Employee benefits are one of the largest expenses for many employers. However, many companies do not regularly benchmark the market or evaluate their broker relationship. Regular benchmarking helps employers determine whether their rates, plan designs, contributions, and overall benefits strategy remain competitive as their workforce and the market change.

    Below are some of the leading reasons employers should consider benchmarking their benefits each year.

    Making Better Strategic Benefits Decisions with Rising Healthcare Costs

    Rather than relying on assumptions or vendor recommendations, benchmarking provides objective market data that supports informed decisions. Employers can:

    –             Prioritize benefit investments with the greatest impact.

    –             Evaluate whether new programs are becoming standard practice.

    –            Support executive leadership with data-driven recommendations during renewal planning.

    On top of the constant rise in healthcare costs, some carriers may price new businesses aggressively to win an account and then work toward their target margins over the next several renewals. This makes the following years an important time to determine whether the plan is still competitive.

    Attracting and Retaining Top Talent by Remaining Competitive

    Health benefits remain one of the most important factors employees consider when evaluating job offers and deciding whether to stay with an employer. Benchmarking allows employers to:

    –            Compare their medical, dental, vision, and ancillary benefits to competitors.

    –            Ensure their benefits package remains competitive within their industry.

    –             Reduce turnover by offering benefits employees value.

    Changing Workforce Demographics

    A strategy designed for 20 employees may not be the best fit once a company grows to 50 or expands into additional states. Hiring, turnover, and changes in employee demographics can affect which carriers and plans are most competitive.

    As a company grows and participation increases, it may also gain access to additional plan options, funding arrangements, and potentially more favorable underwriting. For example, a company that has always been fully insured may now qualify for level-funded coverage.

    Benchmarking Creates Negotiating Leverage

    Competitive bids give the employer and broker something concrete to bring back to the current carrier. Even if the employer ultimately stays where it is, market competition may help produce a revised renewal or uncover alternative plans within the existing carrier.

    Employer Contributions May Not Be Competitive

    Employers should compare how much similar companies contribute toward employees and dependent coverage. An employer may struggle with recruitment and retention if employees are required to pay considerably more than they would at competing organizations.

    Shopping Does Not Automatically Mean Switching

    Employers are often hesitant to benchmark because they do not want to disrupt employees, change provider networks, or complete another enrollment. However, reviewing the market does not require the employer to make a change. Sometimes the results confirm that the current carrier and plans remain the best option.

    Reach out to FosterThomas today if you are interested in benchmarking your current benefits strategy at no obligation. Our advisors can provide company-specific data to help you understand how your benefits compare to the market.