make themselves available. When we were officially ready to sign up they made the whole process seamless and super easy. This team is highly knowledgeable, professional, supportive, and efficient! I can't thank them enough for everything they've done.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
Mike McClay
Mike McClay
19:36 03 May 19
My employer uses New City as their insurance broker, and I'm always amazed when I call in for assistance by how knowledgeable and attentive their staff is with my requests. Their online benefits platform makes selecting insurance plans pretty darn easy. I would highly recommend their services.
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