Your company checks how its pay compares with other companies. You know roughly what your competitors charge. But do you know how your health plan compares with theirs?

Health benefits are often a company’s second-biggest cost after payroll. Most owners never compare them with anyone else’s.

Michael Craig of Pennworth puts it this way:

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

The short answer

A benefits benchmark compares your health plan and other benefits with those of similar companies. It looks at what the plans cost, what your employees pay and what the plans cover.

What it isn’t

People use the word loosely, so here’s what a benchmark is not.

1) It’s not a quote. Nobody is pricing your business or asking you to switch.

2) It’s not a survey. You’re compared with real plan documents, not with what companies said in a questionnaire.

3) It’s not an opinion. Nobody tells you your benefits are good or bad. The report shows where your plan stands and leaves the call to you.

4) It’s not a sales pitch. The report itself doesn’t recommend changes.

5) It’s not an audit. Nothing is checked for mistakes and nothing is reported to anyone.

It’s just a measurement of where you stand.

Who you’re compared with

You’re compared with a group of companies picked to look like yours. Two things decide who’s in it:

1) Your industry

2) The states where you have an office

So a manufacturer in Pennsylvania is compared with other manufacturers that have people in Pennsylvania. Not with a bank in California.

That’s what makes the answer useful. Comparing with a national average wouldn’t tell you much. Comparing with the companies your next hire might also join tells you a lot.

What “competitive” means

People say “competitive benefits” all the time and rarely say what they mean. Here, it means how your benefits compare with what similar companies really offer.

It doesn’t mean expensive or generous. It doesn’t mean your team is happy with it either.

Spending more doesn’t always mean you offer more. A company can spend more than similar companies and still trail them, or spend less and come out ahead.

What the report looks at

Your plans are compared one piece at a time, not as one bundle.

For the health plan, that starts with the deductible, the amount someone pays for care each year before the plan starts paying its share. Then the out-of-pocket maximum, the most someone can pay in a year before the plan covers the rest. Then drug costs and copays, the set amount someone pays for a doctor visit or a prescription.

It also looks at what your employees pay out of each paycheck for coverage. That’s scored apart from the plan’s total price.

That matters because your team never sees the plan’s total price. They see what comes out of their paycheck and they compare it with what their friends pay.

Then the report does the same for dental, vision, life insurance and disability coverage.

What you get

A report with three parts:

1) One score for the whole package, from 0 to 100. Higher means more competitive.

2) A score for each type of benefit. One for medical and drugs, one for dental and vision, one for life and disability.

3) Two short lists. One names the parts of your plan in the top quarter of similar companies. The other names the parts in the bottom quarter.

For example, one company’s scores might look like this (the numbers are made up):

The whole package: 52

Medical and drugs: 48

Dental and vision: 44

Life and disability: 71

Look at the parts, not just the total. This company’s medical plan is near the middle. Dental and vision trail behind. Life and disability is its strongest area.

You’d miss all of that if you only looked at the total.

One more thing to know. A benefit you don’t offer at all scores a zero. So the score shows the whole package, gaps included.

How the parts are weighted

The parts don’t count equally toward the total.

Medical and drugs make up about 80% of the score. Dental and vision make up about 10%. Life and disability make up about 10%.

That’s because medical is where almost all the money goes.

What you do with it

Once your report is ready, we sit down with you and go through five things:

1) Where your plan ranks well

2) Where it trails

3) What your employees pay compared with employees at similar companies

4) What other companies in your industry offer

5) What to look at before your plan renews

Nothing changes that day and nobody quotes you anything. You walk out knowing where you stand.

Then you decide what, if anything, to do. Some owners change something. Others change nothing and feel better about the plan they have.

What it takes

Two sets of papers. You already have both.

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

2) Your plan papers. For each plan, the summary that shows what it covers, what it costs each month and what employees pay to cover just themselves or their families. That’s for medical, dental, vision, life and disability.

Your open enrollment guide, the booklet your team gets each year to pick their benefits, usually has most of it.

To get your report, send both through pennworth.com/secure-upload. Please don’t use email or a regular web form, because the papers have personal details about your team.

What you get back is the Pennworth Benefits Benchmark.

One rule to know first

The report needs at least 50 of your employees signed up for your health plan. Count the employees who signed up, not their family members and not your whole headcount. With fewer, there isn’t enough to compare and the report can’t be built.

Better to know that now than after you’ve spent an afternoon gathering papers.

If you have fewer than 50 employees on the plan, or you’re not ready to send papers, start with the 2-minute assessment below.

Why this matters

Your plan renews every year. Most of the time, someone signs off on the renewal and nobody asks how it compares.

Michael often says your renewal tells you what the insurance company wants to charge you. It doesn’t tell you whether your benefits are competitive.

A benchmark shows you how your benefits compare with other companies’ benefits. Your renewal can’t tell you that.

See where you stand

Answer 7 quick questions and see how healthy your benefits program is. It takes 2 minutes.

Take the 2-minute assessment →