Small businesses are facing extraordinary challenges in managing their employee benefits costs due to rising healthcare expenses, especially with professionals estimating that the total rise for 2024 will be around 8.5%. However, benchmarking data can point to powerful opportunities for cost control without sacrificing the quality of benefits.
Small businesses can find significant savings by strategically using benchmarking data. Here are some practical ways to maximize your benefits benchmarking data, implement effective cost-control measures, and keep your benefits competitive.
What Is Benefits Benchmarking?
Benefits benchmarking involves comparing your business’s benefits offerings, costs, and usage patterns against similar organizations in your area and industry. This process can be especially valuable for small businesses because it can point to opportunities for optimization that you might not have noticed otherwise.
Some important metrics worth tracking include premium costs per employee, plan design features, utilization rates, and contribution strategies. Although large corporations may have access to expensive benchmarking tools, small businesses can still obtain useful data from industry associations and other regional business groups.
One common misconception is that benchmarking requires extensive resources. The truth is, however, that even basic benchmarking data can provide you with some surprisingly valuable insights. It is best to focus on core metrics such as your total benefits cost per employee, employee contribution levels, and plan design. Be sure to look at businesses of a similar size and industry to yours in your local area to get the most relevant insights.
Core Cost Control Strategies
Benchmarking data often shows that small businesses can enjoy significant savings using collective purchasing power. For example, professional Employer Organizations (PEOs) can help clients save on their healthcare costs. At the same time, industry associations and local chambers of commerce can offer another avenue for obtaining better rates with group purchasing arrangements.
Plan design is another area where you can find new ways to control costs. Level-funded plans are gaining traction among small businesses, given their potentially significant savings compared to traditional fully insured plans.
These plans combine the predictable premiums of a fully insured plan with the possibility of receiving premium returns if your actual claims are lower than expected. High-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs) can help businesses find cost savings.
Technology-Based Solutions
Benchmarking can also show small businesses the importance of leveraging technology for benefits administration. Digital platforms can streamline the enrollment process, reduce errors, and provide valuable data for future planning. For example, offering telemedicine can help reduce costs for businesses that have many urgent care visits among their employees.
Mobile apps for benefits management can increase employee engagement while reducing your administrative burden. The solution is to find user-friendly and affordable platforms that integrate well with your existing systems.
Employee Engagement and Education
Your benchmarking data related to employee engagement and satisfaction can also help you find ways to control costs. When comparing their benefits offerings to competitors, businesses often find they have underutilized benefits that can be restructured or eliminated.
In addition, employee feedback can point to your most effective communication channels. You can streamline your benefits education efforts and reduce administrative costs by dropping unfavored channels. Satisfaction surveys may also highlight opportunities to consolidate redundant benefits or reallocate resources to programs most appealing to your employees.
Wellness program benchmarking can provide beneficial cost-control insights. By comparing your program’s effectiveness to similar companies, you can identify which wellness initiatives currently deliver the most substantial returns for reduced healthcare costs and improved productivity. This means you can avoid generic solutions and devote your budget to the most successful programs among your employee demographics.
Implementation Tips
It’s always best to start with any quick wins your benchmarking data reveals, such as adjusting your contribution strategies or implementing telemedicine options. This means you can start enjoying cost savings immediately while gradually rolling out more significant changes.
Monitor important metrics regularly to establish these strategies remain effective. Set clear benchmarks for success, such as your target reduction in per-employee costs or improvements in utilization patterns. Be ready to adjust if you don’t get the expected results.
Reach Out to the Experienced Team at Business Benefits Group
Don’t let rising healthcare costs hold your small business back. The experienced benefits consultants at Business Benefits Group (BBG) can help you implement data-driven cost control strategies that make a real difference to your bottom line. We’ll analyze your current benefits program and use exhaustive benchmarking data to identify opportunities for savings while keeping your benefits competitive so you can attract and retain top talent.
Contact us today to get started on a customized strategy that helps you get the most out of your benefits investment.