Benefits Benchmarking: How Does Your Package Compare?

If you’re running a 10-person tech startup or managing HR for a growing construction company, offering competitive employee health plans is no longer a luxury—it’s an expectation. But how do you know if your current benefits are keeping up with the market?

That’s where benefits benchmarking comes in. This data-driven process allows employers to measure the value, cost, and structure of their health offerings against similar companies in their region or industry.

In this blog, we’ll cover:

• What benefits benchmarking is
• Why it matters now more than ever
• What California companies are offering in their group plans
• How insurance brokers can guide you through the process

What Is Benefits Benchmarking?

Benefits benchmarking is the practice of comparing your company’s benefits—especially your employee health plans—to those offered by similar businesses. Think of it as a reality check for your compensation strategy.

Benchmarking typically looks at:

• Types of group benefits offered (health, dental, vision, mental health, etc.)
• Employer contribution levels
• Plan structures (PPO vs. HMO vs. HDHP)
• Enrollment participation
• Ancillary offerings (HSA/FSA, wellness programs, telemedicine)

Why Does Benchmarking Matter?

If you’re not benchmarking your employee health plans, you may be:

• Overpaying for benefits employees don’t value
• Losing top talent to competitors offering stronger packages
• Non-compliant with evolving regional or federal regulations
• Missing out on savings or plan optimization opportunities

According to the KFF 2023 Employer Health Benefits Survey, nearly 50% of small employers in California offer health benefits—but the quality and cost-sharing models vary widely.

In a tight labor market, staying competitive means offering benefits that align with both employee needs and industry standards.

Benchmark Snapshot – California Small Businesses (2024)

Company Size	Avg. Employer Contribution (Single)	Most Common Plan Type	Popular Add-Ons
2–10 Employees	70–75%	PPO or HMO	Telehealth, Wellness stipends
11–25 Employees	75–80%	PPO + HDHP Combo	Dental/Vision, HSA contributions
26–50 Employees	80–90%	PPO + FSA, Optional HSA	EAP, Gym Reimbursements, Life/STD

From Individual to Group Plans: Why the Shift Matters

Many California companies start by reimbursing individual premiums or encouraging team members to find their own coverage. But once your company begins to grow—or if you want to attract and retain full-time employees—it makes sense to transition to group plans.

Here’s how transitioning to group plans can improve your business:

• Group health premiums are generally lower per person than individual coverage.
• You may qualify for tax advantages, such as the Small Business Health Care Tax Credit.
• Offering structured employee health plans signals legitimacy and investment in your team.

How to Start Benchmarking Your Benefits

Here’s a simple 5-step guide to getting started:

1. Collect Internal Data
   Document your current plan offerings, employer contribution levels, out-of-pocket maximums, deductibles, and participation rates.
2. Identify Peer Comparisons
   Choose comparison groups based on:
   • Industry
   • Company size
   • Geographic region
   • Hiring competitiveness
3. Work With an Insurance Broker
   Experienced insurance brokers have access to real-time benchmarking data and can help interpret what your competitors are offering.
4. Evaluate Cost vs. Value
   High-cost plans aren’t always high-value. Your broker can assess which features drive satisfaction (e.g., provider networks, mental health access) versus which are underused.
5. Plan for Adjustments
   Use the results to shape renewal strategies, new offerings, or tiered benefit packages for different employee classes.

What to Measure in Your Benchmarking Process

Metric	Why It Matters
Employee Participation Rate	Indicates value perception and satisfaction
Employer vs. Employee Contribution	Affects recruitment, retention, and IRS compliance
Plan Type Distribution	PPO, HMO, HDHP adoption impacts network satisfaction
HSA/FSA Participation	Helps gauge interest in flexible spending options
Cost per Employee per Month (PEPM)	Helps budget forecasting and comparison

Make Your Benefits Work Harder

Benchmarking your employee health plans isn’t just a one-time exercise—it’s a strategic advantage. Whether you’re hiring your fifth employee or your fiftieth, making sure your benefits are relevant and competitive keeps your team strong and your business growing.

At Regency West Insurance, we help California companies of all sizes assess their group benefits, identify performance gaps, and build custom strategies to stay ahead in a shifting market. From first-time transitions to complex renewals, we simplify the process so you can focus on running your business.

Work with Regency West Insurance for benefits benchmarking today.

Frequently Asked Questions

1. What should be included in a benefits benchmarking analysis?

A well-rounded benefits benchmarking analysis should cover both qualitative and quantitative aspects of your current employee health plans and group benefits offerings. Here’s what to include:

• Plan design (PPO, HMO, HDHP, HSA-compatible, etc.)
• Employer contribution levels vs. employee premiums
• Deductibles, out-of-pocket maximums, and copays
• Participation rates among eligible employees
• Ancillary benefits like dental, vision, mental health, disability, and wellness programs
• Enrollment trends and employee feedback
• Cost per employee per month (PEPM)

When compared to similar companies—by industry, size, or location—this data helps determine if your package is competitive, cost-effective, and compliant with current expectations.

2. How frequently should you benchmark?

At minimum, businesses should benchmark their employee health plans once per year, ideally 2–3 months before renewal. This gives you time to:

• Assess the competitiveness of your current offerings
• Explore alternative carriers or plan types
• Make budget-conscious decisions before open enrollment

However, benchmarking should also occur when:

• You’re experiencing higher-than-average turnover
• You’re expanding or hiring rapidly
• You’re transitioning from individual to group health coverage
• Major legislation changes impact group benefits (like ACA thresholds or HSA rules)

Regular benchmarking ensures you’re not overpaying—or underdelivering—on your group benefits strategy.

3. What are common challenges of benchmarking?

Several issues can limit the effectiveness of your benchmarking efforts:

• Lack of accurate internal data: Incomplete or outdated plan information makes comparisons unreliable.
• Inconsistent data sources: Benchmarking against national averages when you operate regionally (like only in California) can distort results.
• Overemphasis on cost alone: Lower-cost plans might look good on paper but fail to meet employee needs or satisfaction standards.
• Misinterpreting compliance requirements: California compliance rules are stricter in some areas—especially regarding Minimum Essential Coverage (MEC) and affordability—so it’s important to consider legal obligations alongside market trends.

This is why many employers rely on insurance brokers who are experienced in interpreting both data and compliance benchmarks.

4. What are some benefits of benchmarking tools?

There are several reputable tools and resources to help employers benchmark their benefits:

• SHRM Benchmarking Service
• KFF Employer Health Benefits Survey 
• Bureau of Labor Statistics – Employee Benefits Data
• Benefits Marketplaces like Gusto, Zenefits, and Ease, which provide data to their clients

These tools help you analyze trends, identify gaps, and forecast your benefits investment for the next 12–24 months.

5. Where do you find relevant benchmarking data?

Finding benchmarking data that applies to your business size, location, and industry is key. The best places to look include:

• Regional insurance carriers and broker partners with access to California-specific benefits data
• Professional associations, such as SHRM, that regularly release industry-specific compensation and benefits studies
• State and federal labor agencies, such as the California Department of Insurance and Bureau of Labor Statistics
• Market research reports from Kaiser Family Foundation (KFF), Mercer, and MetLife
• Your own employees—conducting internal surveys on satisfaction and needs provides important context for interpreting external benchmarks

Working with a local insurance broker ensures you’re comparing your employee health plans against the right peer group and staying ahead of California compliance standards.