Employee Benefits Benchmarking: Choosing the Right Plan Type

The 2018 Zenefits Small Business Benefits Benchmark Report is now available. Representing data from more than 8,000 Zenefits customers, the report examines how plan types, contributions, premiums, deductibles, copays and out-of-pocket costs differ across regions. The study is intended to help businesses make more informed decisions by providing insights into the choices of similar companies within the same region and nationally.

In previous posts, we focused on Insurance Premiums and Employer Contributions. In this post, we examine the breakdown of Plan Types and how they vary across regions.

Small Group enrollment and plan type distribution (PPO/HMO/Other) percentages continue to diversify. This trend is growing in all segments, but particularly in smaller groups. The networks or plan names are easily the biggest moving target for healthcare consumers to follow today, due to the fact that networks are constantly evolving. Most of the movement has taken place in provider networks as a lever to relieve or control pricing.

PPOs Continue to Dominate Despite Higher Costs

PPO seems to consistently remain the popular option as it allows the most freedom in provider access, flexible movement of care, networks size, and out-of-network coverages as well. This flexibility and coverage comes at a price, and as a result, PPO plans typically come at a higher cost.

*New and Emerging plans include: EPO, ACO, and HSA/HDHP (Health Savings Account plans).

Greater Plan Diversity on the Rise

In some cases, employees are pushing employers to offer greater plan diversity in order to accommodate different healthcare needs. For certain companies, younger employees may use the health coverage less frequently than other colleagues and therefore have less of a need for higher cost plans—essentially being “over-insured” for coverage they rarely use.

We expect this trend of multiple network offerings to continue in the small/mid-group market segment, which includes a greater adoption of low-cost options such as consumer-driven health plans (CDHPs).

CDHPs are not a fit for every group due to the administrative complexity. One of the key success factors is the incorporation of an integrated benefit management system. This is important since CDHPs require regular member-level education and user-friendly systems that allow members to effortlessly manage their health care dollars.

*New and Emerging plans include: EPO, ACO, and HSA/HDHP (Health Savings Account plans).

Highlights

• HMO plans are least common in the Central states, perhaps due to lower average population density. But, they are much more common in the West.

• The Northeast stands out as having the majority of its enrollments in the non-PPO/HMO category. Much of this is attributed to the difficulty carriers may have in negotiating with network providers. Typically areas where provider systems, like hospitals and medical centers, have little competition, you’ll see more control in their corner versus the insurance carriers, thus a reduction in cost competitive solutions to penetrate that market.

Seek Help From a Benefits Advisor

It is important for employers to align their plan mix to the specific needs of their business and employees. An experienced benefits consultant can help businesses align plans based on business requirements. Contact a Zenefits Benefits Advisor.

Get the Report Now

The 2018 Zenefits Small Business Benefits Benchmark Report can help answer common questions including:

• What type of health insurance benefits are similar types of companies offering?
• Which plan types are most popular in my region?
• How much are similar companies contributing to employee and dependent premiums?
• What are the average premium cost shares for the company and employees?

To download the report now, click here.