The overall numbers show that the larger the employer, the more health plans they are likely to offer.
A new report on how small businesses are adapting to the Great Resignation finds that not all small companies are equally affected by the ongoing disruption in the labor force.
The new 2022 SMB Benefits and Employee Insights Report was created by Ease, an HR software company. The report found that small businesses (SMBs) are trying to keep employees in part through offering attractive benefits, but smaller companies may struggle with the costs of this strategy—and may pass benefits cost on to employees, increasing the chances they'll seek employment elsewhere.
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"The Great Resignation has placed an added emphasis on the role benefits play in attracting and retaining talent," said David Reid, CEO and co-founder of Ease. "Our goal with this report is to provide employers with the data needed to select the benefits that best meet their talent needs. As we continue to grapple with high rates of turnover, we found that the smallest companies—those with less than 50 employees—are losing employees more rapidly than larger SMBs, which have grown in employee size. Small businesses are the backbone of our nation and to ensure they remain competitive they need to provide unique voluntary benefits that meet the demands of today's talent. However, many can't take on the cost and that's a huge problem these companies are struggling with."
Higher prices put the squeeze on smaller companies
The report found that the average small business saw an increase in individual health care premiums of 6.3%, with companies in the 11-50 employee range experiencing the largest increase at 6.9%. For family premiums, the average increase was smaller, at 3.6%.
"Year-over-year premium increases coupled with other factors like increases in hospital and physician services continue to pressure decision-makers to balance access with meaningful benefits for employee," the report said, adding that new costs around the COVID-19 pandemic may result in higher premiums in 2023.
Another sign of the pressure to attract and retain employees: employer responsibility for family premium contributions increased slightly from 2020 to 201, while employee contributions for family plans fell slightly. "This may be in response to the ongoing pressure to acquire and retain employees—offering family coverage can make or break an offer," the report noted.
But the financial burden on employees of smaller companies has increased in recent years, the study found: "On average in 2021, following the trend we've seen since 2018, the smaller the company the more their employees paid toward benefits," the report said. "In fact, employees working for companies with 101-250 employees paid 22.4% less than those working for companies with 1-10 employees this past year."
Larger small companies also have more plan options
The overall numbers show that the larger the employer, the more health plans they are likely to offer, the report found. At the same time the report noted that employees of small businesses don't always opt to enroll in benefits such as health plan: in 2021, nearly 50% of SMB employees waived health care coverage entirely (though that number had declined 5% since 2018).
The majority of employees enrolled in more traditional HMO or PPO plans, the study found, with light adoption of High Deductible Health Plans (HDHPs). The report noted that some studies have found only a small number of employers with fewer than 200 employees offer HDHPs, so the lack of adoption may be related to availability.
The broker angle—taking on more of an advisory role
The report included a chapter devoted to brokers and what they are experiencing in working with small businesses. It found that brokers were adjusting to new realities just as employers are—76% of agencies said they had changed the way they do business after 2020, with 45% saying they conducted most business remotely because clients have bought in in varying degrees to work-from-home structures.
Brokers also said they took on more of an advisory role as the pandemic progressed: 48% said they offered more support to clients in 2021 by helping with onboarding, remote benefits elections, and compliance support.
In addition, an eye-opening 90% of agencies anticipated their clients would want more insurance options in the upcoming enrollment season. For example, telemedicine and mental health benefits are in demand, the report said. "To attract and retain talent in this heated job market, valuable extras like these can carve out a big competitive advantage for your groups," the report concluded.
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