This is written for companies with 20 to 99 employees. The report it describes needs at least 50 people on your health plan, which is said plainly again at the end.

It is also written to be forwarded. If somebody sent you this, they want you to read one page and understand the whole idea. So here is the whole idea in one page.

The short answer

A benefits benchmark compares your actual plans with the plans of similar employers. It looks at what the plans cost, what your employees pay and what the plans cover.

That is the entire definition. Everything below just fills it in.

You already benchmark other things. You know roughly what the market pays for the roles you hire. You know what your competitors charge. Somebody in your company checks those numbers.

Michael Craig asks the obvious follow-up.

“Your company benchmarks sales. Finance. Compensation. Performance. Why wouldn’t you benchmark benefits?”

Health benefits are usually the second biggest line in the budget, behind payroll. It is the one nobody measures.

What it is not

This matters as much as what it is, because the word gets used loosely.

A benchmark is not a quote. Nobody is pricing your business or asking you to switch anything.

It is not a survey. You are not being compared against what employers said in a questionnaire. The comparison is built from real plan documents.

It is not an opinion. Nobody is telling you your benefits are good or bad. The report shows you where your plan sits and leaves the judgement to you.

It is not a recommendation. No changes are suggested inside the report itself.

It is not an audit. Nothing is being checked for errors and nothing is being reported to anyone.

It is a measurement. That is all it is. That is why it is easy to say yes to.

Where the comparison group comes from

You get measured against a group of employers. That group has a name. It is your peer group.

A peer group is a set of employers picked to look like yours. Two things decide who is in it.

• 1) Your industry

• 2) The states where you have a real physical office

So a manufacturer in Pennsylvania is measured against other manufacturers with people in Pennsylvania. Not against a bank in California.

That is the part that makes the answer useful. A national average tells you very little. The firms your next hire is also interviewing with tell you a lot.

What “competitive” means here

Nobody ever defines this word, so here it is.

Competitive means measured against what other employers like you are really doing.

It does not mean expensive. It does not mean generous. It does not mean your team is happy with it.

You can spend more than your peers and still sit behind them. You can spend less and sit ahead. What you spend and where you stand are two separate facts.

What the report measures

Your plans get read feature by feature. Not as one bundle.

On the medical side that starts with your deductible. A deductible is the amount a person pays for care each year before the plan starts paying its share. It means your out-of-pocket maximum, which is the most a person can pay in a year before the plan covers everything else. It means your copays and your drug tiers.

It also means your employee contribution. That is the share of the premium your people pay out of their own paycheck. It is scored separately from the premium itself.

That separation matters. Your team never sees a premium. They see a paycheck deduction and they compare it with their friends.

Then the same treatment for dental, for vision, for basic life and for your short-term and long-term disability cover.

What you get at the end

A report, in three layers.

One score for the whole package. Scores run from 0 to 100. Higher means more competitive.

A score for each group of benefits. Medical and drugs on its own. Dental and vision on their own. Basic life, short-term disability and long-term disability on their own.

Two short lists. One names the features of your plan that land in the “top 25%” of your peer group. The other names the features that land in the “bottom 25%”.

Here is an example of what those scores look like. It is an example, not market data.

The whole package Score: 52

Medical and drugs Score: 48

Dental and vision Score: 44

Basic life, short-term and long-term disability Score: 71

Read the parts rather than the total. That employer’s medical plan is near the middle. Dental and vision trail it. Life and disability is the strongest thing on the list.

The single number at the top hides all three of those facts.

One more rule worth knowing. A benefit you do not offer at all is scored as a zero, not left blank. So the score reflects the whole package, including the gaps.

Free guide: See exactly what a report needs from you in the free What We Need for Your Benefits Benchmark. It fits on one page.

Why the parts are weighted

The groups do not count equally toward the total.

Medical and drugs drive about 80% of the score. Dental and vision are about 10%. Basic life, short-term disability and long-term disability are about 10%.

Medical is where nearly all the money goes, so it does nearly all the work in the number.

What you do with it

The report is not the point. The conversation after it is.

You sit down with it and walk through five things.

• 1) Where your plan ranks well

• 2) Where it trails

• 3) What your employees are paying compared with their peers

• 4) What employers in your industry are offering

• 5) What is worth looking at before your renewal

Nothing changes that day. Nobody quotes anything. You come out of it knowing where you stand, which is more than you knew going in.

Then you decide what, if anything, to do about it. Some owners change something. Some change nothing and feel a lot better about the plan they already have. Both are good outcomes.

What it takes to get one

Two piles of paper. You already own both.

Facts about your company. The name, the website, how many full time employees can join the plan, your industry and the states where you have an office.

Your plan papers. Plan summaries, current rates and what your employees pay at each level of cover, across medical, dental, vision, life and disability.

Your open enrollment guide usually holds most of it.

Plan papers go through pennworth.com/secure-upload, never a normal web form and never email. They describe your people, so they travel the safe way.

What you get back is the Pennworth Benefits Benchmark.

The one rule to know up front

The report needs at least 50 people on your health plan. Below that, there is not enough to measure against and the report is not built.

Better to know that now than after you have spent an afternoon gathering documents.

If you have fewer than 50 on the plan, the 2-minute assessment at the end of this article still gives you a straight read. It also points you to a tool built for your size.

The reason any of this exists

Every year a renewal arrives with a price on it. Somebody approves it. The year starts again.

Michael Craig says it better than we can.

“Your renewal tells you what your carrier wants to charge you. It doesn’t tell you whether your benefits are competitive.”

A benchmark answers the second half of that sentence. Nothing else you receive all year does.

See where you stand

Answer nine quick questions and get a straight read on how much of your benefits package you can really see. It takes 2 minutes.

Take the 2-Minute Benefits Benchmark Assessment →