We recently asked VC-backed companies with 100 to thousands of employees how they’re designing their core employee benefits programs and what changes they intend to make in the next 12 to 24 months.
We focused on core benefits — healthcare, wellbeing, retirement, and leave policies — because they’ve become essentials that employees have come to expect from their employers and are key tools for hiring and retention.
To help mid-size and enterprise VC-backed companies design core benefits programs that are both competitive and affordable, we’re sharing some key healthcare and wellbeing insights from our 2024 Benefits Benchmarking Report, featuring more than 800 tech companies in the software, AI, and life sciences industries. Plus, we’ll share tips and considerations to guide companies as they develop their benefits programs for the next open enrollment season.
(Related: Top 2024 Core Benefits Trends for Early-Stage Companies)
Our report reveals that core benefits remain essential, with 93% of employers offering at least one benefit in each category (medical, dental, vision, life, short-term disability, and long-term disability) — up 3% from last year. Employers are more intentional about what they offer and are making sure benefits match their employee demographics.
When it comes to health plans, PPOs (preferred provider organizations) are practically a requirement these days, while HMO (health maintenance organization) offerings increased 10% from last year.
To attract and retain talent, 62% offer employee-only coverage at no cost for at least one medical plan, typically a high deductible health plan (HDHP). This strategy, which has become more popular over the years, drives employees to be more mindful of their use of care.
Tips for companies who want to add or remove health plan benefits:
1. Before making any big decisions, analyze your benefits data, including enrollment and utilization rates, to see how your program aligns with your employee demographics.
2. Optimize your contribution strategies to keep costs predictable as you scale. A lot of companies do this through a base buy-up strategy. This allows employees who need more coverage to choose more robust plans but capping the employer contribution.
3. If you want to offer a plan at zero cost, choose an HDHP. This ensures employees aren’t enrolling in plans they don’t need and won’t use, just because they’re fully covered.
Most employers (71%) are implementing one of three strategies to contain the rising cost of healthcare:
1. Increasing employee contributions by introducing a contribution to plans that were previously zero-cost to employees or by raising contributions to existing plans.
2. Reducing the number of medical plans offered, typically those with low utilization and low perceived value .
3. Sunsetting programs. These are often wellbeing programs with low participation.
Here are three healthcare cost-containment tips for employers:
1. Figure out what plans aren’t being used or have low perceived value and reallocate funds to those with a greater return on investment.
2. When reducing plans, aim to simplify, not limit, choices.
3. Create an employee contribution strategy based on percentage rather than a dollar value, which allows for a more natural share of the cost increase.
- Our data finds that wellbeing benefits — particularly family and physical benefits — are increasing at the fastest rate. Some key insights over three years — 2022 to 2024:
- 95% of companies are offering at least one emotional wellbeing benefit
- Family wellbeing benefits increased 11%
- Physical wellbeing benefits increased 8%
- Financial wellbeing benefits increased 3 %
There hasn’t been a decrease in any of the categories over the three-year period. However, since 2023, financial planning services dropped 20% and meditation app offerings decreased 15%, likely because of low employee utilization.
What’s ahead: Over the next 12 to 24 months, more than 50% of employers said they are expanding access to mental health services. As a result, we expect to see emotional health benefits increase. Also 44% of employers are considering expanding wellbeing benefits by adding at least one program in any of the four wellbeing categories.
Tips for employers evaluating wellbeing benefits:
1. Explore what benefits are already available through your carriers as a cost-efficient way to expand offerings.
2. Partner with outside vendors to round out wellbeing programs, especially for remote or distributed workforces.
3. Continually monitor enrollment and utilization data to understand what employees truly need or value.
Leave programs are becoming more generous to both birthing and non-birthing parents, which aligns with the increase in family benefits. Complexities tend to arise from the coordination of benefits between disability programs and salary continuation policies.
Some tips to consider when designing family leave policies:
1. Partner with a leave administration company to ensure compliance and improve the employee experience.
2. Harmonize policies for birthing and non-birthing parents to help reduce the stress on new families.
3. Create a thoughtful transition program to help parents go back to work, especially if you can’t provide 12 weeks of leave. This can be a smart smart long-term investment for reducing stress and turnover and retaining key talent.
RELATED:
2024 Trends: Long-Term Incentives for Executives
Top 2024 Core Benefits Trends for Early-Stage Companies
Benchmark Your Benefits Offerings
Want more benefits data from mid-size and enterprise tech companies like yours? Reach out to an experienced Sequoia advisor to access the full benefits benchmarking report and to get your benefits benchmarked against our data.
