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Challenges and opportunities in the employee benefits market



2022 Middle Market Employee Benefits Benchmarking Survey Results

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With an extremely competitive labor market, it is important for employers to recognize the challenges in the current employee benefits market and understand how to take advantage of opportunities to attract and retain talented individuals. According to Microsoft’s 2022 Work Trend Index, 39% of all workers are considering changing employers this year, while 52% of Gen Z and Millennial workers are considering a change. Another trend identified by this study is that 53% of workers are prioritizing their health and well-being over work more than they did before the covid-19 pandemic.

Given this landscape, it is now more important than ever for companies to consider their peers’ benefits offerings and rethink their own to maximize their attractiveness as an employer. By using benchmarking data, companies can make informed decisions about which employer-sponsored health care strategy best aligns with their goals and provides employees with the care security and stability they seek.

Each year, Scott Benefit Services, in partnership with the largest independent mid-sized actuary in the United States (Milliman), conducts a Mid-Sized Employee Benchmarking Survey to serve as a guide and valuable resource for mid-sized employers. The 2022 survey results include data from nearly 24,000 companies, representing 3.8 million employees and $51.8 billion in healthcare dollars. In the Southeast and Virginia regions, data comes from over 350 companies, representing 115,000+ employees with an average workforce of ~350 employees.

This year’s results identify the following challenges and opportunities for medium-sized employers:

Challenges
  • Inflation is the most pressing challenge currently facing the employee benefits market. Over the past 60 years, healthcare inflation has consistently outpaced general inflation. With this trend expected to continue, healthcare is reasonably expected to reach double digits soon. The full effect of inflation will be felt during next year’s renewals.
  • Lack of healthcare staff continue to persist and increase costs. With the health care workforce still nearly 3% below pre-pandemic levels, providers have increased leverage in negotiations with carriers. With fewer discounts and savings, the benefits plan will pay more. The full impact of this trend is expected to be felt between 2023-2025.
  • Residual effects of covid-19 caused the average national healthcare cost for a family of four to increase by 1.1% in 2021. A continued small increase is expected in the coming years due to the long-term health effects on those with pre-existing risk factors.
Possibility
  • Diversified health plans can help employers stand out. Most employers – nationally and regionally – offer two or more health plans. Preferred Provider Organizations (PPOs) and High Deductible Health Plans (HDHPs) remain the most popular plan types.
  • Individual Health Reimbursement Coverage Agreements (ICHRA) enables employers to control costs and avoid unsustainable renewals while offering employees the freedom to choose plans that best fit their needs with no minimum participation requirements.
  • Alternative financing options, such as self-insurance and group intake, often help lower costs. Although self-insurance provides significant savings to the employer, this form of insurance is often not a viable option for smaller to medium-sized organizations. However, captive insurance allows mid-market organizations to enjoy the benefits of self-insurance but with minimized risk and volatility.
  • Non-traditional health benefits rapidly gaining popularity and importance among the employees. Two of the most valued non-traditional benefits are corporate wellness programs and access to Teladoc.

The complete, unbiased data from this survey has been compiled to provide actionable benchmarking for employers at local, national and industry-specific levels. Contact a Scott Benefits consultant to compare your benefits plans – including employee share of premiums, coinsurance and deductibles, plan design and out-of-pocket maximums – with those of nearly 24,000 mid-sized businesses nationally.


About Milliman

Milliman is one of the world’s largest independent actuarial and consulting companies. Founded in Seattle in 1947, Milliman has offices in key locations around the world. Through consulting practices in employee benefits, health care, investment, life insurance and financial services, and property and casualty insurance, Milliman serves the full spectrum of corporate, financial, government, union, educational and nonprofit organizations. In addition to consulting actuaries, Milliman’s professional corps includes many other specialists, ranging from clinicians to economists.


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