Ease’s 2021 SMB Benefits & Employee Insights Report is a study of SMBs across the country, such as doctor’s offices, manufacturers, restaurant groups, and more. With this report, you’ll be able to benchmark against premium costs, contribution data, shifting plans makeup, and more to unlock insights that will empower you to better serve your clients and set you apart from your competition.
The data in the report is reflective of the SMBs that use Ease. Thus, the findings may not apply to businesses with more than 250 employees. This analysis is based on anonymized data and was collected in November and December 2020
This report focuses on trends from the last three years (2018-2020). During that time Ease has supported 75,000 businesses and more than 2.5 million employees across the country.
The report covers the following:
In this weeks’ Broker Tool Belt, we share the key findings in medical premiums and contributions and health plans offered and types. Next week, we will come back with part two to share the key findings in Voluntary benefit, SMB growth, and the impact COVID-19 has had on employee benefits.
In light of a global health crisis in 2020, rising medical premiums for both families and individuals may not have made front-page news, though costs did continue to steadily rise again a trend that shows no indication of slowing. However, the rate of increase is perhaps a story unto itself, with both family and individual rate increases eclipsing the rate of inflation for 2020. In fact, overall healthcare prices only rose 1.8% in 2020, while prescription drug prices dropped 2.4%.
Even amidst a pandemic, costs for hospital services rose only 3% percent from 2019 to 2020, holding steady with the same increase as the prior year. Costs for physicians? services increased by only 1.7%. However, the average company in Ease saw an increase in individual medical premiums of nearly 6%, while the family medical premiums increased 3.74% on average. This inordinate increase compared to both the rate of inflation and even the rate of change for other costs in the healthcare industry landscape pose unique challenges to business decision makers, as they seek to balance meaningful access and quality care with affordability.
2020 saw increases in medical premiums across the board, a continuation of the trend seen in 2019. In Ease, the average individual medical premium in 2020 was $541, an increase of 5.98% year over year (YoY).
Family medical premiums also saw an increase across the board, following the trend seen in individual medical premiums. For all companies in Ease, the average family medical premium in 2020 was $1,398. The year-over-year growth for family medical premiums lagged behind that of individual medical premiums, with only a 3.74% increase from 2019 to 2020.
As per monthly contributions, in 2020, companies that use Ease contributed an average of 73.97%, or $400 per month, to their employees’ individual medical premiums. The percent covered by employers declined marginally, from 74.24% in 2019 to 73.97% in 2020; however, the overall individual premium amount continued to experience growth YoY, climbing from $379 to $400 on average. This suggests that while premium costs continued to rise, employers costs remained fixed, passing the increase onto their employees. In relation to family medical premiums, on average, employer contributions have remained nearly unchanged for the past three years, holding steady at 59.12% in 2020.
Over the last three years, the number of medical plans offered per employee has decreased by about 3% on average. This small but steady annual decrease observed since 2018 signifies an effort at cost containment by group leaders and business decision makers. By controllingand more notablyshrinking the number of medical plans available to employees, companies are able to steer their employees to selecting more affordable plan options, such as HDHPs.
Company size plays a significant role in determining the overall employer cost of a group health plan. As we saw in 2020 in Ease, on average, businesses with more employees offered more medical plans than those with fewer employees. Larger groups may have the advantage of risk pooling, enabling higher-cost claimants to be offset by the healthier, lower-cost population within the employer group.
On average in 2020, employees selected HMOs more than any other plan type for medical insurance. This is a continuation of a trend we saw in 2019, though the rate of selection has actually diminished slightly YoY. In fact, in all company size segments except for those with 101-250 employees, the percentage of HMO and PPO plan selection actually decreased from 2019 to 2020.
Meanwhile, in contrast, HDHP selection increased YoY in all segments other than in companies with 1-10 employees. HDHP plans are particularly popular amongst millennial employees, as a lower cost option that is generally attractive to a younger, healthier workforce.
Every year, businesses take on the financial risk of encountering unpredictable expenses when insuring employees and their families, while still making sure they connect them to in-network providers that offer high-quality care. As a result, there is a unique pressure on you as the insurance broker to help your clients build the best benefit packages for their employees while helping them control costs. But where can you find meaningful insights and anticipate evolutions and trends within the industry to better advise your clients, build smarter benefit plans for them, and help them balance both cost and quality? Access Ease’s 2021 SMB Benefits & Employee Insights Report to discover more data, see where you stack up in comparison to your peers, and be better prepared to anticipate the road ahead!
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