Analysis of four years of benefits enrollment data highlights opportunity for health plans to serve the midsize employer
Benefitfocus, Inc. an industry-leading benefits technology platform that simplifies benefits administration for employers, health plans and brokers, has released the second in a series of reports in its State of Employee Benefits™ 2021, in this case focusing on the trends across midsize employer groups, defined as employers with 100-999 employees.
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The report explores how an evolving multi-generational workforce and the impact of COVID-19 affected health care costs and health plan design for midsize employers. It compares their response to large employers (1,000+ employees) and the potential impact on employees. The first report of the State of Employee Benefits 2021 series analyzed employee benefit plan design and participation for large employers.
According to the latest report, midsize employers appear to have kept health insurance offerings and premium cost-sharing trends consistent since 2018, similar to the findings in the large employer market. However, as large employers remained consistent in their effort to increase voluntary benefit offerings in 2021, midsize employers reduced these offerings. Employees, on the other hand, are showing greater demand for voluntary benefit products – even those that are not employer funded.
Based on analysis of the compiled data, the report concludes with opportunities for health plans to offer midsize employers enrollment solutions that will enable seamless administration of medical coverage alongside more robust voluntary benefit packages.
“The data we’ve collected over recent years provides specific insight on the benefit plan designs by midsize employers and participation trends among their employees,” said Stephen Lance, Senior Vice President for Benefit Catalog at Benefitfocus. “This insight, along with our platform and road map for software enhancements, highlights the opportunity health plans have to better serve the midsize group market as health care and employee needs evolve.”
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“These two editions of the State of Employee Benefits demonstrate how we leverage data to create insights and guidance for our customers,” said Matt Levin, president and CEO of Benefitfocus. “It’s part of our commitment to ensure our customers get the greatest return on their investment in health care benefits and that everyone in our ecosystem makes good decisions on health care choices.”
Among the report’s key findings:
- Health Insurance Offerings: Since 2018, there is little variance in the percentage of midsize employers only offering traditional health insurance options and those offering a combination of traditional and high-deductible health plans (HDHPs), while the percentage of employers offering only HDHP has dropped by half. Midsize employers are offering fewer choices when it comes to health insurance than large employers.
- Health Care Spending Accounts: Since 2018, the percentage of midsize employers offering at least one health care spending account option has increased by nearly 40 percent. More than half now offer both a health savings account (HSA) and flexible spending account (FSA). Midsize employers offer either an HSA only or an FSA only option at a higher rate than large employers.
- Employee Health Insurance Participation: Traditional plans remained the most popular choice across generations compared to HDHPs for employees of midsize employers. However, enrollment overall is increasing for all generations except for traditionalists as they’re likely enrolled in Medicare or other coverage. Generation Z had the highest growth in participation across all plan types since 2018, while Gen Xers account for the most participation overall in employer-sponsored health insurance in 2021.
- Health Insurance Premiums: On average, health insurance premiums increased in 2021 for both midsize employers and employees across most plan types. However, employee premiums are considerably less than they were in 2018. This is likely because employers are taking on a higher percentage of the total premium from 2019 through 2021 for most plan types. This differs from large employers, who increased their share of the total premium only in 2021.
- Voluntary Benefit Offerings & Participation: Voluntary benefit offerings for midsize employers have steadily increased since 2018, with hospital indemnity offerings nearly doubling from 15 percent to 28 percent. However, voluntary accident, critical illness, hospital indemnity and legal insurance offerings dropped slightly in 2021, while pet insurance and identity theft protection experienced growth during the same timeframe – 27 percent and 12 percent increases respectively. Even with that growth, midsize employer voluntary benefit offering rates are significantly lower than those of the large employer groups, except for pet insurance.
For this report, Benefitfocus compiled data from enrollment transactions from 144 midsize employer groups (100-999 full-time employees), representing 244,000 individual employees. The data was evaluated on an anonymous basis. Enrollment records include both active and passive enrollments made by a variety of industry roles (employee, carrier representative, broker, benefits administrator, etc.) from the fall of 2017 through fall of 2020 for effective dates of January 1, 2018 through January 1, 2021. These measurements are not meant to be a nationally representative sample, but to represent the aggregate activity for midsize employers on the Benefitfocus platform.
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