Ease Report Reveals Smallest Businesses are Losing Employees While Larger SMBs Experience Continued Growth

SAN FRANCISCO, Feb. 8, 2022 /PRNewswire/ -- Ease, a leading HR and benefits software solution for small businesses, insurance brokers, and insurance carriers, today released The 2022 SMB Benefits and Employee Insights Report, its third annual report which uncovered how SMBs are adapting to the pressure the Great Resignation has placed on attracting and retaining talent. The report, which draws on data from 75,000 SMBs (those with 1-250 active employees) and 2.5 million employees nationwide, found that though medical premiums across the board fell under the rate of inflation, the 7% consumer price index increase is the highest we've experienced in nearly 40 years.

SMBs are having to balance retention with benefit offerings. A recent PwC survey revealed a staggering 88% of companies are experiencing higher turnover rates than normal, and that employees rank benefits as the second most important reason to start looking for a new job. As turnover in the workplace continues, offering family coverage can be one response SMBs can take to acquire, and maintain, talent.

"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," Reid said.

Voluntary benefits continue to take the lead in attracting talent

Last year, we saw an increase in the demand for voluntary benefits as employees grappled with the impacts of the pandemic at work and at home. And according to a recent MetLife survey, 55% of SMB employees view benefits as more important now than before the pandemic. As we continue to navigate the evolving work landscape, holistic well-being benefits remain top priority for employers and employees. Offering physical, mental, financial and social health benefits has proven to be a key differentiator in attracting talent, and in retaining existing employees.

As is the case with medical plans, the larger the company, the more voluntary benefit plans offered per employee in 2021. Companies of all sizes have increased the voluntary benefit plans offered slightly year-over-year, with the smallest businesses seeing the highest rate of change from 2018-2021. In comparison, the larger the company, the more VB plans offered per employee. Further, the largest companies offered more than double the number of VB plans than an employee in a company with 1-10 employees in 2021.

In 2021, employers and employees alike adjusted the amount contributed to specific voluntary benefits premiums:

• Employers contributed nearly 4% (3.6%) less in accidental death & dismemberment (AD&D) premiums than the year prior. From 2018 to now, however, employers cover nearly 24% (23.7%) more to monthly premiums (and continue to cover more than half of the plan cost).
• Last year, employers were passing the cost increase of long-term disability onto their employees, but we've seen a reversal of that in 2021. This past year, employers contributed 5% more than in 2020. 

According to MetLife, 64% of SMB employees say offering a wider array of non-medical benefits would make them more loyal to their employer. Non-traditional benefits including, hospital indemnity, financial wellness, cancer insurance, legal services, and pet insurance, have all seen increases in preference since the onset of the pandemic. Businesses that want to remain competitive should remain on top of the evolving wants and needs of tomorrow's employee base.

SMBs are shrinking in larger companies' shadow

Businesses that successfully adapted to the hybrid work landscape were those that implemented digital efficiencies and new technologies to enhance their workflow, something SMBs might have an advantage in due to fewer layers between decision-makers and workers.  While larger businesses require multiple approval channels to implement new ideas, SMBs have fewer layers between decision-makers and employees, making evaluating and onboarding digital solutions a more nimble process.

While SMBs came out on top in adapting to today's environment, they lagged in retaining talent compared to larger companies. Since 2018, the smallest SMBs (those with fewer than 50 employees) have been losing employees, while larger SMBs (51+ employees) have increased their employee count. Companies with 101-250 employees saw the biggest gains in employees, placing extra pressure on the survival rates of the country's smallest businesses.

Employers increase family coverage to attract talent

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 employees. Additionally, requiring insurers to pay for COVID-19 testing, vaccine administration, and treatment could translate these costs to customers through premium increases.

Though medical premiums across the board fell under the rate of inflation, the 7% consumer price index increase is the highest we've experienced in nearly four decades. Regardless of company size, individual medical premiums averaged $575 in 2021. The average Ease company saw an increase in individual medical premiums of 6% (6.3%), and on the family side, medical premiums rose at just over half that rate - 3.35% on average.

Unlike the trends we see for individual plans, employer responsibility for family premium contribution has increased from 2020 to 2021, likely in response to the ongoing pressures to acquire and retain employees. Employers have found that offering family coverage can make or break an employment offer. According to Humana, adding dependents may diversify the group and help lower rates, leading to benefits for employers and employees alike.

The larger the company, the broader the health plans

The past four years have shown that the larger the employer, the more health plans they are likely to offer. While HMOs and PPOs account for nearly half of the plans selected in 2021, nearly 50% of SMB employees opted to waive coverage entirely (this number has declined 5% since 2018). Holding relatively steady, the number of health plans offered by employers reflect efforts to steer employees toward more affordable options. While uptake of consumer-driven plans remains a sliver of those enrolled in more traditional plans, participation in high deductible health plans has increased 52% since 2018.

Looking year-over-year, 2021 brought no new differentiation in plan-type enrollment. The majority of SMB employees continue to enroll in HMO plans at the highest rate, followed by PPO plans. These traditional plans may seem more stable and comfortable to workers in 2021, where pandemic-related worries have likely impacted benefits decisions. Although higher deductible health plans continue to garner huge buzz, we see light adoption compared to HMOs and PPOs. As employers get larger in size, more employees choose to waive coverage. However, on average, fewer employees are choosing to waive coverage in 2021 than in 2018.

The full report, which dives deeper into benefits, costs and adoption, is available here.

About Ease

Ease is an online benefits enrollment system built for insurance brokers and employers. Ease makes it simple to set up and manage benefits, onboard new hires, stay compliant, and offer employees one destination for all their human resources information. Started in 2012 in San Francisco by employee benefits veteran David Reid and web and engineering architect Courtney Guertin, Ease works with insurance brokers and small businesses to create seamless HR and benefits processes on an easy-to-use system. Ease has offices in Las Vegas, New York, Omaha and San Diego. In 2015, Ease was launched on the West Coast and is among the most widely adopted, fastest growing solutions for brokers and employers in the area, with more than 75,000 employers and over 2.5 million employees. For more information, head to www.ease.com.

Methodology

The data featured in this report draws on data from 75,000 SMBs (those with 1-250 active employees) and 2.5 million employees nationwide, reflecting small- and medium-size businesses using Ease. This analysis is based on anonymized data collected in November and December 2021.

Media contact:
Inkhouse for Ease
[email protected] 

SOURCE Ease