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Standard plan design benchmarking is as important for smaller companies as it is for larger ones. Employers with 100 to 500 employees are the backbone of our local and national economy; they face the challenges of performing as a large employer but are saddled with the budget and limited resources of a smaller employer. Furthermore, these companies face unique challenges when it comes to benchmarking their health plans.
Employers are asking a host of questions about benchmarking:
• “What data should I be looking at to benchmark my core health benefits?”
• “Is my benefits program appropriate for the size of my company?”
• “How competitive are my benefits for the geographic market I am hiring in?”
• “Are my benefits at least on par with my industry and competitors?”
Companies need to understand not only how competitive their healthcare plan is, but their other talent and reward offerings as well, such as paid time off, supplemental benefits, part-time benefits, and retirement benefits. Employers should take a more granular view of their plans and compare them to their geographic region and industry. They should also examine whether their total compensation plan is appropriate and whether their total rewards plans meet local and global standards.
But how can employers who may be new to benchmarking approach this critical task? Here are three things employers can do to benchmark their health plans more effectively.
1. Go Beyond the Basics
Employers have traditionally focused on basic plan information when it came to benchmarking health plans such as deductible amount, income insurance percentage, and premium level. But employers are discovering that the basics are not enough. With five generations in today’s workplace, an employer needs a benefits package that is comprehensive and competitive.
Employers may speculate that other companies are becoming more generous with benefits such as paid leave, but they lack the empirical data for making informed decisions to create a comprehensive package that is meaningful, competitive, and cost-efficient.
Employers also need to evaluate their employees' opinions and feedback, as well as how their benefit offering affects employee attraction and retainment. Aon Architect® allows employers to measure employee perception of their benefits, using data and advanced statistics, and it can predict their plan selection behavior. This type of analysis goes beyond a simple employee satisfaction survey to provide insight into the relative preferences of their employees, given a variety of options and benefits, as well as trade-off scenarios.
2. Keep a Close Eye on Costs
Unfortunately, robust benchmarking can be cost-prohibitive for many employers. Benchmarking for health plans can also be complicated by the fact that the employer is charged by the insurance carriers’ renewal rates and costs, based on factors largely outside the employer’s control.
But there is a variety of tools and options that help companies manage the cost of benchmarking to get a picture of how their health plan performs. Experienced brokers like Aon can offer benchmarking tools that track thousands of employer-offered health plans. These databases contain detailed plan design information broken out by geographic region, industry, and group size.
Employers can use these benchmarking tools to make decisions about the healthcare plans that allow them to remain competitive for their size, industry, and geography, all while keeping a close eye on costs.
3. Seek out Local Data
While employer health plan benchmarking data within a particular industry or market size may be readily available, obtaining data from a particular locality can be more useful, and also more difficult.
When seeking out local benchmarking data, state workforce commissions are a good option for providing local and regional information. Local human resource chapters, such as SHRM, may also have data available that can help employers compare local competition norms to regional and national benchmarks.
For employers in a more specialized industry, where recruiting efforts are centered around specific job skills however, employers may need to focus more on industry-specific benchmarks. Some professional associations may be able to provide the industry-specific data needed to compete for top talent in their field.
With the cost of healthcare always on the rise, employers need data to enhance their ability to attract and retain employees while still managing costs. Health plan benchmarking is an effective means to equip a business owner with the data they need to build out their benefits strategy, to compete for talent, and to control costs.
By leveraging the expertise and comprehensive health benefit databases of an experienced broker or consultant such as Aon, employers can confidently benchmark their plans and have peace of mind they are balancing cost and value for their employees.