Does your business offer competitive health benefits? For many organizations, this area can be an afterthought and thrown in as a formality. However, it is essential to recognize the value these benefits provide in enhancing employee satisfaction and, by extension, elevating your business to the top of your field.
The Hidden Value of Benefits Benchmarking
Benefits benchmarking is a very effective way of learning more about how your business’s benefits compare to the prevailing market standards. It’s a data-driven approach that can guide you toward better decisions about the benefits you offer while helping you stay competitive when acquiring and retaining talent.
Important Metrics to Examine
Here’s a look at the most essential benchmarking metrics from a human resources point of view.
Total Cost Per Employee
The total cost per employee metric includes all health-related expenses, including medical benefits and dental, vision, and even wellness. It is important to consider the direct costs involved as well as indirect ones, such as administrative fees.
Some essential cost metrics include total healthcare spending per employee per year, administrative costs per member, the medical cost trend rate year on year, stop loss premium rates, and pharmacy costs as a percentage of your overall healthcare spending.
Cost Sharing Structure
One metric worth looking at is the distribution of healthcare costs between your company and your employees. Employers often cover between 70 and 80% of the premium costs for their employee-only coverage.
However, this varies depending on the industry. Comprehending how your specific cost-sharing ratio compares to the industry standards can help you find the right balance between employee satisfaction and any budgetary limitations you are working with.
Some specific metrics include the employer contribution percentage for the various coverage tiers you offer, your premium cost per member per month, employee premium contributions as a percentage of their salary, and the premium differentials for participation in any wellness programs you offer.
Employee Participation Rates
Employee participation rates are very telling, indicating the value your workforce perceives of what you are offering them and how well you communicate the benefits of your offering.
A low participation rate might suggest that your offering is not meeting expectations, but do not discount the fact that it may also indicate poor communication that needs improvement. A 75 to 85% participation rate is generally considered good for primary medical coverage.
Plan Design Features
It is also helpful to examine some of the specific features of your plan’s design to find out how it compares to your competitor’s offerings. Some important design metrics you should assess include maximum out-of-pocket limits, HSA and FSA employer contributions, prescription drug tier pricing, coinsurance and copayment structures, and the deductible levels for in-network and out-of-network visits.
Access and Availability
To get a clearer idea of how accessible your benefits are, look at metrics such as specialist availability by type, the primary care physician availability ratio, geographic access standards compliance, the average wait times employees are experiencing for appointments, and the percentage of claims processed in-network.
Advanced Benchmarking Metrics to Consider
Here’s a look at some advanced benchmarking metrics that are worth considering.
Quality Metrics
Quality-related metrics can provide insights into provider quality ratings, patient satisfaction scores, and network accessibility. This might include clinical quality indicators such as hospital readmission rates, patient safety indicators, chronic condition management participation, and preventive care screening rates.
Employee Satisfaction and Perceived Value
Businesses should conduct surveys regularly and provide other mechanisms for collecting feedback to determine how the workforce values their benefits package. Qualitative data and open-ended surveys allow employees to identify areas where improvements can be made that a cost analysis focused on numbers alone could overlook.
Employee Engagement
You can assess several metrics to determine the degree of employee engagement that is taking place, including your benefits portal’s utilization rate, health risk assessment completion rates, employee assistance program usage, and wellness program participation levels.
Workforce Impact
Some metrics that indicate how your benefits package impacts the workforce include productivity measures, absenteeism rates related to health issues, turnover rates compared to benefits satisfaction, and disability claim frequency and duration.
Work With The Experienced Benefits Consultants at Business Benefits Group
Effectively benchmarking your benefits requires expertise and an ongoing commitment to monitoring and improving your benefits package. Although your internal HR team might be capable of making surface-level comparisons, benefits consulting professionals can provide you with deeper insights and more actionable recommendations.
Are you ready to optimize your business’s health benefits through exhaustive benchmarking? Reach out to Business Benefits Group and find out how our professional insights and industry-leading data analytics can help your organization gain an edge over the competition.