What is plan design benchmarking?

Plan design benchmarking is a process used by employers and organizations to compare the features, costs, and performance of their employee benefit plans against industry standards or peer organizations. The goal of plan design benchmarking is to evaluate the competitiveness, effectiveness, and efficiency of a company's benefit offerings, such as health insurance, retirement plans, wellness programs, and other employee perks, in relation to similar organizations.

Key components of plan design benchmarking include:

• Data Collection: Gathering detailed information about the organization's benefit plans, including plan design features, premium costs, contribution levels, coverage options, and employee utilization data.
• Comparison Group: Identifying a relevant peer group or industry standards against which the organization's benefit plans will be compared. This group can consist of competitors, industry peers, or organizations of a similar size and industry.
• Analysis: Conducting a comprehensive analysis to compare the organization's benefit plans to those of the comparison group. This analysis can include examining plan costs, coverage levels, employee contributions, deductibles, copayments, out-of-pocket maximums, and other plan design elements.
• Performance Evaluation: Assessing how well the organization's benefit plans are performing in terms of meeting specific goals and objectives. This may involve evaluating factors such as employee satisfaction, recruitment and retention success, cost-effectiveness, and compliance with regulatory requirements.
• Identifying Areas for Improvement: Based on the benchmarking results, organizations can identify areas where their benefit plans may be lagging or excelling compared to peers. This information can guide decisions about plan design changes or enhancements.
• Strategic Decision-Making: Using benchmarking data to inform strategic decisions about benefit plan design, cost-sharing arrangements, provider networks, wellness initiatives, and other aspects of the benefits package. This can help organizations enhance their competitive position in attracting and retaining talent while managing costs effectively.
• Communication: Sharing the benchmarking results and any proposed changes with employees and stakeholders to ensure transparency and gather feedback.

Plan design benchmarking is a valuable tool for organizations aiming to optimize their employee benefit plans. It provides a data-driven approach to making informed decisions about plan design, cost management, and benefits strategy, ultimately helping organizations align their benefits offerings with their business goals and the expectations of their workforce.

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