.png){kind=small}
%20(1).png){kind=small}
.svg)
Health Insurance Trends
Preliminary Health Insurance Premium Rate Increases for 2025
Preliminary health insurance premium rate increases are starting to be filed by state and are expected to climb considerably on average next year.
August 21, 2024
Key Takeaways
ARTICLE | Preliminary Health Insurance Premium Rate Increases for 2025
Preliminary rate changes for 2025 for small group health insurance policy premiums through exchanges have started to be filed.
For context, the rate at which US healthcare expenditures are rising is expected to hit a 13 year high next year, with data from PwC indicating that medical costs are set to rise by about 8% for group coverage (7.5% for individual coverage), which is half a point above the 2024 growth rates and up significantly from a recent low of 5.5% growth in medical costs recorded in 2017.
At this stage in the process, these proposed rate changes are still open for public comment in many cases and are usually subject to further approval by in-state agencies that cover these insurance-related matters before the changes can be enacted.
Although these rates are not yet finalized, preliminary rates will often pretty closely mirror final rates.
While these proposed rates are not the exact same rates that companies can ultimately get if they are self-funding their employee insurance plans, these rates will usually correlate fairly tightly with the rates that self-funding companies can expect as the employee demographic and healthcare utilization patterns are similar in a given geography.
Here are the proposed rate changes for 2025 plans from all states that have released this information to date.
Individual health insurance plan premiums on the exchange are preliminarily set to decrease on (unweighted) average by -3.1% in 2025, while small group plan rates are proposed to climb by an unweighted average of 7.41%.
The largest average rate decrease for individual policies was proposed by Celtic Insurance Co. at - 7.28%, while the smallest increase in small group plan rates was 4.96%, requested by Blue Cross Blue Shield of Alabama.
The largest individual policy average rate increase was proposed by UnitedHealthcare Insurance Co. with a meager rate increase of just 0.55% on average, while VIVA Health requested the largest average rate increase among small group plans at 14.95%.
Health insurance premiums in Alaska are currently set to climb by about 17.1% on average for individual plans and plus 11.71% on average unweighted for small group plans next year.
Premera Blue Cross Blue Shield of AK requested the smallest average rate increase for individual policies at 16.26% on average, while UnitedHealthcare Insurance Co. requested the smallest average rate increase for small group plans at 8.65%.
Moda Assurance Co. made the largest requested average rate increase for individual plans among carriers at 19.63%, and the largest average rate increase requested for small group plans was Moda Health Plan, Inc. with an average premium rate increase of 14.77%.
Insurance carriers requesting rate increases largely attribute the need for those increases to inflation in medical/pharmacy costs and utilization.
Requests to increase premiums for individual and small group health insurance plans through the exchange in 2025 average to about 4.2% for individual plans and about 9.6% for small group plans.
One insurance carrier in Arkansas - QCA Health Plan, Inc. - proposed a decrease of 2% on average for individual policy premiums, while the smallest increase for small group plans was QualChoice Life and Health Ins. Co. Inc. which requested an average rate increase of 4.53%.
USAble HMO Inc. (Octave) requested the largest average rate increase for individual policies at 8.57%. while UnitedHealthcare Insurance Company had the largest small group plan premium rate hike at 15.98%.
Individual and small group health insurance plan premiums via the exchange are currently slated to increase an average of 8.3% in 2025, which is down from 12.4% in 2024. Small group plan rate hike requests average to about 11.9%.
Rate increases were requested by 8 health insurance carriers in Connecticut and are presently under review by the Connecticut Insurance Department, although the public comment period has closed.
CTCare Benefits requested the smallest average rate increase for individual policies at 7.4% while Oxford Health Plans CT had the smallest small group plan premium rate hike at 5.1%.
The largest requested average rate increase for individual plans was made by CTCare Insurance Co. at 12.5%, and the largest average rate increase requested for small group plans was Anthem Health Plans with an average premium rate increase of 13.6%.
The carriers making these requests attribute the increases to overall trends, higher than expected COVID-19 expenses, and the unwinding of Medicaid.
Insurance carriers have proposed increasing Individual and small group health insurance plan premiums via the exchange in 2025 by 13.3% and 8%, respectively.
In the individual market, one carrier proposed reducing premiums by 14%, while the smallest rate increase proposal for the group market was Highmark BCBSD at 8%.
Aetna Health requested the largest average rate increase for individual policies at 34.53%. while UnitedHealthcare had the largest small group plan premium rate hike at 18.2%.
Individual and small group health insurance plan premiums are currently slated to increase an average of 6.6% and 9.3% in 2025, respectively.
Mountain Health Co-Op proposed decreasing premiums for individual policies by 2.7% while PacificSource Health Plans requested the smallest premium rate hike among carriers with at least 1% market share for small group plans at 4%.
The largest requested average rate increase for individual plans was made by Regence Blue Shield of Idaho at 11.9%, and the largest average rate increase requested for small group plans was UnitedHealth Insurance Co. with an average premium rate increase of 13%.
Carriers are attributing rate increases in Idaho to health claims paid outpacing premiums collected.
Requests to increase premium rates in 2025 for individual health insurance plans in Illinois average to about 4.6%, while the average proposed rate increase to small group plans is an unweighted 9.5%.
Molina Healthcare of IL, Inc. requested the smallest average rate increase for individual policies at 1.6% on average, while MercyCare HMO requested the smallest average rate increase for small group plans at 6.52%, but it is unclear how much market share that MercyCare HMO serves.
Oscar Health Plan, Inc. made the largest requested average rate increase for individual plans among carriers at 19.9%, and the largest average rate increase requested for small group plans was Health Alliance Medical Plans, Inc. with an average premium rate increase of 19.9%.
Insurance carriers expect to decrease policy premium expenses for individual health insurance plans through the exchange by an average of - 1.5% in 2025, although the majority of plans are requesting rate increases. Small group plan rates are expected to rise by about 8%.
Coordinated Care Corporation proposed the largest average rate decrease for individual policies at -4.3%, while UnitedHealthcare Insurance Co. proposed the smallest increase for small group policies at 6.54%.
Aetna Health inc. requested the largest average premium rate increase request for individual policies at 10.8%, while Physicians Health Plan of N. Indiana proposed the largest average rate hike for small group premiums at 9.45%.
Requests to increase premiums for individual and small group health insurance plans via the exchange in 2025 average to about 14.2% and 14.8%, respectively.
The smallest requested average rate increase for individual plans was made by Taro Health Plan of Maine, Inc. at 3.9%, and the smallest average rate increase for small group plans among carriers with at least 1% market share was United Health Insurance with an average premium rate increase of 5.3%.
Harvard Pilgrim Healthcare requested the largest average rate increase for individual policies at 15.8%. while Maine Community Health Options had the largest small group plan premium rate hike at 19.6%.
Individual exchange-acquired health insurance plan premiums are currently slated to increase an average of 6.7% in 2025 - with average individual policy rate increase requests ranging from 4.7% to 14.2% - while small group premiums are expected to increase by about 6.11%.
CareFirst BlueChoice requested the smallest average rate increase for both individual policies and small group policies at 4.7% and 4.9%, respectively.
CareFirst (GHMSI) and CareFirst of Maryland, Inc. shared the largest average premium rate increase request for individual policies, as well, at 14.2%, while Aetna Life Insurance Co. proposed the largest rate hike for small group premiums at 23%.
Requests to increase premiums for individual and small group exchange health insurance plans in 2025 average to about 8.4%.
Fallon Community Health Plan Inc. requested the smallest average rate increase for both individual and small group policies at 1.4% each.
The largest requested average rate increase for individual plans among carriers with at least 1% market share was made by Tufts Health Public Plans at 10.4%, and the largest average rate increase requested for small group plans was UnitedHealthcare Insurance Co. with an average premium rate increase of 12.4%.
Rate increases are being attributed primarily to rising hospital and prescription drug costs, although other contributing factors include a population that is aging, risk analysis, general trends, an improved user experience, and use of certain inpatient and outpatient services.
Individual and small group exchange health insurance plan premiums are currently slated to increase an average of 10.5% and 11.2%, respectively, in 2025.
Meridian Health Plan Inc. requested the smallest average rate increase (3.1%) among carriers with at least 1% market share for individual policies, while UnitedHealthInsurance Co. had the smallest small group plan premium rate hike at 4.7%.
Priority Health requested the largest average rate increase for both individual and small group plans was made by Priority Health at 18.89% and 13.2%, respectively.
According to the insurers requesting them, these rate increases are primarily being driven by inflation in medical costs, risk adjustment, changes to plan benefits, and to more accurately reflect past experience.
Individual health insurance plan premiums are preliminarily slated to increase an average of about 8.7% in 2025. Small group plan premium hike requests have an unweighted average of about 9.4%.
Medica Insurance Co. requested the smallest average rate increase for both individual and small group policies at 1.95% and 3.71%, respectively.
The largest requested average rate increase for individual plans was made by Blue Plus (HMO Minnesota) at 12.75%, and the largest average rate increase requested for small group plans was Quartz (formerly known as Gundersen) with an average premium rate increase of 15.82%.
Individual health insurance plan premiums are currently slated to increase an average of about 16.2% in 2025 while small group plans are slated to increase by 19%, although rate increase proposals are currently being reviewed by the New York Department of Financial Services and often result in significantly reduced rates from the initial preliminary figures.
UnitedHealthcare of New York requested the smallest average rate increase for individual policies at 8.8% while MVP Health Plan, Inc. had the smallest small group plan premium rate hike at 9.5%.
The largest requested average rate increase for individual plans was made by HIP of Greater New York at 51%, and the largest average rate increase requested for small group plans was Independent Health Benefits Corporation with an average premium rate increase of 28.1%.
The premiums for individual and small group health insurance plans from the exchanges are currently slated to increase an average of 14.9% and 15.1% in 2025, respectively.
For BlueCross Blue Shield plans in Vermont, individual policy rates are expected to climb by 16.3%, while small group rates are expected to climb by 19.1%.
MVP Health Plans are expected to increase between 2.7% and 34.3%, with an average increase of 11.7%.
These rate increases are largely attributed to increased silver loading and premium alignment.
The premiums for individual and small group health insurance plans from the exchanges are currently slated to increase an average of 11.3% in 2025, which are presently under review by the Washington Insurance Department.
Of the 13 health insurance carriers that have filed rate increase requests in Washington, the smallest increase was the Community Health Plan of Washington with a 4.5% increase, and the largest rate increase was requested by Regence Blue Shield which requested an increase of 23.8%.
As a reminder, some of these rate increases are likely still to be slashed by state regulatory bodies, so the sticker shock may not ultimately be as bad in some places as it currently appears to be.
Also, self-funding companies are probably going to see somewhat lower rates than the finalized exchange plan rates on average, which will also help a little on the bottom line.
That said, while there rates are still potentially in flux, the ultimate rate increases tend to correlate fairly strongly with preliminary rates.
On the other hand, these rate increases represent averages across all insurance carriers in a given state (weighted when sufficient data is available), so it is of course a good idea to go ahead and take a look at the premium rate adjustments your insurance carrier is proposing, which may not be final yet but will more accurately reflect the approximate potential rate increases your organization may be facing next year and will help you better prepare in advance for the additional expense.
Nashville, Tenn.– August 20, 2024 – Mployer, the industry-leader in providing employee benefits research, ratings, and reviews, has named over 750 brokerage office winners nationally in more than 50 regions as part of its fourth annual “Top Employee Benefits Consultant Awards” for 2024.
Mployer’s Top Employee Benefits Consultant Award Program evaluates each benefits broker and consultant office based on their depth of experience across employer industries, sizes, and plan design features, as well as employer client ratings and reviews.
“We are proud to recognize this distinct group of 2024 top-rated insurance advisors as part of our fourth annual Top Employee Benefits Consultant Awards,” said Brian Freeman, CEO of Mployer. “Employer-sponsored healthcare and benefits provide care for over 160M Americans. Who an employer selects as their benefits advisor and their plan design has more impact on employee cost and satisfaction than who an employer chooses as the insurance carrier. We have rated each broker using our proprietary M Score and applaud the winners’ demonstrated commitment to service, quality, and positive employer experience.”
In Tampa, St. Pete, and Sarasota, Mployer has named over 25 benefit brokerages as top brokerages with several of the highest-scoring winners in the market listed below. The Tampa-St. Petersburg-Clearwater job markets are among the most competitive in the U.S. Southeast region, employing more than 1.6 million people. Offering competitive employee benefits is a critical factor in hiring top talent for the region’s employers. Finding and partnering with a highly-rated insurance consultant is imperative to attracting and retaining talent in any market.
Several of the “Top Employee Benefits Consultant Awards” for Tampa, St. Pete, and Sarasota include:
To see the full list of Top Employee Benefit Consultant Award winners for Tampa, St. Pete, and Sarasota, visit Mployer. The above winners are a snapshot of Mployer's matrices and proprietary M Score as of July 2024.
About Mployer:
Mployer is transforming employee benefits by empowering employers and leading benefit consultants to easily assess, rate, and communicate the value of employee benefits. Providing industry-first transparency through unbiased research, benchmarking, and advanced analytics, our goal is to support employers and brokers in providing benefit plans that optimize costs and employee-employer relationships. To learn more about Mployer, visit https://mployeradvisor.com and follow us on LinkedIn.
Disclaimer: Rankings are dynamic, and this report may not reflect the rankings currently listed on Mployer’s website. Because Mployer’s research is ongoing, interested companies that want to join next year’s list are encouraged to claim their free profile on Mployer.
Media Contact:
Anthony Waters
Editor's Note: This report is based on survey data from July 2024 that was published in August 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
The two-tenths of a percent increase registered last month when the US unemployment rate average climbed from 4.1% to 4.3% was the largest jump we’ve seen in almost a year since the rate spiked from 3.5% to 3.8% between July and August 2023.
In total, 13 states recorded an increase in their state unemployment rate averages over the month of July, led by Massachusetts, Michigan, Minnesota, and South Carolina, which all saw their unemployment rates increase by 0.3%.
Connecticut was the only state that saw a reduced unemployment rate last month at minus 0.3%.
The 114 thousand new jobs added last month were about 35% below the predicted numbers, while only 2 states - New York and Oregon - registered a meaningful net addition to the number of payroll entries in each state.
Missouri was the only state last month that recorded a significant net loss in jobs.
Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for August 2024.
For 3 months in a row now, Washington DC has had the highest unemployment rate among ‘states’ - up one-tenth of a point from last month to 5.5% - followed by Nevada at 5.4% and California and Illinois at 5.2% unemployment, each.
Washington is the only state that currently has an unemployment rate in the 4% range at 4.9% as of last month, with all the other states coming in in the 3% and 2% unemployment range.
Last month, 13 states saw their unemployment rates climb - Delaware, Georgia, Missouri, and North Dakota each recorded a 0.1% increase; Illinois, Indiana, Kansas, Nevada, and Utah each recorded a 0.2% increase; and Massachusetts, Michigan, Minnesota, and South Carolina each recorded a 0.3% increase in unemployment.
Over the last 12 months, 29 states have seen their unemployment rates increase, led by Rhode Island at plus 1.8%, followed by Ohio and South Carolina at plus 1.1%, and Washington at plus 1.0%.
South Dakota recorded an unemployment rate of 2.0% last month and retains the title of state with the lowest unemployment rate for the 7th month in a row.
Vermont, North Dakota, and New Hampshire posted the next lowest unemployment rates at 2.1%, 2.2%, and 2.5%, respectively.
The only state that recorded a reduction in its unemployment rate was Connecticut, which saw its unemployment rate drop by 0.3% over the month.
Over the last year, only Arizona and Michigan recorded net reductions in their unemployment rates at minus 0.5% and 0.4% each.
Missouri was the only state to record a net decrease in job numbers over the course of July, dropping a little more than 22 thousand jobs and seeing their payrolls in state reduced by 0.7%.
No state recorded a net reduction in jobs over the course of the last year.
Only New York and Oregon saw their payroll figures climb last month. New York added about 41 thousand jobs and Oregon added about 8 thousand jobs, amounting to about a 0.4% increase each.
Over the last 12 months, California has added the most jobs in terms of raw job numbers at plus about 284 thousand, followed by Texas at plus 265 thousand, and Florida at plus 229 thousand.
The largest proportional job increases over the last year have occurred in South Carolina (plus 3.7%), Nevada (plus 3.3%), Alaska plus (3.1%), and Montana (plus 3.0%).
Despite a respectable 100 thousand plus new jobs added to US payrolls last month, the employment data from July renewed a lot of speculation about an imminent economic downturn.
In fact, one of the many metrics used to identify recession known as the Sahm Rule now indicates that we have in fact already entered one - although the accuracy of this metric as applied to the current economic conditions may be less useful than they normally would be as a result of the continuing effects of the COVID dip and recovery.
The stock market saw a steep decline of more than 5% over the first 5 days of the month, as well - which also added fuel to the recession predictors' fire and led to significant speculation that a past-due market correction was at hand.
As of this writing two business weeks later, however, the DOW has recovered 99.5% of the losses in the dip from earlier this month in part due to an influx of cash from retail investors looking to take advantage of some relatively cheaper prices, and a major correction no longer appears to be at hand.
With the Fed set to meet again in just over 4 weeks and most forecasts predicting a quarter to half point cut in baseline interest rates, we may be in a position soon in which an economic downturn looks less likely than it did even just a few weeks ago.
The fact that trends sometimes appear to be shifting in a matter of weeks speaks to a degree of volatility in the current economic climate, however, and with elections coming up in just a couple months in which control of Congress and the presidency are up for grabs, increased volatility is certainly possible if not likely.
We may soon get the opportunity to find out how much of a stabilizing factor the presumed interest rate cut turns out to be, assuming that it comes to pass in September as expected.
Looking for more exclusive content? Check out the Mployer blog.
Understanding what constitutes good benefits is crucial for employee satisfaction and well-being. In this guide, we help you assess your current benefits package or those provided in a job offer. We cover the why, the what, and the how—from vital health insurance details to work-life perks—equipping you with the knowledge to evaluate or negotiate your benefits effectively. Whether you’re considering a new job or reviewing your current offerings, it’s essential to understand how your benefits compare.
Stay informed about important news related to federal benefits, deadlines, and health insurance updates to ensure you don't miss out on crucial information.
Employee benefits are essential for job satisfaction, loyalty, and retention, and can affect overall well-being. Therefore, evaluating comprehensive benefits alongside salary is crucial. Understanding if you are eligible for receiving these benefits is also important.
A complete benefits package typically includes five key components:
The average employee benefits package is worth $15K for singles and $25K for families. It represents a large percentage of compensation and varies greatly by employer.
To properly value your current benefits package or a new job offer, compare it with industry standards, calculate its monetary value, and assess how well it meets your personal needs. Mployer provides online, easy-to-use tools for employees and employers to do just that, as well as information to help you better understand how it all works together.
Employee benefits are more than just perks; they’re a critical part of the employment relationship, ensuring job satisfaction and fostering loyalty and retention. Employers also support job seekers through specialized services and programs tailored to various demographics. Benefits account for over 20% of an employee’s total compensation. That’s a significant chunk! So, when weighing a job offer or thinking about your current job, it’s crucial to consider not just the paycheck but also the following benefits and perks that come with it. Considering these factors will give you a more comprehensive understanding of your total compensation package.
Before we delve into the evaluation, let’s first understand the key components of a great benefits package. These components include:
Comprehensive coverage for medical care is crucial in a benefits package, ensuring that employees have access to necessary healthcare services and compliance with regulations.
Remember, the value of these benefits is dependent on your personal life and career stage, making a big difference in how you perceive them and the pay you receive.
Health insurance is a cornerstone of any benefits package. Employers must evaluate their contribution towards health insurance carefully. Individual coverage contributions typically range from 70% to 90%, while family coverage contributions range from 55% to 85%.
Large employers often have the advantage of negotiating better rates with insurance providers due to their higher volume of employees. This can result in more comprehensive health insurance plans for employees. When evaluating health insurance options, consider the following:
Ancillary benefits, including dental, vision, disability, and life insurance, are essential additions to any benefits package. These benefits may seem like minor perks, but they can add significant value for employees. For example, dental and vision insurance can cover routine care and major procedures, while disability and life insurance provide financial security in case of unexpected events.
Paid time off (PTO) and paid holidays are crucial for maintaining a healthy work-life balance. Employers should offer competitive PTO policies, considering both industry standards and employee needs.
Retirement savings plans, such as 401(k)s, are essential components of a good benefits package. Employers should offer competitive match rates and plan features, such as auto-enrollment and auto-escalation. These features encourage employees to save for the future and ensure that they are financially prepared for retirement.
Work-life balance perks, such as flexible schedules and employee assistance programs, play a crucial role in supporting employee well-being. These perks help employees manage their work and personal responsibilities, leading to higher job satisfaction and productivity.
Employers should regularly evaluate their benefits packages to ensure they meet industry standards and employee needs. Using tools like Mployer’s benefits calculator can help employers assess the monetary value of their benefits and compare them with industry peers. By understanding the full value of their benefits, employers can make informed decisions and negotiate better offerings for their employees.
Providing a comprehensive and competitive benefits package is crucial for attracting and retaining top talent. Regularly evaluating and adjusting your offerings to meet employee needs and industry standards can make a significant difference in employee satisfaction and retention. By ensuring your benefits package is robust, you can create a positive work environment that supports employee well-being and productivity.
Stay informed about important news related to federal benefits, deadlines, and health insurance updates to ensure you are always up-to-date with crucial information.
Health insurance is often the most valued part of any benefits package. Not only does it provide essential health care coverage, but it also significantly impacts overall job satisfaction. When evaluating health insurance options, consider the coverage network, plan details, and employer contributions. Large employers often provide more comprehensive health insurance plans due to their larger budgets and ability to negotiate better rates with insurance providers. Health insurance is a critical component of employee benefits that requires careful evaluation and planning.
In addition to health insurance, offering Health Savings Accounts (HSAs) can be a significant perk. HSAs allow employees to save money tax-free for medical expenses. These accounts can cover out-of-pocket costs, making health care more affordable. HSAs are particularly beneficial for employees with high-deductible health plans, providing a financial cushion for medical expenses. Including HSAs in your benefits package can enhance its overall value and appeal.
Paid time off (PTO) and paid holidays are crucial for maintaining a healthy work-life balance. Employers should offer competitive PTO policies, considering both industry standards and employee needs. Consolidated leave packages, which combine vacation and sick leave, are becoming increasingly popular. These packages provide flexibility and can contribute significantly to employee satisfaction. Paid time off and holidays are essential for promoting employee well-being and productivity.
Retirement savings plans, such as 401(k)s, are essential components of a good benefits package. Employers should offer competitive match rates and plan features, such as auto-enrollment and auto-escalation. These features encourage employees to save for the future and ensure that they are financially prepared for retirement. Evaluating the match
What are the key components of a good benefits package? A good benefits package should include health insurance, ancillary benefits, retirement plans, paid time off, and other perks like flexible schedules and childcare assistance. These components can help employees feel supported and valued in the workplace.
How do I evaluate the quality of health insurance? To evaluate the quality of health insurance, consider factors such as premiums, deductibles, copays, coinsurance, network coverage, tax strategy approach, and the employer's contribution. These factors play a key role in determining the overall quality of the insurance plan.
How can I calculate the monetary value of my benefits package? The easy way is to use Mployer's free calculator. The complicated way to calculate the monetary value of your benefits package is to sum the annual employer costs for each benefit. You can also divide that total value by your annual salary to express benefits as a percentage of your salary. This will give you a clear understanding of the value of your benefits package.
How can I negotiate better benefits? To negotiate better benefits, start with your job offer. Research, prepare, prioritize your needs, and effectively communicate your value to the employer. Approach the negotiations with confidence and respect for a successful outcome.
What online tools can I use to evaluate benefits? Mployer provides a simple calculator to grade and value your benefits. Other sites provide summary information if you want to do research, such as Glassdoor, PayScale, or Indeed. Mployer is the only platform available to compare benefits packages, which include calculators and rating systems to make an informed decision.
Nashville, Tenn.– August 6, 2024 – Mployer, the industry-leader in providing employee benefits research, ratings, and reviews, has named over 750 brokerage office winners nationally in more than 50 regions as part of its fourth annual “Top Employee Benefits Consultant Awards” for 2024.
Mployer’s Top Employee Benefits Consultant Award Program evaluates each benefits broker and consultant office based on their depth of experience across employer industries, sizes, and plan design features, as well as employer client ratings and reviews.
“We are proud to recognize this distinct group of 2024 top-rated insurance advisors as part of our fourth annual Top Employee Benefits Consultant Awards,” said Brian Freeman, CEO of Mployer. “Employer-sponsored healthcare and benefits provide care for over 160M Americans. Who an employer selects as their benefits advisor and their plan design has more impact on employee cost and satisfaction than who an employer chooses as the insurance carrier. We have rated each broker using our proprietary M Score and applaud the winners’ demonstrated commitment to service, quality, and positive employer experience.”
In Chicago, Illinois, Mployer has named over 50 benefit brokerages as top brokerages with several of the highest-scoring winners in the market listed below. The Chicago-Naperville-Elgin, IL-IN-WI job markets are among the most competitive in the U.S. Midwest region, employing more than 4.8 million people. Offering competitive employee benefits is a critical factor in hiring top talent for the region’s employers. Finding and partnering with a highly-rated insurance consultant is imperative to attracting and retaining talent in any market.
Several of the “Top Employee Benefits Consultant Awards” for Chicago, Illinois include:
To see the full list of Top Employee Benefit Consultant Award winners for Chicago, Illinois, visit Mployer. The above winners are a snapshot of Mployer's matrices and proprietary M Score as of July 2024.
About Mployer:
Mployer is transforming employee benefits by empowering employers and leading benefit consultants to easily assess, rate, and communicate the value of employee benefits. Providing industry-first transparency through unbiased research, benchmarking, and advanced analytics, our goal is to support employers and brokers in providing benefit plans that optimize costs and employee-employer relationships. To learn more about Mployer, visit https://mployeradvisor.com and follow us on LinkedIn.
Disclaimer: Rankings are dynamic, and this report may not reflect the rankings currently listed on Mployer’s website. Because Mployer’s research is ongoing, interested companies that want to join next year’s list are encouraged to claim their free profile on Mployer.
Media Contact:
Anthony Waters
Key Takeaways:
ARTICLE | The Employers' Guide To Ozempic and GLP-1 Drugs
The meteoric rise of Ozempic has been widely documented.
More than just the traditional drug marketing via billboards, commercials, and pamphlets at primary care offices, some of the most heavily publicized evidence of Ozempic’s effectiveness has been found on magazine covers, streaming platforms, and in social media feeds, all providing the kind of organic promotion that even huge sums of money can’t (always) buy.
While to some it may seem like a miracle drug - with potential health benefits including blood sugar regulation, cardiovascular issue risk reduction, and of course weight loss - there is, it seems, at least one catch - Ozempic is very expensive.
The sudden surge in demand as a result of Ozempic’s success has left manufacturers scrambling to keep up, which has contributed to soaring prices and in turn sent employers and insurance providers struggling to adapt to the rapid rise in popularity of a drug that can cost more than $1,000 per person per month.
Not all employers are addressing that tension between the growing employee demand and the accompanying growing expense in the same way, however, and in this piece we’ll take a look at some of those potential approaches as well as some of the potential costs and benefits associated with each.
Ozempic is a type of drug known as a GLP-1, which is a relatively new class of drugs that first gained approval from the FDA in 2005.
There are currently at least 10 different GLP-1 drugs, but treating diabetes, cardiovascular conditions, and/or weight loss seem to be fairly consistent among them, although new uses such as treating kidney disease are still being explored.
Ozempic was approved by the FDA as a diabetes medication in the final month of 2017 before hitting the market in earnest the following year, but it wasn’t too long before users and their doctors started taking note of the weight loss side-effect.
Nearly 20 thousand Ozempic prescriptions were written in 2018, which grew to just over 60 thousand active prescriptions in 2019, 100 thousand in 2020, and 160 thousand in 2021.
But in 2022, Ozempic seems to have crossed the tipping point, with prescriptions doubling to more than 300 thousand over the year before then growing by another 25% - up to about 375 thousand - within the first couple of months of 2023, which is the most recent data available.
Collectively, prescriptions for Ozempic and its GLP-1 weight loss drug competitors have grown by more than 300% over the last 3 years with total US sales growing from less than $5 billion at the end of 2020 to more than $15 billion at the end of 2023.
According to a Gallup poll released at the end of May 2024, more than 15.5 million people in the US had used one of these drugs for weight loss - representing 6% of the US population and counting.
According to the Pew Research Center, about 3 in 4 Americans are either overweight or obese based on current medical classifications, and that number has been growing pretty consistently for a quite awhile.
As a result, the target market of potential Ozempic, et al. weight loss users is considerably larger than the (still substantial) 30 plus million Americans with type 2 diabetes, and although the resulting Ozempic shortages are certainly more problematic for the latter group, any sufficiently substantial surge in demand will make the price goes up for everyone.
While the company that produces Ozempic has plans in the works to build a more than 4 billion dollar factory in order to improve production capacity, any release of demand pressure as a result of the increased accessibility of the drug is still likely several years away at least.
Further, that patent on Ozempic will prevent the production and sale of cheaper generic alternatives until at least 2031 in the US, so no short-term cost-saving hope on that front either.
Given these market conditions, Ozempic-comparable weight loss drugs are likely to continue costing upwards of 15 thousand dollars per patient per year for the foreseeable future.
For employers, those costs, which essentially were non-existent just a handful of years ago before doctors started prescribing GLP-1 drugs for weight loss, accounted for 8.9% of total employer health care spending in 2023 according to a survey from the International Foundation of Employee Benefits - up from 6.9% of total employer health care expenses the year before.
At those prices in the face of near-exponential demand growth, it is not hard to understand why multiple health systems have chosen to drop or reduce weight-loss-based GLP-1 coverage from their employer-sponsored plans, including Hennepin Health Care, University of Texas Health System, and the Mayo Clinic.
At the same time, however, other employers and health systems are looking past the sticker shock and weighing the totality of health benefits that can accompany weight loss in the cost-benefit analysis, including potential reversal of diabetes, cardiovascular improvements, reduced incidence of certain cancers, and improved arthritic conditions.
After looking at those net benefits, a growing number of companies including Elevance Health, Kaiser Permanente, and CVS Health are expanding coverage and concluding that it is worth paying the high ticket price of GLP-1 medication for improved patient outcomes and the expectation of reduced expenses in the long run.
In terms of proportional breakdown, those employers who see the value in GLP-1-assisted weight loss are still in the minority, but they have the momentum on their side, with the percentage of employers covering Ozempic or a comparable drug for weight loss purposes rising to 34% in 2023, up from 28% in 2022.
Further, larger businesses are even more likely to adopt GLP-1 weight loss coverage according to the head of Cigna’s health services business, who also noted that 50% of the employers utilizing their pharmacy benefits management system already cover GLP-1 weight loss uses, and that figure is inching up.
For those employers who are not yet ready to buy-in completely on the long-term benefits or for whom full coverage of Ozempic and comparable drugs for weight loss purposes is economically infeasible in the short-term, there are still several measures that can be taken in order to minimize the risk of runaway costs while still providing employees with a meaningful option.
The appetite for these drugs among employees is likely to continue growing, especially as new treatments and functions emerge (i.e. treating kidney disease), which will likely keep the costs relatively inflated in the short term even as new production capacity comes online.
In the long run, however, short term price inflation may be a small price to pay relative to the long-term benefits that can potentially come from a reduced risk of obesity-related illnesses that go well beyond cost savings, and that’s true for both employers and employees.
But more than just putting upward pressure on the price, that demand reflects health care that is both expensive and increasingly sought after by a large portion of the talent pool, so there’s also an opportunity here to differentiate your organization from the competition in terms of employee attraction and retention.
Although some employers are moving away from Ozempic and other GLP-1 coverage to curb those growing expenses, there are more employers moving in the opposite direction and opening up coverage, and absent an unforeseen change in circumstances, that trend is unlikely to reverse course anytime soon.
Key Takeaways
ARTICLE | Top 25 States With Most Employee-Friendly Paid Leave Laws (Part 2)
In part 1 of this 2 part series, we took a look at the 25 states with the most employer-friendly laws and regulations in terms of the circumstances in which the state may require some or all employers to provide some or all employees with paid leave.
In this piece, we’ll review the paid leave rules in the remaining 25 states that have more employee-friendly laws and regulations, which includes a much wider spectrum of regulatory involvement, ranging from a relatively minor paid leave requirements that don’t go much beyond what is required in the states covered in Part 1, all the way up to substantial, robust paid leave mandates and worker protections.
Arizona paid leave law requires private employers with $500,000 or more in annual revenues to provide their employees with one hour of paid sick leave for every 30 hours worked.
For employers that have more than 15 or more employees, those employees can accrue up to 40 hours of sick leave per year, while the employees of employers with fewer than 15 employees can accrue a maximum of 24 hours of paid sick leave per year.
Employers can require employees to wait up to 90 days after the start of their employment before they can use any paid sick leave that has accrued, and employers are not required to pay out any accrued PSL upon termination, employees are allowed to roll over paid sick leave from one year to the next.
Arizona employers are also required to provide up to 3 hours of paid leave to enable employees to vote in any municipal, county, state, or federal primary or general election if those employees do not already have 3 consecutive hours available to them when the polls are open and they are not required to be at work.
California enacted one of the more robust paid sick leave policies among states, requiring pretty much all employers - with few exceptions, such as railroad companies and airlines - to provide at least 40 hours of paid sick leave each year to their employees, even part-time and temporary workers, who have worked at least 30 days out of the first year of their employment. While employees begin accruing pid sick leave as soon as they begin working, accruing at 1 hour of paid sick leave for every hour worked, employees are not legally allowed to use the accrued leave until they have been on the job for at least 90 days.
California state law doesn’t require employers to offer either paid or unpaid vacations, but if an employer chooses to offer PTO, then any unused hours (not including unused paid sick leave) must eventually be paid out with the employee’s last paycheck.
Further, while California employers are required to allow employees to roll over unused PTO days, as well as up to 80 hours of paid sick leave, they do have significant leeway in determining how many consecutive PTO days an employee can use, preventing employees from using PTO on certain dates, and implementing notice requirements that must be met before leave will be granted.
California law entitles employees to 8 weeks of paid family leave at between 60% to 70% of employee’s income, up to $1,620 each week in 2024, although importantly this leave is not necessarily job-protected, though other state and federal laws may protect an employees job in this situation nonetheless. State Disability Insurance can also be used as support for up to 1 year with weekly payouts of between 60% -90% of income, capped at $1,325 per week.
California employees who don’t otherwise have time to vote also get up to 2 paid hours for voting leave if they provide their employers with at least 3 days’ notice of their intent to be away from their job for the purpose of voting.
Colorado state law requires all employers to provide paid sick leave, which accrues at a rate of one hour of paid sick leave for every hour worked. That accrued sick leave can be capped at 48 hours per year, but Colorado law requires employers to allow employees to roll over unused paid sick leave from one year to another.
Colorado employees who earn at least $2,500 per year and have been on the job for at least 180 days are entitled to up to 12 weeks of family leave with partial pay, which can include up to an additional 4 weeks of paid parental leave in the event of pregnancy and/or childbirth complications.
And while Colorado state law does not require employers to offer paid vacation time, Colorado does require employers to pay out any unused PTO in the event that the employee leaves the company.
Colorado law also requires employers to pay employees $50 per day for the first 3 days of jury duty service, after which the state will take over jury service compensation.
Finally, for any employee whose shift starts less than 3 hours after the polls open or ends less than three hours before the polls close, employers must offer up to 2 hours of PTO so that employees can exercise their right to vote, and while employers can choose when an employee votes during the middle of a shift, if the employee requests to vote at the beginning or end of a shift, the employer is obligated to honor that request.
Connecticut law requires employers who had averaged at least 50 employees at some point in the prior year, to provide paid sick leave to employees who work at least 10 hours a week, which accrues at a rate of 1 hour of paid sick leave for every 40 hours worked for up to 40 hour per year, which can be rolled over to the next year if unused. Paid sick leave hours begin accruing immediately, but can not be used until an employee has worked 680 hours on the job. These rules cover most employees, but exceptions include employees who are exempt from overtime and minimum wage rules in accordance with the Fair Labor Standards Act.
Paid family and medical leave is available to most Connecticut employees (including many sole proprietors and self-employed people) for up to 12 weeks per year (with a potential additional 2 weeks in the event of medical complication) so long as the employee has earned at least $2,325 in one of the previous four quarters, is currently employed, and has been employed for the preceding 12 weeks. Qualifying employees can receive up to 95% of their typical income with a cap set at 60 times the state’s minimum wage, currently $15.69 per hour.
Further, for the first 5 days of an employee’s jury duty service, Connecticut law requires employers to pay employees $50 per day before the state then takes over those payments.
While Connecticut voters had been entitled since 2021 to 2 hours of paid time off to vote in special elections and standard elections for state and federal representatives should they request that time off at least 2 days in advance, those rules are set to expire at the end of June 2024, after which time the voting paid time off requirement will no longer be valid absent the intervention of Connecticut lawmakers.
Delaware currently has no laws in effect with regard to paid time off requirements, but beginning January 1, 2026, employees who have worked at least 1,250 hours for an employer over the past year are eligible for up to 12 weeks of paid family and medical leave at a rate equivalent to the lesser of $900 per week or 80% of the employee’s weekly pay.
Georgia state law requires employers with 25 or more employees to allow those employees who work at least 30 hours per week to accrue up to 5 paid sick leave days per calendar year that can be used to care for close family members in need.
Hawaii state law allows for partial paid leave via Temporary Disability Insurance, which requires that an employee has worked in Hawaii for 14 or more weeks and has worked at least 20 hours and earned at least $400 in each of those weeks, although the weeks need not be in a row and can be spread among multiple employers. Employees can receive up to 67% of their average weekly wages, with a cap that’s currently set around $700 per week.
While pregnancy and childbirth applications of the temporary disability insurance program usually last between 4 and 6 weeks, the disability insurance generally is available for up to 6 months.
Hawaiian employees that don’t already have 2 consecutive hours when they are off work and polls are open are also entitled to up to 2 hours of paid voting leave, though employers can require proof that the employee voted.
Illinois state law entitles employees with 1 hour of flex leave for every 40 hours worked (capped at 40 hours per year) that can be used for any purpose. Employees must, however, wait 90 days after their leave time has begun accruing before they can exercise it, and employers are allowed to require 7 days notice before accrued leave can be used and can set a minimum leave usage increment of at least 2 hours.
Whether or not employees are allowed to roll over unused leave depends on whether employers have front-loaded leave (i.e. provided a pro rated 40 hours on the first day of the year to all employees, in which case employee leave does roll over from one year to the next) or whether employees accrue their hours of leave one at a time - 1 hour of leave for every 40 hours worked as described in the preceding paragraph - in which case leave does roll over.
Further, while Illinois does not provide for paid sick leave statewide, Cook County and the city of Chicago both have laws in place guaranteeing paid sick leave for employees who have been with their employer for at least 6 months, worked at least 2 hours within the city/county over the last 2 weeks, and have worked at least 80 hours within the last 120 days. Paid sick leave for qualifying employees accrues at 1 hour for every 40 hours worked, capped at 40 hours annually.
Employees in Illinois are also entitled to up to 2 hours of paid leave in order to vote if their schedule does not already provide for 2 consecutive hours off work during which the polls are open.
While Illinois does not require most unused leave to be paid out upon termination, if leave has been specifically granted as PTO or vacation, then employers must compensate employees for it when an employee leaves the company.
Louisiana employers are not required to provide paid vacation time, but those employers that choose to offer such PTO are required to pay out any unused time at the conclusion of employment if the employee is eligible for a vacation at that time of their departure according to company policy.
Louisiana employers also must provide employees with one day’s wages on the employee’s first day of jury duty.
Maine law requires that most employers provide employees with 1 hour of paid leave for every 40 hours worked, capped at 40 hours per year - although there are exceptions including employers with fewer than 10 employees and employees that are seasonal or commission-based.
If employers front-load employee paid leave banks to 40 hours at the start of each year (or at the start of an individual new employee’s employment) then that leave is not required to roll over, but if the leave is accrued, then roll over is mandated by law. Employers must also pay out any unused leave at the conclusion of an employee’s employment.
Maryland state law requires employers to provide 1 hour of paid sick leave for every 30 hours worked, capped at 40 hours per year, to employees who have worked for the employer at least 12 hours per week for 15 weeks, although the law excludes employees under the age of 18, independent contract workers, seasonal agricultural workers, and those operating under collective bargaining agreements. Further, unused leave can roll over but the bank is capped at 64 hours accumulated total. Employees who work at least 8 hours each week in Montgomery County have their annual sick leave accrual cap set at 56 hours.
For employers with 15 or more employees that do provide paid leave, the Maryland Flexible Leave act provides for paid time off in the event of an illness or death of an immediate family member, as well.
Maryland employers are also required to provide at least 2 hours of paid voting leave if an employee’s schedule does not already provide for 2 consecutive non-working hours when polls are open.
Massachusetts state law does not require employers to provide paid vacation leave, but employers who have adopted such a policy are required to pay out any unused time when the employee leaves the company.
Massachusetts employees earn 1 hour of paid sick time for every 30 hours worked - capped at 40 hours per year and unusable until the employee has been on the job for at least 90 days - which can be utilized to take care of themselves and/or close family members dealing with physical or mental illness. Employers are allowed to require 7 days notice for appointments that are scheduled in advance, and can also opt to allow employee paid sick leave to accrue on a statutorily-set lump-sum schedule if they don’t want to track the hours worked of individual employees. Employers in Massachusetts also have the option of front-loading paid sick leave for their employees, in which case roll over isn’t required, but roll over is mandated when the leave is accrued.
Massachusetts employees are also entitled to up to 12 weeks of paid family leave and 20 weeks of paid medical leave which can combine to amount to as many as 26 weeks of paid leave in a year.
Further, Massachusetts employers are required to pay out up to 3 days of jury duty leave.
Michigan state employers and private employers with 50 or more employees must provide paid sick leave to employees who work at least 25 hours a week for at least 26 weeks a year, which accrues at a rate of 1 hour of leave for every 35 hours worked, capped at 40 hours per year and can roll over from one year to the next if unused. Employees, however, are not allowed to use accrued leave until their 90th day on the job. Employees exempted from these paid sick leave requirements include workers operating under collective bargaining agreements or those exempt from minimum wage and overtime regulations.
Minnesota employees who worked at least 80 hours over the last year in Minnesota can accrue 1 hour of paid sick leave for every 30 hours worked, capped at 48 hours per year - but that paid leave doesn’t become available to employees until they’ve been on the job for 90 days. Unused hours also roll over from one year to the next, capped at 80 hours.
4 cities in Minnesota - Minneapolis, St. Paul, Duluth, and Bloomington - each have additional paid sick laws that go further than the statewide paid sick leave requirements.
Minnesota employers are also required to allow employees paid leave so they can vote, though no minimum or maximum lengths of time for that leave are specified.
Nebraska employers are not required to provide any paid vacation leave, but if they do offer such PTO, employers are required to pay out for any PTO that remains unused when an employee leaves the company. Nebraska state law also specifically forbids Nebraska employers from enacting use-it-or-lose-it policies with regard to earned leave, so Nebraska employees are entitled to be paid out for any remaining unused leave at the conclusion of their employment.
Nebraska law also requires employers to provide paid leave for jury duty, and 2 consecutive hours of paid leave to vote in municipal, country, state, and federal primaries and general elections if the employees schedule does not already allow for 2 consecutive off-duty hours during polling hours, though employers retain the right to determine during which hours eligible employees are allowed paid leave in order to vote.
Nevada employers with 50 or more employees must provide flex leave time that can be used for any purpose, which employees acquire at a rate of 0.01923 hours of paid leave per hour worked, which is about 1 hour of paid leave for every 52 hours worked. The law doesn’t apply to temporary, seasonal, and on-call workers, and employers can exempt themselves from the law by providing a flat 40 hours of paid time off each year to each eligible employee. Employers who have been in operation for less than 2 years are also exempt.
Further, Nevada state law doesn’t cap the amount of PTO that employees can accrue, but it does allow employers to limit the amount that employees can use to as little as 40 hours in a benefit year. Employees must also work for 90 days before they are able to use any of the accrued PTO.
Employers are required to provide paid leave for employees to vote, as well: 1 hour of paid leave if the polling place is less than 2 miles away, 3 hours of paid leave if the polling place is more than 10 miles away, and 2 hours of paid leave otherwise.
New Jersey law mandates that employees earn 1 hour of paid sick leave for every 30 hours worked capped at 40 hours per year, and employees must be on the job for 120 days before utilizing any accrued paid leave. Further, employees are entitled to roll over from one year to the next up to 40 hours of unused paid sick leave, but employers can require up to 7 days notice for appointments and can require reasonable documentation for absences that last 3 or more days in a row.
New Jersey state law also enables employees to take up to 12 weeks per year of flexible paid family leave, which is funded by the New Jersey Family Leave Insurance Program via payroll deductions.
New Mexico state law entitles employees to 1 hour of paid sick leave for every 30 hours worked, capped at 64 hours per year, which employees can roll over from one year to the next.
New Mexico does not require PTO accrual, but if an employer adopts a policy of providing PTO and allowing earned/unused hours to accrue, then unused time off must be paid out when the employee leaves the company.
Employers in New Mexico must also allow employees 2 hours to vote if polls are not open for 2 hours prior to the start of a shift of 3 hours after the end of a shift.
New York employers that have between 0 and 4 employees and more than $1 million in revenue and New York employers that have between 5 and 99 employees regardless of revenue must provide employees with 40 hours of paid sick leave per year, accrued at 1 hour of leave for every 30 hours worked. New York employers with 100 or more employees must provide 56 hours of paid sick leave each year.
New York employees are also entitled to 12 weeks of paid family leave per year after they have completed at least 26 weeks in a row of at least 20 hours of work per week. Those leave payments are typically covered through insurance and provide up to 67% of an employee’s average weekly salary, capped at 67% of the statewide average weekly salary, which currently puts the cap at about $1,068 per week.
New York employees are also entitled to collect up to 26 weeks of short-term disability (or 4 to 6 weeks for disability as a result of pregnancy and/or childbirth), but these disability payments are only available during times when an employee is actually, physically unable to perform the job.
New York state law also requires that employers with more than 10 employees must pay $40 dollars a day for each of the first 3 days of an employee’s jury duty service.
New York employees that don’t have 4 consecutive hours during which to vote are also entitled up to 2 hours of paid voting leave, but employees must notify their employers between 2 and 10 days before their planned voting absence, and employers can choose what time the voting leave is exercised.
Oregon employers are not required to provide paid vacation leave, but if they choose to offer it and their employment policies and contracts don’t specifically absolve employers of the responsibility to pay out unused PTO at the conclusion of employment, then employers are required to make those payouts when an employee parts ways with the employer.
Oregon employers with 10 or more employees are required to provide paid sick leave at a rate of 1 hour earned for every 30 hours worked, which is capped at 40 hours per year that can be rolled over to the next year when unused (unless the leave is front-loaded), but any accrued leave can not be used until the employee has worked at least 90 days.
Oregon employees are also entitled to up to 12 weeks per year of paid family/medical/safe leave via a social insurance program.
Rhode Island state law requires employers to pay out any unused PTO upon termination if the employee has been on the job for at least 1 year.
Rhode Island employers that have 18 or more employees are required to provide paid sick leave at a rate of 1 hour for every 35 hours worked (capped at 40 hours per year and capable of roll over from one year to the next), which accrue immediately upon commencement of work but can not be used for the first 90 days of employment.
Rhode Island employees are also entitled to up to 30 weeks of temporary disability insurance and up to 6 weeks of temporary caregiver insurance, each offering up to about $1000 per week.
Tennessee employers with 5 or more employees are required to provide paid leave for jury duty service, though employees must show their employer their jury summons on the day they receive their jury summons or the day after receiving summons in order to be eligible, and employers can deduct any payment received from the court from the wages owed to the employee.
Tennessee employers are also required to provide up to 3 consecutive hours of paid vote leave to any employee that does not already have 3 consecutive hours off work when the polls are open. In order to qualify, employees must request paid voting leave by 12pm on the day prior to Election Day.
Tennessee state employees and some metropolitan employees also are eligible for up to 6 weeks of paid family leave.
Utah employers are not required to provide PTO, but if they do they must explicitly make clear their policy of not paying out unused PTO upon termination, otherwise unused PTO must be paid out when an employee is terminated.
Utah employees that don’t already have at least 3 hours off during polling hours are entitled to 2 hours of paid voting leave, provided that they give their employer at least 1 day of advanced notice, and employers may still choose when the leave is exercised.
Vermont employees earn 1 hour of paid sick leave for every 52 hours worked, capped at 40 hours per year which can be rolled over from 1 year to the next if unused, but employees may have to wait up to 1 year before utilizing accrued leave. In order to be eligible, however, employees must be at least 18 years old, must have worked at least 20 weeks in the last year, and must have averaged 18 hours per week over the year, as well.
Washington employers are required to provide employees with paid sick leave that accrues at a rate of 1 hour earned for every 40 hours worked, with up to 40 hours capable of being rolled over from one year to the next. Employees may have to wait 90 days before utilizing the accrued leave, at the employer's discretion.
The city of Seattle expands upon the statewide paid sick leave rules by allowing the employees of employers that employ between 50 and 259 employees to roll over 56 hours of accrued paid sick leave per year, while employees of employers with 250 or more employees can roll over up to 72 hours per year of unused leave.
Washington state law also provides for a paid family leave insurance program that enables employees to take up to 12 weeks of paid leave for many family and medical events including childbirth under normal circumstances, and up to 18 weeks given certain qualifying events.
While the range of regulatory involvement with regard to paid leave varies considerably between states, the bars set by state rulemakers can tend to be on the low-side relative to the actual paid leave benefits offered by companies within those states.
Even in states with no paid leave requirements whatsoever, industry and regional/intra-state norms often set standards that many if not most applicable employers follow, and those norms can sometimes go beyond the heftier mandates laid out by some of the states with more comprehensive regulation, as well.
As a result, in order to maintain a more complete picture of both best practices and talent expectations, it is important to keep up with a changing regulatory environment, both on the state and federal level, as well as benchmarking against comparable employers in the same industry and/or region.
.webp)
Key Takeaways
ARTICLE | Top 25 States With Most Employer-Friendly Paid Leave Laws
Last month, we covered the rising popularity and prevalence of consolidated and unlimited leave policies relative to non-consolidated leave policies, which have now nearly become a minority policy among US employers.
These policy choices and changes do not occur in a vacuum, however, and can be significantly impacted by both industry and geographic norms as well as governmental rules and regulations, which can sometimes vary widely from one state, county, and municipality to another.
While data on the geographic distribution of leave policy structure can be found in our benchmarking reports, available on mployeradvisor.com, this piece will be the first in a pair of articles that will highlight major differences in the rules governing paid leave from state to state in the US, compiled from information primarily from Vacation Tracker and Paycom.
This piece will cover the 25 states that provide the most leeway for employers to determine their own policies with regard to providing employees with paid leave.
Alabama state paid leave law requires only that employers provide their employees with paid leave for jury duty if the employee provides notice of jury duty summons within one business day of receiving the summons. Further, that PTO for jury duty service must not reduce the amount of PTO an employee may have otherwise accrued, although employers are permitted to deduct the amount paid to the employee by the court from any amount the employer owes the employee.
Alaska state paid leave law requires employers to provide employees with paid voting leave in order to cast ballots in municipal, county, state, and federal primary and general elections if that employee’s shift starts earlier than 2 hours after the polls open or ends later than 1 hour before the polls close. While the employee is to be given sufficient time to enable them to vote, the employer gets to determine the hour(s) when the employee leaves work to cast their vote.
While Arkansas provides no mandatory paid leave for private employees in the state beyond what the policies and contract requirements set by the employers themselves, state law does allow public employees paid sick leave for illness, injury, and the death or illness of a close family member. Those public employees can accrue up to 30 days (depending on employee tenure) of paid sick leave every year.
Arkansas state law also requires state employers to provide paid leave for jury duty, but no similar requirement exists for private employers, although private employers are prohibited from requiring an employee to use vacation or other leave in order to fulfill their jury duty requirements.
Florida state law imposes no obligations on employers with regard to paid leave for employees.
Idaho state law entitles state employees to up to 8 weeks of paid leave following the birth or adoption of a child, but no similar requirement for private employers exists unless the private employer has adopted or contracted to provide such a policy.
Indiana state law makes no requirements for employers to provide employees with paid leave.
Iowa provides for some paid vacation leave for state employees, but there is no similar requirement for the employees of private employers.
Further, employees who do not have 3 consecutive hours off work during which time polls are open are entitled to up to 3 hours of paid leave in order to cast their votes, though employers have the right to determine which 3 hours are made available to their employees.
Kansas has no formal state laws requiring paid leave, although internal leave policies adopted by companies may be legally enforceable against employers if they rise to the level of a “promise.”
Kansas employers must, however, provide employees with up to 2 consecutive hours to vote (including employee non-working hours when the polls are open) and the timing of which the employer has the right to determine.
In Kentucky, employers are not required to offer paid leave for vacation, but if they do offer such paid leave, it is considered essentially equivalent to wages and must be dealt with accordingly - in this case meaning any unused leave of this sort must be paid out when an employee leaves the company.
Further, while Kentucky doesn’t require paid family leave to employees upon the birth of a child, if an employer does provide paid maternity/paternity leave, they must also make those provisions available to newly adoptive parents.
Mississippi state law imposes no obligations on employers with regard to paid leave for employees.
Missouri employers are required to provide 3 hours of paid voting leave if employees schedules do not already allow for 3 consecutive non-working hours when the polls are open.
Montana state law imposes no obligations on employers with regard to paid leave for employees.
New Hampshire state law imposes no obligations on employers with regard to paid leave for employees, although there is an optional paid family and medical leave insurance program that employers can opt into.
Although North Carolina state law doesn’t require employers to provide paid vacation time, if employers choose to do so and don’t specifically state as a matter of policy or contract that unused PTO will not be paid out when the employee leaves the company, then NC employers are required to make those payouts at the conclusion of employment.
While North Dakota state law doesn’t mandate PTO, employers who choose to offer it are required to pay out unused PTO upon the conclusion of employment, although there are a few exceptions. Employers are not required to pay out unused PTO if the employee does not provide at least 5 days notice prior to their departure or if an employee has been on the job for less than 1 year. Also, employers can provide written notice at the start of their employment that any unused PTO will not be paid out, in which case the employer is not required to pay out unused time.
Although Ohio employers are not required to provide paid vacation time, if they do offer paid vacation and employment policy and contracts don’t specifically make it clear that unused PTO will not be paid out when an employee leaves the company, then employers are required to pay out for unused PTO when the employ departs the organization for whatever reason.
Oklahoma employees are entitled to 2 hours of paid voting leave (and more than 2 hours if their commute to polling place and work would reasonably require it), but employees are required to provide at least 1 day notice to their employer regarding their absence.
Pennsylvania employers are not required to provide paid sick leave in general, but employers in Philadelphia, Pittsburgh, and Allegheny County are required to provide employees with paid sick leave.
In Philadelphia, employers with 10 or more employees must provide paid sick leave to employees, which accrues at a rate of 1 hour earned for every 40 hours worked up to 40 hours, which aren’t usable until the employee has been on the job for 90 days.
In Pittsburgh, employees earn 1 hour of paid sick leave for every 35 hours worked, capped at 24 hours per year for employers with fewer than 10 employees and capped at 40 hours total for employers with 10 or more employees.
Allegheny County employers with 26 or more employees must provide them with 1 hour of paid sick leave for every 35 hours worked, capped at 40 hours.
South Carolina state law places no paid leave requirements on employers.
South Dakota employers are required to provide any employee that doesn’t already have 2 consecutive hours off duty when the polls are open with 2 hours of paid vote leave, although the employer can set the time during which the leave is exercised.
Texas employees who notify their employer in advance and who don’t already have 2 consecutive hours off work during polling hours are entitled to a reasonable amount of paid voting leave.
Virginia state law limits paid sick leave requirements to home health care workers who work an average of 20 hours per week or 90 hours per month. Qualifying employees accrue paid sick leave at a rate of 1 hour earned for every 30 hours worked, capped at 40 hours per year and capable of being rolled over from year to year unless the sick leave was frontloaded.
West Virginia employees who don’t already have 3 consecutive hours available when they’re off duty and polls are open are entitled to 3 hours of paid voting leave so long as they provide at least 3 days notice prior to the day of the election.
Wisconsin state law imposes no obligations on employers with regard to paid leave for employees.
Wyoming employers are required to provide employees (who don’t already have 3 consecutive hours when they are not scheduled at work and polls are open) with 1 hour of paid voting leave, though the employer is allowed to pick when the employee exercises the leave and only has to pay out on the hour of wages owed if the employee actually votes.
Stay tuned for Part 2 where we'll take a look at the 25 states with more employee-friendly paid leave laws and what they are requiring from employers.
Understanding what constitutes good benefits is crucial for job satisfaction and well-being. In this guide, we’ll cut to the chase, helping you assess your current benefits package or those provided in a job offer. We cover the why, the what, and the how—from vital health insurance details to work-life perks—equipping you with the knowledge to evaluate or negotiate your benefits effectively. Before you take a new job, understand how your benefits compare.
Employee benefits are essential for job satisfaction, loyalty, and retention, and can affect overall well-being, making it important to evaluate the comprehensive benefits along with salary.
A complete benefits package typically includes five things:
The average employee benefits package is worth $15K if you are single, and $25K if you are covering a family. It represents a large percentage of your compensation and ranges greatly by employer.
To properly value your current benefits package or for a new job, compare it with industry standards, calculate its monetary value, and assess how well it meets your personal needs. Mployer provides online, easy-to-use tools for employees and employers to do just that as well as information to help you better understand how it all works together.
Employee benefits are more than just perks; they’re a critical part of the employment relationship, ensuring job satisfaction and fostering loyalty and retention. Benefits account for over 20% of an employee’s total compensation. That’s a significant chunk! So, when weighing a job offer or thinking about your current job, it’s crucial to consider not just the paycheck but also the following benefits and perks that come with it.
Considering these factors will give you a more comprehensive understanding of your total compensation package.
Before we delve into the evaluation, let’s first understand the key components of a great benefits package. These components include:
But remember, the value of these benefits is dependent on your personal life and career stage, making a big difference in how you perceive them and the pay you receive.
The average dollar value health insurance paid by an employer for an individual is $9,000 if you are single, $15,000 for a family. See below to understand how to value your employer's offering.
There are three main components to evaluate when you are looking at the medical insurance an employer offers:
The average value for an individual of ancillary benefits is $1,500 but can vary significantly. See below to understand how to value your employer's offering.
Ancillary benefits do not cost an employer a lot of money but they can add up, especially to the specific employee and depending on the job role. Do you wear contacts or glasses? Then you, along with almost 75% of Americans, get it. Are you in commercial construction? Short-term disability and life insurance are two items that your company should provide given the nature of the work.
To unpack the ancillary benefits, there are several core ones to evaluate -
The average value for an individual of ancillary benefits is $5,000 as an example but can vary significantly based on your income. See below to understand how to value your employer's offering.
We all need a break from work, right? That’s where paid time off (PTO) policies and paid holidays come in. Generous PTO policies contribute significantly to the mental health of employees, but it also has a hard dollar value. It’s not just about taking a vacation; it’s about achieving a healthy work-life balance, which is a critical aspect of overall job satisfaction.
The average value for retirement benefits are $3,200 as an example but can vary significantly. See below to understand how to value your employer's offering.
Planning for your future is a long-term endeavor, and employer-sponsored retirement plans are a key part of that journey. These can come in different forms. Most employers today offer a defined contribution plan, such as 401(k)s, but pensions still exist, especially with governmental entities. In each of these retirement plans, they involve regular contributions from both employers and employees.
But buyer beware, even if two employers offer a 401(k), the plans can be very different and have a significant impact on your retirement and savings. There are two main components to consider -
Over a five year period, for an $80K salary, the difference between a 1% match and a 6% match is the difference between an employer contribution of $4,500 for 1% and $27,000 for 6%, assuming modest investment returns. The difference is $20K+ for an $80K year employee. That is just five years, imagine if that were compounded over 20-30 years. Plan features can then escalate that even higher and or lower. The higher match, the more money it costs your employer.
Work-life balance and other benefits perks are one of the most important factors to make the full plan work together. They are the interior features of a car and the paint color and while not expensive to an employer (for the most part), they can bring it all together. Some of these perks include:
These perks play a crucial role in supporting employees’ needs and promoting a healthy work-life balance. Similar to the above benefits though, each of these also costs money for your company to cover these benefits.
Now that we’ve identified the key components of a strong benefits package, let’s dive into how to evaluate your current benefits or those being offered for a new job. An effective evaluation involves assessing the entire spectrum of benefits offered, including both employee-paid and employer-paid options.
Use online tools to grade and evaluate your benefits package. Mployer offers a useful calculator that helps you assess your benefits across various categories. If you want to calculate it yourself, below is a high-level example of just a few of the simple (and complex) elements to evaluate:
If you want to calculate it yourself, below is a high-level example of just a few of the simple (and complex) elements Mployer evaluates -
Furthermore, to put your benefits into perspective, Mployer enables you to download an industry-specific cohort report. This report compares your benefits with those offered by other companies in your industry, helping you understand where your package stands relative to your peers. By considering these comprehensive factors, you can make more informed decisions about your employment offers and negotiations.
Were you paying less out of pocket monthly with your last job compared to this job offer? Did you have access to things like dental, vision and a 401k but don't with this offer?
The good news and the bad - an employer is not going to change their benefit plans just for you. Benefit costs are significant for an employer and large percent of your overall pay. But, what they can do is adjust your salary up (or down?) to make it comparable. Armed with all this knowledge, you’re now ready to negotiate better benefits. But where do you start? Let’s explore some tips to help you navigate this often daunting process.
Large employers typically provide a richer package than smaller employers. This is due to two main items -
Employee benefits can range in value from a few thousand dollars to $20,000+ plus depending on the employer based on our peer reviewed studies - that is material. Remember to ask for the employee benefit plan details before accepting a position to get a clear understanding of the benefits offered. Review detailed benefit sheets and seek clarification on any unclear points before engaging in salary and benefit negotiations.
By confirming benefit options prior to accepting a job offer, you’ll ensure that they meet your needs and provide an opportunity to request negotiations.
Understanding, evaluating, and negotiating your employee benefits package is a crucial aspect of your employment journey. From health insurance and retirement plans and other benefits perks, each component of your benefits package plays a vital role in your overall job satisfaction and well-being. Remember to consider industry standards, calculate the monetary value, and assess your personal needs when evaluating your benefits. By utilizing online tools and prioritizing your needs, you can effectively negotiate a benefits package that aligns with your personal and professional goals.
An example of a good benefits package should include health insurance, ancillary benefits, retirement plans, paid time off, and other perks like flexible schedules and childcare assistance. These components can help employees feel supported and valued in the workplace.
To evaluate the quality of health insurance, consider example factors such as premiums, deductibles, copays, coinsurance, network coverage, tax strategy approach and the employer's contribution. These factors play a key role in determining the overall quality of the insurance plan.
The easy way is to use Mployer's free calculator. The complicated way to calculate the monetary value of your benefits package is to sum the annual employer costs for each benefit. You can also divide that total value by your annual salary to express benefits as a percentage of your salary. This will give you a clear understanding of the value of your benefits package.
To negotiate better benefits, it starts in your job offer. you should research, prepare, prioritize your needs, and effectively communicate your value to the employer. Approach the negotiations with confidence and respect for a successful outcome.
Mployer provides a simple calculator to grade and value your benefits. Other sites provide summary information if you want to do research like Glassdoor, PayScale, or Indeed. Mployer is the only platform available to compare benefits packages, which include calculators and rating systems to make an informed decision.
Editor's Note: This report is based on survey data from June 2024 that was published in July 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)
The unemployment rate hit 4.1% as of the latest report from the Bureau of Labor Statistics, which is the highest the unemployment rate has been since November 2021, albeit still well within the range of a healthy job market.
US employers added 206 thousand jobs, which slightly exceeded the 200 thousand that were expected. That said, the latest report also included downward revisions of the job additions reported in April and May amounting to 111 thousand jobs, which is a reduction of almost 25% of new jobs from what was initially reported.
The number of unemployed people climbed a bit to about 6.8 million after hovering around 6.5 million for several months, and the number of long-term unemployed made a significant jump up by about 166 thousand up to 1.5 million last month, as well.
Of the approximate 200 thousand new jobs added, the largest portion were government jobs, which grew by 70 thousand payroll entries - a significant improvement over the approximate 50 thousand government jobs added on average over the last year.
The healthcare industry was also responsible for a significant chunk of the new jobs, netting almost 50 thousand new jobs, which is strong albeit down from the 64 thousand monthly average, followed by the social assistance and construction industries, which each grew by about 25 thousand jobs last month.
Industries that recorded a net reduction in jobs last month include the retail and professional services industries, which dropped about 9 thousand and 17 thousand jobs respectively, while there was no meaningful change in the employment numbers in the energy, manufacturing, warehousing, transportation, information, financial activities, and leisure and hospitality industries.
The average workweek didn’t budge from 34.3 hours per week for the third month in a row, while average hourly pay rose by 10 cents to $35.00 per hour, which is a 0.3% jump over the month and represents a slight slowing in rate increase from the month before. Hourly wages are up 3.9% total over the last year.
Mployer Advisor’s Take
On one hand, there are economic professionals who describe the latest jobs report as the ideal balance, with a job market that’s neither too hot nor too cold, but instead is right in the sweet spot in the middle that the Fed is targeting.
On the other hand, however, there are plenty of experts of equal stature who are starting to call more attention to the potential problems on the horizon.
Beyond the dramatic downsizing of the last couple of months of job gains, another potentially troubling sign is the sharp reduction in temporary worker employment recorded last month, which can often foretell employer expectations that their growth will slow, stop, and or reverse.
Another problematic indicator worth keeping an eye on is the noteworthy increase in the percentage of unemployed people who are now long-term unemployed, which has grown nearly 3 and a half percent in the last year and now accounts for 22% of the total unemployed population in the US.
The Fed will meet again at the end of this month and determine whether or not to keep interest rates where they are or whether to start bringing them down, and this report (including recent revisions) certainly makes a rate cut or two this year more likely and markets seem to believe we remain on track for a quarter point decrease in September.
As previously noted, however, any rates that may come to be are far from guaranteed at this point, even if markets are largely pricing in a pair of quarter point drops before 2025.
From this onlookers perspective at least, the latest report makes an interest rate reduction sometime this fall now more likely than not, but another report like this one and a rate reduction this year will graduate to plain old ‘likely.’
Check out the Mployer Advisor blog here.
.jpg)
ARTICLE | The Employers’ Guide To Consolidated, Non-Consolidated & Unlimited Leave Policies
Leave practices and policies can be wildly inconsistent between states, industries, and organizations - even internally - and yet they are regularly one of the top factors employees consider when evaluating and taking stock of their prospective and/or current compensation packages and job situations, generally.
Further, according to Forbes’ best employee benefits of 2024 reporting, leave is one of the most notably undervalued benefit package components in terms of the gap between the importance ascribed to favorable leave policies by employees vs. the importance ascribed to favorable leave policies by employers.
The combination of the wide-ranging leave policies employees may have encountered over the course of their careers and the large number of employers that are overlooking the significance of leave from the employee perspective provides an opportunity for employers to better align leave policy with larger organizational goals while gaining a competitive edge over other players in their respective industries at the same time.
Despite that the idea for paid leave first started gaining steam globally around 1910 after President Taft proposed a law (that never came to pass) requiring 2 to 3 months of mandatory paid vacation for every American worker, the US has lagged behind its international, industrialized peers ever since in terms of ensuring its domestic workforce has access to paid time off from their labor.
In the years since, many state governments have stepped in to require private employers to provide some forms of paid leave in some situations, and many private employers have of course gone above and beyond state minimums as part of a compensation package designed to attract, retain, and optimize the output of talent, but the end result is a mess of policies and expectations that can vary considerably depending on a number of different variables.
The net effect of those varying policies is that a little less than 8 out of 10 workers on average in the US have access to some form of paid leave, with about 79% of US workers having access to paid sick leave, 77% of US workers having access to paid holidays, and 75% of US workers getting some form of paid vacation.
Even among similarly situated employers, there remains at least 3 distinct approaches for how best to navigate this shifting leave policy landscape - the standard non-consolidated leave approach, the growing consolidated leave approach, and the emerging unlimited leave approach.
There are, however, disadvantages and advantages to each of the potential leave approaches that comparably positioned organizations may weigh very differently and are best addressed on a case-by-case basis in light of the circumstances specific to a given employer.
Non-consolidated leave policies separate different potential types of leave into categories with a separate amount/tranche of leave time offered for each category. For example, in non-consolidated leave plans an employee is offered a set amount of paid sick days during a given term/year, as well as a set amount of paid vacation days, and a set amount of paid/personal time off (PTO) to be used for personal business, etc.
According to the most recent available data from the Bureau of Labor Statistics, about 56% of US employees are subject to non-consolidated leave policies, which, while still a majority, is down considerably in just the last few years and is hanging onto that majority status by a thread.
This kind of leave segmentation is in many ways more the natural evolutionary byproduct of paid leave plan administrators adding new types of leave piecemeal over time than it is a cohesive policy conceived in pursuit of some specific aims, but there are nonetheless advantages that non-consolidated leave policies can potentially wield over the newer, less-structured alternatives.
The main advantages that non-consolidated leave policies provide employers is a greater degree of hands-on control that may enable them to better tailor leave policies in line with the needs of both the organization and the employees.
For example, sick days can be deemed to rollover from one term to another in order to encourage employees to come to work when capable while knowing that those days aren’t lost if they find themselves experiencing a more significant, contagious, and/or long-term illness or injury down the road.On the other hand, vacation days may be deemed not to rollover, thereby encouraging employees to take the breaks that have been afforded them in order to relax, recharge, and return to work ready to produce at a high level, which is in all parties’ mutual interest.
Further, sick days, personal days, and vacation days can potentially be set to accrue at different rates based on different inputs in line with business needs, as well.The disadvantages to non-consolidated leave policies, however, are largely centered around enforcement difficulties and the additional administrative expenses incurred to manage them. While employers may have an interest in having their employees use sick days only when they are sick, the process for confirming and documenting proper leave utilization can be cumbersome, invasive, and/or lead to ill will between workers and management that is outsized relative to the perceived advantages that are attained.
In consolidated leave policies, time made available for employee leave - whether for vacation, illness, personal business, or otherwise - all comes out of the same collective pool (sometimes referred to as a PTO bank) with no need for segmentation into leave categories.
As of the most recent data available, about 44% of US workers who have some kind of PTO work under consolidated leave plans, although that number climbs to over 50% when measuring only workers who receive paid vacation days (as of 2023), in contrast to the fewer than 25% of workers with paid vacation who had consolidated leave plans back in 2010.
Clearly, consolidated leave plan adoption has been on the rise, and while they do not share some of the employer-tailoring potential that non-consolidated plans can offer, consolidated plans do have the benefit of allowing employees to tailor their leave utilization in line with their own motivations and interests, which is a selling point in its own right and a meaningful one from the vantage point of many employees.
Consolidated plans also immediately remove the sick-day skepticism that can poison working relationships between workers, managers, and coworkers alike, in addition to cutting down on costs associated with collecting, tracking, and storing certain leave utilization documentation.
The latest trend in leave policy takes consolidated leave flexibility one step further by not only consolidating the different types of leave into one PTO bank, but also removing the cap on the number of days in that bank so that the number of PTO days available to a given employee is technically unlimited.
According to a recent report from the International Foundation for Employee Benefit Plans, about 9% of private employers surveyed had adopted an unlimited PTO policy, which comports with the 8% of companies offering and 10% of employees being offered unlimited PTO as reported by Zippia.
Further, 87% of those employers offering unlimited-PTO have begun doing so within the last 4 years, and Indeed reports that the number of job listings referencing unlimited PTO grew by 40% between 2019 and 2023, so the growth trajectory for unlimited leave is even steeper than that of consolidated leave has been.
While an unlimited PTO model may sound like a dream to many workers and a nightmare to some employers, the reality so far has in many ways been the opposite.Workers who may envision themselves going on regular extended sabbaticals more often than not actually find themselves taking fewer days off work under the unlimited PTO model than they did with a set number of PTO days. Such employees often cite a heavy workload, social stigma, coworker/manager coordination, and not wanting to offload responsibilities to others as some of the main reasons for underutilizing the opportunity to take leave. In fact, workers with unlimited PTO take only an average of about 13 PTO days per year.
Employers, on the other hand, who may be reluctant to adopt the unlimited leave model for fear of mass employee absenteeism not only end up with employees working more than before, they also can eliminate carrying the liabilities associated with accrued vacation days on their accounting books and can avoid paying out on unused PTO to terminated employees (as is required in 19 states: CA, CO, IL, IN, LA, ME, MD, MA, MT, NE, NH, NM, NY, NC, ND, OH, RI, WV, WI) simply because there are no longer any PTO days that have accrued.
Those kinds of advantages may become increasingly hard for employers to ignore, even as employees adjust to the new system and begin to utilize it more to their own advantage, as well.
While a majority of states (27) have some form of PTO law on the books, the scope ranges from relatively small (as in Louisiana's requirement that each employee be given one day of PTO for jury duty or Virginia’s requirement that home health workers who work at least 20 hours per week receive one hour of paid sick leave for every 30 hours they spend on the job) to much more broad in application (like Nevada’s law requiring employers with more than 50 employees to provide 0.01923 hours of PTO (capped at 40 hours per year) for every hour worked, which employees can use for any purpose.
The following states have enacted at least one law with regard to PTO for private employers/employees, the vast majority of which focus on sick and family leave:
The following states have no current laws mandating any form of PTO:
While there are a few potential advantages to non-consolidated PTO, many of those advantages in terms of shaping employee PTO usage are often more theoretical than practical, whereas the additional burdens of verifying and administering non-consolidated PTO are very concrete.
Though non-consolidated PTO remains the majority position for the time being at least, all the momentum seems to be behind consolidation.
Whether that momentum will ultimately carry the unlimited leave model and its even greater levels of flexibility to become standard business practice and the majority approach among employers remains to be seen, but unlimited PTO certainly seems to have the necessary tailwinds behind it to make that outcome a real possibility.
Despite the practical downsides for employees with unlimited PTO - which employees will adapt to over time and which employers can mitigate through proactive efforts to help encourage culture shift and encourage optimized leave utilization - the idealized promise of unlimited PTO remains a strong draw for talent from a recruitment and retention perspective.
Further, employers would be ill advised not to consider the potential benefits that can be immediately realized from a liability perspective when the policy is implemented, especially if they operate in a state that considers accrued PTO to be equivalent to wages and/or mandates the payout of accrued PTO to employees that have been fired.
The right PTO arrangement may very well be a little different for any given employer based on what they do, where they are, and what they hope to accomplish via the policy, but consolidation and unlimited PTO offerings are clearly not only attracting the interest of a growing number of employers, but many of those employers who take a closer look are liking what they see and making a change.
.jpg)
Key Takeaways
ARTICLE | The Employers’ Guide To Juneteenth
Juneteenth is coming up on June 19th, 2024 - Here’s what you need to know.
Juneteenth - a celebration and commemoration of the end of slavery in the US - is the latest holiday to join the esteemed ranks of the 10 other federal holidays that can be found on the US calendar.
As with all other federal holidays, private employers are not federally mandated to provide paid time off or any other accommodations for employees with regard to Juneteenth under the Fair Labor Standards Act or otherwise, but the scope of the holiday’s impact will extend well beyond government employees getting the day off work.
In terms of practical impacts, most government buildings will of course be closed including, post offices, public schools, and courts. Banks and financial markets will be closed, as well.
Further, 38 states so far have declared Juneteenth as a state holiday, so many state workers will be off-duty too, and more than a few cities and local governments have also passed Juneteenth-related ordinances to varying effect that may be worth looking into in your geographic area.
This year, June 19th will be a Wednesday - but for those who do/will offer PTO for Juneteenth and want to stay in line with the federal holiday schedule protocol in the event that June 19th falls on a weekend - if it’s a Saturday the holiday should be observed on the preceding Friday and if it’s a Sunday the holiday should be observed on the following Monday.
Perhaps most impactful will be the growing number of private businesses that are choosing to make Juneteenth a companywide holiday.
According to a study from Mercer, about 39% of private employers in the US had adopted Juneteenth as a paid holiday as of last year (2023 - the most recent data available), which is up by 6% over the 33% adoption rate reported in 2022.
In 2021 - the year that Juneteenth was declared a federal holiday - only 9% of private employers had adopted Juneteenth as a paid holiday, so while the rate of adoption has slowed over time, the upward trajectory almost certainly continues as more organizations get on board and time off for the Juneteenth holiday approaches the tipping point from normalized to expected.
In some industries, to be clear, that threshold from Juneteenth PTO normalization to expectation has already been crossed, such as in the financial services industry for example. In 2023, nearly 2 out of 3 employers in the financial services industry (63%) were already offering employees paid time off for the Juneteenth holiday.
How does Juneteenth PTO adoption among private employers stack up compared with PTO adoption for the other holidays, federal and otherwise? It is about middle of the pack, which is especially impressive given how recently it attained federal holiday status.
Prior to gaining federal holiday status in 2021, the PTO adoption rate for Juneteenth was less than half of the PTO adoption rate for President’s Day and Good Friday, both of which have been adopted as company holidays by about 19% of private employers. Juneteenth was even below Veteran’s Day and New Year’s day at 11% and 14%, respectively, according to Indeed.
After becoming an official federal holiday, however, and being adopted by an additional 30% of private employers in the 3 years following that status declaration, the number of private employers offering Juneteenth as a company holiday now likely exceeds the number of private employers who do so for the Day After Thanksgiving (~39% PTO adoption), Christmas Eve (26% PTO adoption), or Martin Luther King, Jr. Day (24% PTO adoption).
While Juneteenth still has a long way to go to reach private employer PTO adoption rates comparable to the heavy hitter holidays like Christmas Day, Thanksgiving Day, Independence Day, Labor Day, New Year’s Day, and Memorial Day - all of which have approximately 90% or more adoption across private employers - those kinds of adoption figures are not outside the realm of possibility if the labor market remains tight and leave/benefits become an increasingly competitive battlefield in the fight for top talent.
Despite being a recent addition to the federal holiday list, there is a long history and tradition surrounding the Juneteenth celebration stretching back nearly 160 years, and a closer look at that history will serve to encourage further the adoption of the holiday for reasons beyond talent attraction and retention.
While slaves in secessionist states were technically freed upon Lincoln’s issuance of the Emancipation Proclamation on January 1, 1863, it wasn’t until 2 and a half years later - and more than 2 months after the war had technically concluded - that the Union army finally secured the physical release of the last remaining slaves from a Confederate stronghold in Galveston Texas (on June 19, 1865) that the promise of the Emancipation Proclamation was finally fulfilled.
It is also worth noting that the last remaining slaves in the US were not actually freed until the 13th Amendment was ratified on December 6, 1865 since the Emancipation Proclamation only addressed the slaves in secessionist states and had not covered slaves in Kentucky and Delaware, neither of which had joined the Confederacy despite allowing legalized slavery within their borders.
By the end of 1865, all slaves had been freed in the US, and the following year on June 19th, 1866, the first ever Juneteenth holiday was celebrated to mark the significance of the occasion and memorialize the gravity of what had taken place the year (and the years) before.
With the growth we’ve seen over the last few years in the number of employers recognizing Juneteenth and offering employees paid time off, it is probable that the holiday has already reached critical mass at which point observation of the holiday and company-wide holiday status for Juneteenth is more likely to continue growing than to recede.
We are, however, still in the sweet spot when Juneteenth PTO is becoming commonplace but has not yet become a majority position among private employers (in most industries), so the window of opportunity to gain a competitive advantage as an early adopter is still open for most organizations and enterprises.
Whether or not commemorating an important date in American history coupled with forward-thinking talent attraction and retention tactics is enough motivation to consider expanding PTO-covered holidays to include Juneteenth, it would be wise to recognize these dynamics at play in terms of how they are likely to induce additional adoption in the years ahead.
The downside for late adopters, of course, is that instead of getting ahead of the competition while signifying the importance of the occasion and making a positive connection, they end up coming around anyway just to keep up with the competition even as the benefits for doing so yield increasingly diminished returns.
Don’t miss out on the opportunity to call attention to the occasion and celebrate Juneteenth this year!
.jpg)
ARTICLE | The HR Professional’s Guide To The End of The Non-Compete Era
Last month, the Federal Trade Commission issued a new rule that invalidates non-compete agreements for the vast majority of employment contracts, reducing the percentage of the employees subject to non-compete agreements from almost 20% of the workforce to less than 1%.
For human resource professionals, executives, and organizational leadership, the impacts of these changes will be considerable - from talent acquisition and retention to employee health outcomes - and may be worth considering in advance of when the new rule takes effect this coming fall.
To be clear, it’s very possible if not more likely than not that at least one of the pending/forthcoming lawsuits challenging the new rule will succeed on some level, but the FTC makes a fairly compelling case - both against non-compete agreements and for the agency’s ability to regulate them - that is unlikely to go away even if the new rule in its current form doesn’t survive judicial review unscathed.
In the event that the current era of non-competes truly does come to an end, whether sooner or later, more than a few aspects surrounding common business practices for managing talent retention, intellectual property protection, and limiting competition will have to be rethought and reconfigured from the ground up, which will provide both significant challenges and meaningful opportunities.
How HR professionals and organizations in general respond to those challenges and adapt their way of doing business to adjust to the new non-compete normal, and more importantly how effective those adjustments prove to be, will likely reshape human resources management practices and business organizational structuring for decades to come.
The first thing that employers must do is notify all employees who will be affected by the new rule and inform them that their non-compete agreement will no longer be in effect as of September 4th (or whatever date in advance of September 4, 2024 that the company may choose). The FTC has provided model language to assist in the process that can be found on the agency website.
The next step must be quickly adjusting course in line with the new reality that non-compete agreements may soon be a relic of the past.To understand how the absence of non-compete agreements will affect business operations, it’s important to start with the main goals that non-compete clauses are typically utilized to meet - retaining talent, protecting IP/ trade secrets, and limiting competition.
These goals can all be pursued via a combination of other efforts, of course, but those efforts will not necessarily all be as effective as non-competes had been, nor will they all be equally effective for every employer that puts them to use.
While it remains to be seen what methods will and won’t be effective for a given employer/industry/goal, that process of trial and error in discovering what works and what doesn’t will likely have major consequences that will be felt across the labor market and economy as a whole in terms of how business is conducted going forward relative to the status quo.
Non-compete agreements have often been employed in order to ensure that in-house know-how and trade secrets stayed in-house.
Perhaps the most relatable of the justifications for restricting the free movement of employees within a market is the understandable desire for organizations to keep some information out of the hands of competitors, would-be market entrants, and others who may inhibit the ability of the business to grow and succeed.
To those ends, non-compete agreements were fairly effective, which is partly responsible for the widespread practice of routinely including non-compete agreements in employment contracts.In a post-non-compete world, one concrete measure organizations can undertake to better protect intellectual property and trade secrets is putting in place more clear and restrictive policies and procedures for using company equipment and for accessing, downloading, storing, and utilizing company data and work product.
These efforts can decrease the likelihood that confidential information gets outside of the building in the first place, in addition to potentially helping to determine if, when, how, and by whom that information was improperly accessed or disclosed in the event of a breach.
While laws that allow for the protection of trade secrets and IP remain in place even absent non-compete agreements, however, in practice it can be much more difficult to prove infractions than to prevent them.
As a result, to better reduce the leaking of valuable information without non-compete agreements to limit in-house knowledge from benefiting competitors, employers are likely to redouble their talent retention-efforts, especially for specialized roles with specific insight into the organization’s competitive advantages.
Regardless of the efforts taken to retain talent, however, some employees with access to trade secrets and valuable organizational knowledge will inevitably move on to work for another employer, in which case tighter, and more specific non-disclosure agreements with heightened penalties for term violations may be the best tools available for ensuring departing employees know both what information should not be revealed and the legal repercussions they may face if they do so.
Once non-compete restrictions are lifted, employees will be able to more directly test the market value of their labor by offering it to competitors.
At first, this newfound employee freedom of movement may lead to both increased turnover and increased wages/labor expenses. While some employees will take the opportunity to open their own business, the majority of the influx of talent on the market will likely look to move on and/or move up resulting in an industry-wide game of musical chairs.
As a growing number of companies begin adopting alternative means for achieving the goals they had previously pursued via non-compete agreements, however, that churn is likely to settle and may ultimately lead to a lower turnover rate overall.
For example, while non-competes provided a serviceable ‘stick’ to limit employees’ ability to leave their jobs, the absence of non-compete agreements suddenly makes the various ‘carrots’ that serve a complementary purpose all the more crucial.
While some other retention-aiding ‘sticks’ can still be put to use toward improved retention, including Training Repayment Assistance Programs (TRAPS) so long as those programs are not so severe as to constitute de facto non-compete agreements, ‘carrots’ like escalating bonus schedules, accumulating benefits, and longer vesting periods for stock options will have an increasingly important function in keeping top talent on board.
The threat of increased competition is two-fold when employees are suddenly more capable of either putting their skills to use for a rival organization or starting their own operation in the space.
In either case, non-solicit agreements can be effective in limiting that exposure by limiting the ability of employees to poach clients on their way out the door and for a period of time following their employment. Non-solicit agreements should also be put in place to restrict former employees from hiring your organization’s current staff, agents, and sales people for a set period of time following the former employee’s term of employment.
Non-disparagement and non-interference agreements may also be useful in similar situations with similar goals by preventing former employees from disparaging, disrupting, damaging, or otherwise interfering with their former employer’s business.
As for inhibiting competition from existing industry counterparts who benefit from talent your organization developed in-house, the best defense is to shore up your IP protection alongside reinforced talent longevity and retention efforts.
The best offense, on the other hand, may be to bolster your own organization’s ranks with some of the new talent who will be making their services available on the market in the near future.
Beginning September 4th, 2024 most non-compete clauses will be banned going forward, but not all.
Non-compete agreements involving the sale of a business will remain valid for both past and future business sales so that buyers can remain protected from competition from the seller.
Importantly, this exception applies to any bona fide good faith sale in which the seller has an ownership stake regardless of the size of that stake - which is a departure from the proposed rule which required a minimum 25% ownership stake for non-compete clauses to be valid. Though the final rule is an expansion of the exception form the proposed rule, the FTC is clearly aware of the potential abuse of this exception.
Further, the FTC notes that the invalidation of existing non-compete agreements isn’t retroactive, so violations of existing non-competes can still result in viable legal action if the violations or conditions enabling the violations occurred prior to the new rule taking effect.
Most existing non-compete agreements that don’t meet the business sale exception will also be invalidated as of September 4th, 2024, but there is an exception for existing non-compete agreements involving ‘senior executives’ - defined in the rule as employees who earned at least $151,164 in the last year and who have final authority to make policy-setting decisions that affect significant aspects of the business.
Non-profit organizations are also outside the scope of the new rule as beyond the purview of the FTC, but regulators note that they do retain jurisdiction over organizations who may be non-profit in name, designation, and/or tax status, but nonetheless operate as for-profit entities and/or primarily for the benefit of their operators, in which case the new rule will be applicable.
Given the prominent role that healthcare plays in workforce management, benefits administration, and worker productivity, human resources professionals should also be mindful of some of the healthcare-related changes that may result from banning non-compete agreements.
The two primary negative impacts that non-compete restrictions can have on the healthcare industry according to public commentary highlighted by regulators can be boiled down to reduced access to care and reduced quality of care.
While reduced quality or access to a product or service is generally considered a problem across most industries, the stakes are often significantly higher when health is involved, which is one reason that the FTC paid special attention to address some healthcare related issues and objections related to banning non-competes.
Further, the healthcare industry will be critically impacted by the new rule as a result of the large number of physicians currently subject to non-compete agreements, with as much as 45% of physicians at for-profit hospitals are currently constrained by non-compete agreements.
While the new rule has the support of the American Medical Association, there are still plenty of agents and organizations within the healthcare industry who are of the opinion that the rule will ultimately have a net negative impact.
In responding to those who oppose the new rule, regulators make it clear that they are very much aware of the relevant concerns held by some within the healthcare industry about how the new rule will affect their operations - including that the rule would worsen the existing healthcare worker shortage problem and would drive up healthcare worker wages and health care costs in general as a result - but the FTC largely dismisses those concerns as unsupported by the data.
It is not entirely clear whether or not regulators found those concerns to be without merit, however, or if the evidence in support of those propositions was simply insufficient while they found the data and commentary in opposition to non-compete clauses more compelling.
For example, a significant number of physicians commented that non-competes negatively impact the quality of care they can provide by forcing them to accept care-impacting decisions made by administrators at the institution with which they are contracted while depriving them of the opportunity to offer their skills and experience to a competing institution instead, which can ultimately lower the overall quality of care for both healthcare institutions in the example.
Further, while regulators conceded that tax-exempt organizations in general operate outside the realm of the FTC, they do notably claim jurisdiction over (and fired a shot across the bow of) the many nominally non-profit hospitals and healthcare organizations that nonetheless pay executives exorbitant salaries and contribute less to their communities than the value of the tax breaks they get as a result of their non-profit structure.
What will be the overall impact on healthcare? The FTC claims the new rule will lower healthcare expenses by an average of $20 billion per year over the next decade in addition to creating more competition and offerings to better meet patient needs/demand, while opponents believe freedom of movement for healthcare workers will result in higher wages that drive the cost of healthcare up.
Whatever the end result, there will almost certainly be healthcare-related confusions and complications that arise as the industry adapts to the changing environment, which will likely cause employees to lean on their employers further for guidance and help navigating the evolving healthcare landscape.
According to the Federal Trade Commission (FTC), about 30 million workers are currently subject to non-compete agreements, which means any problems that non-compete agreements may be causing or exacerbating are going to be felt economy wide.
Despite the widespread adoption and long history of non-compete clauses in employment contracts, the practice has long been the subject of controversy, with data analysis increasingly seeming to confirm some of the most common critiques of non-compete agreements, including that they are economically inefficient, lead to higher costs, result in worse quality product/service offerings, and stifle innovation.
One of the biggest arguments against non-competes embraced by the FTC is that they unnaturally inhibit free market forces that could potentially distribute labor more efficiently if non-competes weren’t restricting the free movement of talent within a market/geographic region.
Those restrictions affect not only the movement of labor and ideas among existing competitors within a given market, which affects the value of that labor in turn (i.e. wage suppression), but non-compete agreements also inhibit new entrants from accessing the market, which has a chilling effect on innovation by limiting the availability of expertise and experience to would-be innovators and their organizations, whether preexisting or brand new.
Interestingly, data indicates that non-competes not only depress wages and earnings for workers whose contracts contain non-compete clauses, but also for workers who aren’t directly subject to non-compete clauses, as well, by lowering wages across the entire category.
Quality of product and service offerings is another victim of non-compete agreements highlighted by the FTC, noting that employees who are unable to take their services elsewhere are less capable of pushing back against excessive workload, job requirements, or cost-saving measures that are likely to result in a lower quality of work output.
Given these findings, it is no surprise why the FTC decided that the use of these kinds of restrictions should be banned.
Not everyone agrees, however, with opponents challenging both the wisdom of the new rule and the FTC’s authority to issue it, which is a position supported by many stakeholders across a range of industries who believe that regulators at the FTC have overstepped their regulatory bounds with the new rule and grossly misunderstood and/or mischaracterized the potential effects that banning non-compete agreements may have.
As of this writing, there are at least 2 separate lawsuits that have been filed against the FTC with regard to this rule.
The most prominent plaintiff thus far is the US Chamber of Commerce, which claims that the FTC lacked the authority to issue such a broadly-sweeping rule, amongst other claims. The suit was filed in the US District Court for the Eastern District of Texas, which the Chamber presumably believes to be a district friendly to the cause and somewhat increases the chances that the challenge will be heard favorably, at least in the short-term.
In making its case, the Chamber specifically pointed to the substantial costs that companies would have to undertake to protect their investments in terms of both developing talent and safeguarding intellectual property if non-competes are no longer permissible.
The FTC counters those complaints by claiming that the agency is specifically mandated to regulate unfair methods of competition, which they have concluded includes non-compete agreements.
The Chamber has not yet said whether it will move for a temporary injunction blocking the enforcement of the rule pending their legal challenge, but as September approaches, that motion for injunction becomes increasingly likely unless another legal challenger to the new rule (of which many more are anticipated) takes that action first.
Despite having the final rule in hand and just a few months before it is scheduled to take effect, the general consensus is that legal challenges to both the rule banning non-competes and the FTCs right to enact the rule will succeed in delaying implementation at the very least.
How those cases play out remains to be seen for the time being, but given the current makeup of the federal judiciary, substantial changes to the rule if not a de facto gutting of it seem more likely than not prior to the rule taking effect.
Even if the non-compete ban is severely diminished if not invalidated by the time it has been terminally adjudicated, given the clarity of the case they present and the resolution in their actions, regulators at the FTC may very well attempt to achieve the same ends via different, more judicially palatable means should they still be in position to do so next year following the elections this fall.
One way or another, the spotlight has been shone on non-compete clauses, and a return to the era of widespread, default non-compete agreement use is unlikely to happen regardless of the fate of the current legal challenges to the new rule.In justifying the ban, the FTC noted that there were a number of less-intrusive ways for employers to achieve the benefits they’ve come to expect from non-compete agreements including talent retention and IP protection, including some of those discussed above.
Further, the FTC pointed to the experience of several early adopter states like California and Oklahoma that paved the way for the new rule via heightened non-compete regulation above and beyond the national standards at the time. Those early adopter states not only provide evidence that banning non-competes won’t result in the worst outcomes predicted by those opposed to the new rule, but they are also home to thousands of companies that can serve as case studies that can benefit out-of-state companies addressing these issues for the first time with how best to adapt to the new, more competitive environment.
Forward-thinking organizations might be wise to begin looking toward those models, exploring their options, and making the transition away from relying on non-compete agreements before being directly faced with a swiftly approaching the legal deadline for doing so, whether that deadline ends up being this coming September or a little farther down the road.
.jpg)
Key Takeaways:
ARTICLE | To ICHRA or Not To ICHRA?
Individual Coverage Health Reimbursement Arrangements (ICHRAs) have been getting an increasing amount of attention in recent years and are being touted as a potential next evolution in how employers support employee healthcare.
While the rate of adoption has been quite impressive in the little more than 4 short years since ICHRAs were first legislated into existence, however, the question remains as to whether the reality of what ICHRAs can deliver lives up to the hype they have been generating.
Thus far at least, the heightened attention surrounding ICHRAs and the resulting meteoric rise has only translated into a tiny sliver of market share, and although that market share has been obtained over a relatively short amount of time, the types of companies that are best suited to capitalize on the advantages that accompany ICHRA adoption are too few in number to make widespread adoption seem likely.
Essentially, ICHRAs provide employers of any size the opportunity to set aside a fixed amount of money each month/year that employees can use to cover healthcare expenditures like premiums, deductibles, copays, and other qualified medical expenses.
There are several aspects of ICHRAs that are very appealing to employers for obvious reasons, including that they enable employers to satisfy Affordable Care Act requirements via tax-deductible contributions as long as cash available for reimbursement meets or exceeds the minimum affordability standards.
Also, these accounts can be offered as standalone health benefits, or they can be offered in tandem with traditional employer-sponsored insurance, and there is no upper limit on reimbursement levels, which allows for significant flexibility in tailoring these arrangements to the needs of the talent pools that your organization hopes to attract and retain.
Further, compliance and administration for ICHRAs are theoretically simplified relative to traditional group-plan coverage, and risk/cost is limited due to the predetermined amount of reimbursement available each term.
At face value, the potential ICHRA appeal is immediately clear - risk limitation for employers and freedom of choice for employees - but a deeper analysis reveals a considerably more complex dilemma than may be apparent on the surface.
The story of the ICHRA can not be told without acknowledging the Health Reimbursement Arrangement (HRA) from which it evolved.
The IRS first recognized HRAs in 2002, and though the popularity of HRAs swelled throughout the early part of the century, in 2013 an interpretation of the Affordable Care Act effectively outlawed them for failure to comply with the new credible coverage rules.
Because many companies (especially those on the smaller side) were unable to provide any employee healthcare spending support at all in the wake of the HRA ban, however, Congress created the QSEHRA in 2016 to allow small employers to offer HRAs if they met certain conditions that made providing traditional health insurance coverage less feasible.
In 2019, the Department of Labor took the additional step of enacting rules to expand the access to HRAs to companies of all sizes, enabling the first ICHRAs to come online in 2020 and bringing the HRA adoption trend line full circle.
And while HRAs continue to be a major factor in employer-sponsored health coverage today, and make up a core component of most high-deductible health plans, which in turn make up about 45% of all employer-sponsored health plans, it is ICHRAs that are currently dominating the spotlight, with the number of companies offering ICHRAs last year increasing by more than 60% over the year before.
Supporters like to compare the current shift toward ICHRA adoption and away from traditional health insurance coverage offerings as analogous to the shift away from defined benefit retirement savings offerings toward defined contribution retirement savings plans.
In short, plenty of ICHRA proponents think that ICHRAs will eventually replace traditional healthcare benefits similar to how pensions have been largely replaced by 401ks and other investment vehicles over the last 40 years, and based on the year-over-year changes between 2022 and 2023, that possibility seems quite plausible.
As the chart below shows, there were about 2,500 employers offering ICHRAs in 2022, but that number jumped up by about 64% to an approximated 4,100 employers in 2023.
The QSEHRA adoption tells a somewhat different story, however, with only about an 8% increase between 2022 and 2023 in the number of small employers offering QSEHRAS bringing that figure from 6,000 up to an approximated 6,500.
Of course, QSEHRA adoption had a few years-long head start on ICHRA under the latest regulatory rules, which can partially explain the slower adoption rate for QSEHRAs relative to ICHRAs.
More importantly, however, the additional flexibilities built into ICHRAs have made QSEHRAs relatively obsolete for all but a small slice of qualifying small businesses, so the disparity in pace of growth between ICHRA and QSEHRA adoption is more likely to grow than shrink at this point.
For context however, even with this kind of significant levels of year-over-year adoption, ICHRAs went from accounting for 0.08% of employer-sponsored healthcare expenditures in 2022 to 0.1% of employer-sponsored healthcare expenditures in 2023, so the impact on the overall market still remains incredibly small for the time being at least, and that may not be a bad thing.
- Nearly two-thirds of employers (64%) that offer ICHRAs or QESHRAs have 5 or fewer employees;
- Only 6% of employers that offer ICHRAs or QESHRAs have 50 or more employees;
- The fastest growing segment of ICHRA adoption is by employers with 50 or more employees, which grew by more than 140% between 2022 and 2023; and
- The number of employers offering ICHRAs grew by 170% between 2022 and 2023 while the number of employers offering QSEHRAs grew by about 100% over the same period.
- 55% of employees insured via ICHRAs or QSEHRAs in 2023 were age 44 or younger.
It’s important to note that there are some understandable reasons driving interest in and adoption of ICHRAs. In fact, there are a number of situations in which ICHRAs or QSEHRAs may be the best available option for employers to support employee health care coverage.
First and foremost, employers that don’t intend to contribute at least 50% contribution toward total employee healthcare spending may be well-served by offering ICHRAs, which allow employers to specify and cap in advance the maximum amount of reimbursement available to each employee each one-year term.
This type of risk-limiting arrangement can be appealing to employers, especially those on the smaller side who may not have sufficient resources to fund traditional employer-based health insurance coverage.
Further, despite requiring employees to submit monthly any healthcare bills for which they are seeking reimbursement, ICHRAs are also considerably less complex and labor-intensive to administer than traditional employer-sponsored health plan management, which appeals to employers that may lack the necessary human resources or finance department/professional(s) capable of handling the workload.
ICHRAs also can be a good idea for employers with high turnover and/or whose employees primarily qualify as low-income and therefore can still obtain substantial discounts on health insurance through the public marketplace as a result, even after accounting for the ICHRA reimbursement funds available to them.
As the above example under the Advantages of ICHRA header makes clear, having a relatively small business and a small number of employees is the primary common factor linking the situations in which ICHRA adoption is most optimal, which seems to remain the case for both ICHRAs and the QSEHRAs that were designed specifically to accommodate the needs of small employers.
Interestingly, however, employers with 50 or more employees were the fastest growing segment in terms of ICHRA adoption between 2022 and 2023 nonetheless, even though employers with more employees and greater resources are often going to find that the disadvantages associated with ICHRAs outweigh any advantages they may have hoped to gain via implementing an ICHRA program.
For example, while it is true that ICHRAs set a hard limit on employer healthcare costs, that limit is only meaningful for employers that intend to provide less than market-competitive employee health benefit spending.
In reality, almost all employers covering 80% of an employee’s healthcare costs (which is the market average) are going to get a much better group rate for their employee pool than what individual employees would be able to obtain on their own through the ACA exchange, with the only exceptions being employers that have a very small number of low-income employees, as noted above.
The alternative, of course, is offering healthcare benefits that are below market rate, which is a strategy that comes with tangential disadvantages of its own, including productivity loss, higher turnover rates, and other talent acquisition and retention issues.
There are also some other potential - though relatively minor - issues with ICHRA administration that aren’t necessarily baked into the system but can be problematic nonetheless. ICHRAs rely on employees to submit their medical expense bills in a timely and consistent manner, for example, which doesn’t always result in lightening the administrative workload as much as expected.
Perhaps the main problem with ICHRAs, however, is that they are simply not currently designed to work in a complementary fashion with the current insurance broker model that undergirds the weight of the US healthcare system.
Similar to Medicare Advantage enrollment, initiating an ICHRA or QSEHRA program requires each employee to be enrolled individually. Currently, however, most brokers don’t really have an ICHRA enrollment vehicle to efficiently facilitate that process, so many traditional brokers who currently own employer accounts will no longer be able to collect the health commission and fees associated with those accounts, which would instead go to the Medicare-Advantage-type of enrollment broker.
Those Medicare-Advantage-type brokers, on the other hand, are unable to facilitate enrollment in dental and vision plans as well as other employee benefits that traditionally sit in the traditional insurance broker wheelhouse, further scrambling the division of responsibilities and the incentive structure as they currently exist in the insurance and employee benefits markets.
While there are clearly advantages that can be gained by implementing an ICHRA program, those advantages appear to be primarily applicable to a much smaller subset of employers than the current interest in ICHRAs and the accompanying expectation for their impact on employer healthcare provision norms in the future seem to indicate.
At the end of the day, however, for most employers other than those with only a small number of low-income employees, the disadvantages that come with ICHRAs will amount to more on balance than the advantages.
Although the ICHRA adoption growth rate still looks impressive, those rates are already slowing year-over-year just a handful of years after their introduction on the market.
Further, employers utilizing ICHRAs still make up an infinitesimal portion of overall market share at one-tenth of one percent, and with brokers and carriers both disincentivized to help expand the size of that market, adoption rates seem likely to continue slowing in the next few years.
Despite any clamor about a potential future in which ICHRAs play a much more prominent role in supporting employee health coverage, the numbers as they currently exist and the forces likely to shape those numbers going forward largely don’t support those conclusions.
.webp)
The average US employee costs their employer about $45.42 per hour in total compensation expenses, excluding members of the armed forces. A little less than 70% ($31.29) of that total compensation was earned in salary and/or wages while a little more than 30% ($14.13) of that expense covered employee benefits and perks according to the BLS.
Benefits and perks cross a number of segments. Below is the full breakdown but as you can imagine, the majority comes from medical, social security, leave, and retirement. While life, disability, dental and vision are all important, the only represent a small percentage of the full medical.
Employers each year invest over $1T into their employee's benefits, this is over 5% of the US GDP. Your firm does the same, employee benefits are often one of the top five expenses each year for an employer, in some industries it is in the top three.
Going one level deeper, the average hourly wage/salary costs were nearly identical between service employees and goods producing employees at $30.34 and $30.31 hours, respectively, whereas the average hourly employee benefits expense was a couple dollars higher for goods-producing employees at $14.44 an hour per employee than for service employees at $12.44 an hour per employee.
Expenses derived from leave, however, whether paid time off or sick leave, were slightly higher for the service industries at $3.34 per hour relative to the $2.82 per hour average leave expense for employees in industries that produce goods.
First, lets take a look by industry. As the following chart illustrates, the information industry had both the largest wage/salary expense at $48.25 per hour and the largest employee benefits expense at $26.60 per hour, for an average total compensation expense of $74.85 per employee per hour.
Despite paying a slightly lower average wage/salary expenses per employee at $47.95 than the information industry’s $48.25, the utilities industry nonetheless has the highest average hourly total employee compensation expense at $76.91 as a result of boasting the largest average hourly employee benefits expense of $28.96.
The other services industry had the lowest average total employee compensation costs of just $17.82, followed by leisure and hospitality at $19.44, and the retail industry at $25.08 before making the jump up to the manufacturing industry, which spends an average of $43.68 on employee compensation per hour.
Interestingly, despite paying the lowest wages and salaries, the other services, leisure and hospitality, and retail industries pay the largest proportion of total employee compensation in the form of wages and salaries. In short, the pay is relatively bad in these industries and the benefits are even relatively worse.
As noted above, the split between wages/salary expenses and employee benefits expenses was about 70% to 30%.
The 30% of total employee compensation expenses that went toward employee benefits can be further broken down, the largest portion of which went to health insurance of course, which cost private employers about $2.94 per hour per employee on average.
Social Security contributions were the next largest expense at $2.06 per employee per hour, followed by paid leave at $1.67, non-production bonuses at $1.20, and defined contribution benefits which cost employers an average of $1.07 per employee per hour in 2023.
Those 5 employee benefit expenses alone (totally $8.97 per employee/hour) accounted for more than 70% of the average total hourly employee compensation expense of $12.77 per hour.
The least expensive eight benefits expenditures combined to equal a little more than $1 in total cost per employee per hour, or a bit over 8% of the total average employee benefits expense.
While the list stacks up for the minor benefit offerings, with a negligible impact on cost. some of them are the most important to certain segments of employees. As noted above, the split between wages/salary expenses and employee benefits expenses was about 70% to 30%.
Next, lets look at the specific occupation. While workers in private industry cost their employers $43.11 per hour in total compensation expenses, those figures unsurprisingly varied quite significantly based on occupation type.
Management, business, and financial occupations had the highest average hourly compensation costs at $81.72, followed by professional and related occupations at $66.53.
Construction, fishing, farming, and forestry employees cost their employers an average of about $44.50 per hour in compensation expenses, while sales, transportation, and office and administrative employees had an average compensation expense of about $33 per hour. Service industry employees came in at the bottom of the list costing just $21.55 per hour in total compensation.
It is worth noting that the benefits expenses incurred for sales employees is surpassed by all other occupations outside service occupations, and although sales occupations pay higher wages and salaries than transportation and office/administrative jobs, transportation and office/administrative jobs are nonetheless more expensive in total compensation because of their relatively more substantial benefits offerings.
When accounting for both industry and occupation type at the same time, the combined effect that these independent factors have on average employee compensation expenses can be seen even more clearly, as in the following charts outlining employee compensation costs by industry, further broken down by occupation type.
For example, management, business, and financial jobs in the professional and business services industry cost their employers ($89.79 per hour) more than $12 more an hour in total compensation expenses than employees in the same field that work in the manufacturing industry ($77.56 per hour).
On the other hand, office and administrative support jobs compensation expenses were slightly more expensive in the manufacturing industry, albeit largely consistent across industries - $34.4 per hour in the manufacturing industry, $32.31 in the professional and business services industry, and $32.38 per hour in the trade, transportation, and utilities industries.
In a future installment, we’ll take a look at how these employee compensation expenses also vary by company size and region as well as how occupation and employee headcount combine to affect average hourly employee compensation cost.
.svg)
.svg)
.svg)
.svg)