SAN FRANCISCO, March 9, 2021 /PRNewswire/ -- Ease, a leading HR and benefits software solution for small businesses, insurance brokers, and insurance carriers, today released its second annual SMB Benefits and Employee Insights Report, which uncovered how SMBs across the country are recovering from the economic fallout of the pandemic. According to the Bureau of Labor Statistics, more than 18 million workers were furloughed by April 2020. The report, which draws on data from 75,000 SMBs and 2.5 million employees nationwide, found that businesses with 1-10 employees have since rehired an average of 37% of furloughed workers, the highest rehiring rate of SMBs.
"As we come out of the pandemic and the economy slowly recovers, our goal with this report is to help employers make informed decisions - backed by data - about the benefits they offer to help drive recruitment and employee engagement," said David Reid, CEO and co-founder of Ease. "We've found that small businesses that survived the downturn were able to adapt and do more with less—and even rehire many of their employees. But with premiums on the rise nationwide, small businesses need to look for more flexible, affordable plan options and voluntary benefits to help attract new talent and compete with larger companies."
Smallest businesses rehired furloughed employees at the highest rate
Prior to COVID-19, the US unemployment rate was the lowest it had been since 1969 creating steep competition among employers looking to attract the best talent. But during the recession this past year, the job market and employment landscape shifted dramatically as millions of Americans were furloughed or laid off.
As the year wore on, the job growth the US experienced in the second and third quarters was tied to the return of furloughed workers to their companies, as well as the availability of funding through PPP loans. Companies on the Ease system saw the following rehiring trends of employees furloughed due to the pandemic:
37.09% of employees who worked for companies with 1-10 employees
2.21% of employees who worked for companies with 11-50 employees
3.29% of employees who worked for companies with 51-100 employees
4.24% of employees who worked for companies with 101-250 employees
Further, in 2020, the majority of insurance brokers surveyed (81%) said they helped their SMB clients lay off employees/navigate COBRA, according to Ease's 2020 Fourth Quarter Preparedness Report, in which Ease surveyed nearly 600 brokers, account managers and agency owners. Seventy-four percent said they helped their clients furlough employees and 69% said they helped with hiring employees and conducting onboarding/benefits selection remotely.
Voluntary benefits take the lead in the war for talent
Beyond standard medical benefits, optional voluntary benefits offerings have also increased across companies looking to differentiate themselves in the talent market. The larger the company, the more voluntary benefits plans offered per employee. A company with 101-250 employees averaged 3.33 more voluntary benefits plans in 2020 than a company with 1-10 employees. The number of voluntary benefits plans offered per employee has increased by roughly 3% on average since 2018. The most popular plans are Dental, Vision, Life AD&D, Short-Term Disability, and Long-Term Disability.
On the West Coast, in California the number of voluntary benefits plans offered per employee has increased 2% since 2018, on average. Florida, however, saw a slight decrease in 2020, year-over-year, while Texas and New York saw slight increases year-over-year.
Medical premiums increased, eclipsing the rate of inflation
The COVID-19 pandemic deeply impacted the healthcare industry and medical premium costs were no exception. Year-over-year, the average company in Ease saw an increase in individual medical premiums of nearly 6%, while family medical premiums increased nearly 4%, on average. Overall healthcare prices rose 1.8% in 2020 and costs for physician services increased by 1.7%. One area that remained consistent despite the pandemic was costs for hospital services, which rose only 3% percent from 2019 to 2020 and held steady with the same increase as the prior year.
The report also looked at four states across the country: New York, Florida, Texas and California to compare benefits trends across the nation at a state level. New York saw the largest increase in individual and family premiums with a 20% and 15% increase, respectively. While Florida and Texas both saw increases in individual and family premiums, individual premiums were well below the $541 national average at $489 and $478, respectively. Family medical premiums in Florida also experienced a notable variance, with companies of 1-10 employees seeing a 3% decrease in family medical premiums in 2020, and companies with 11-50 and 51-100 employees were faced with steady increases. While there was a strong correlation between company size and increased premium cost nationally in 2020, Florida exhibited more variability in 2020. Lastly, California saw a 4% increase in individual premiums and just under 4% (3.73%) increase in family premiums from 2019 to 2020.
This inordinate increase relative to both the rate of inflation and the rate of change for other costs in the healthcare industry poses unique challenges to business decision makers as they seek to balance affordability with meaningful access and quality care.
The report also found that there's been an emergence of a "digital first" care model designed to meet the needs of patients while physical points of care were closed. In fact, Ease brokers initiating telemedicine enrollment for their employer groups skyrocketed with a year-over-year increase of 109%. One-third of brokers surveyed said they helped implement a telehealth option for their clients' employees. This new care model is unlikely to lose ground in 2021.
Fewer medical plans means more affordability
One way to help with affordability is fewer medical plan options. Over the last three years, the number of medical plans offered per employee has decreased by about 3% on average. This small but steady annual decrease observed since 2018 signifies an effort at cost containment by group leaders and business decision makers to point employees to the most affordable plan options, such as high deductible health plans (HDHPs). HDHPs are particularly popular amongst millennial employees because these plans are a lower cost option.
In 2020, businesses with more employees offered more medical plans than those with fewer employees. These larger groups are able to take advantage of risk pooling which enables higher cost claimants to be offset by the healthier, lower-cost population within the employer group. Due to this risk-shifting model, larger companies can offer a wider variety of medical plans that may be cost prohibitive to smaller companies.
On average in 2020, employees in California and Florida selected health maintenance organizations (HMOs) more than any other plan type; whereas Texas employees chose preferred provider organizations (PPOs) at the highest rate. New York employees selected exclusive provider organizations (EPOs) more than any other plan type for medical insurance, which typically have lower premiums than a PPO plan.
The full report, which dives deeper into benefits, costs and adoption, is available here.
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.