How to Evaluate and Improve Your Employee Benefits Program

Benefits are one of the largest costs on your payroll. Across US private employers, they made up 30% of employer compensation costs in June 2026, counting legally required payments such as Social Security and Medicare, according to the Bureau of Labor Statistics (opens in a new tab). They are also part of the offer every candidate and employee weighs. If the review waits for the renewal notice, there may be only weeks to decide whether to accept a premium increase or move more of the cost onto employees.

A planned review gives you better choices. This guide sets out a benefits review in seven steps and the published figures to compare your program against. It then covers what to check in your health and retirement plans, the federal rules a review should confirm, and how to brief a benefits adviser if you use one.

DisclosureJake Jorgovan co-founded Alpha Apex Group, which is mentioned in this article.

What a benefits review should decide

A review considers four options for each benefit: keep it as it is, change its design or cost sharing, add something employees need, or drop what few people value. It also decides who helps you run the program, from the broker or consultant to the plan administrator.

Ideas for what to add come from the survey and the benchmarks: what employees ask for, and what similar employers offer that you do not. Candidates to consider include flexible or hybrid work, mental health support, paid family leave and professional development. In BLS's data, paid family and medical leave is the least widely available of the leave benefits in the benchmarks table below.

Start several months before the renewal date. That leaves time to survey employees, ask the current adviser and insurers for data, and, if the review points that way, compare other providers before the deadline forces a choice.

The order matters. Employee preferences without cost data produce a wish list; cost data without employee input risks cutting what people value most. The steps below put the facts first and the decisions last.

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Pew’s October 2024 survey shows differences by income in satisfaction with benefits, pay, and remote-work flexibility. These are reported experiences, not a ranking of which benefit will improve retention.pewresearch.org (opens in a new tab)

How to review your benefits program, step by step

1. 1

   Gather the plan and cost facts you already hold

   Collect the plan documents and summary plan descriptions, the last renewal, enrollment by plan and coverage tier, employer and employee contributions, claims or utilization reports from the insurer or administrator, and every adviser and vendor contract. Under ERISA, a broker or consultant to a group health plan who expects $1,000 or more in direct or indirect compensation must disclose it to the plan's responsible fiduciary reasonably in advance of a contract or its renewal. The Department of Labor (opens in a new tab) explains the requirement in a 2021 bulletin. Find that disclosure: it tells you what the program's advice costs.

2. 2

   Ask employees what they use and value

   Run a short survey, then hold a few focus groups to explore what the survey raised. Segment the questions and the results: new hires, long-tenured staff, employees with families, part-time staff and different locations often need different things. Ask which benefits people use, which they would trade for others and where they struggled to use one. Tell employees how the results will be used, and later share what changed. Without it, a program risks three common mistakes: not listening to employees, designing without a needs assessment and offering one package to a varied workforce.

3. 3

   Measure take-up and use

   For each benefit, compare the number of eligible employees with the number enrolled, then look at how much the benefit is actually used. National figures give you a reference point: in March 2026, 87% of full-time private industry workers had access to employer medical plans and 67% of those took them up, BLS reported (opens in a new tab). Low take-up is a question to investigate. Employees may find the premium or deductible too high, may not know the benefit exists, or may be covered elsewhere. Interviews and the survey's open answers can show which.

4. 4

   Benchmark against employers like yours

   Compare your contribution split, deductibles, plan types and benefit list with employers of similar size, industry and region. The figures below are a start. SHRM's Employee Benefits Survey (opens in a new tab) lets members filter more than 230 benefits by industry, organization size and location. Industry associations and your adviser's own book of business are other sources; ask any adviser what employers sit behind its benchmark.

5. 5

   Price each benefit against what it delivers

   Work out the annual cost of each benefit to the company and to employees, then set it beside take-up and the value employees put on it. A benefit that is expensive, rarely used and seldom mentioned in the survey is a candidate for redesign or removal. A heavily used benefit that employees rate highly deserves protection when costs are cut elsewhere. Before renewal, ask the incumbent for its best terms and test them against quotes from other carriers or administrators.

6. 6

   Check the rules and the filings

   Confirm that the program meets the federal requirements in the rules section below and any state mandates where you employ people. For an ERISA-covered plan, the Department of Labor (opens in a new tab) says fiduciaries should document their decisions and the basis for them, and review service providers at reasonable intervals: their performance, their reports, the fees actually charged and participant complaints.

7. 7

   Decide, explain and set the next review

   Write down what changes, what stays and why. Explain the changes to employees before enrollment opens, in plain language, with what each option costs them. Then set the date of the next review and the measures you will check: enrollment, use, cost per employee and what the next survey says.

Benchmarks to compare your program against

National averages hide large differences by firm size, industry and workforce, so compare your figures with the closest group the source reports. Two public sources supply most of the figures below: KFF's annual survey of employer health plans and the Bureau of Labor Statistics' benefit cost and access data.

KFF reports large differences in worker contributions and deductibles by firm size. Workers at firms with 10 to 199 employees contributed $8,889 a year on average toward family coverage in 2025, against $6,227 at larger firms. And 53% of them had a single deductible of $2,000 or more, against 28% at larger firms. If your company is in the smaller group, benchmark against that group.

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KFF’s 2025 survey separates total family premiums from workers’ contributions. Small firms have 10–199 workers; large firms have at least 200. Workforce and ownership differences help explain why one national average is a weak benchmark.kff.org (opens in a new tab)

Health plan choices to revisit at renewal

Health coverage makes up almost all of what employers spend on insurance benefits: $3.48 of the $3.69 per hour worked that private employers spent on insurance in June 2026, according to BLS. Four decisions deserve a fresh look at each renewal.

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KFF’s 2025 survey shows the mix of plans used by covered workers, with a comparison to 2021. Enrollment describes market choices; it does not show which plan is best for an individual employee or employer.kff.org (opens in a new tab)

Plan types and the choice you offer

In KFF's 2025 survey, 46% of covered workers were in a PPO, 33% in a high-deductible plan with a savings option, 12% in an HMO and 9% in a POS plan.

In KFF's definitions, a PPO covers in-network and out-of-network care with no primary care referral, at lower cost sharing in network. An HMO does not cover non-emergency care out of network; KFF counts exclusive provider organizations with HMOs. A POS plan requires a primary care gatekeeper for specialist or hospital visits. KFF's high-deductible category covers plans offered with a health reimbursement arrangement and plans qualified for a health savings account; their average single premium was $8,620 in 2025, below the $9,325 average for all plans.

Offering a choice of two or three plan types lets employees match cost and flexibility to their own situation. Check the choice against your workforce: an older workforce, employees with families and staff in several regions need different things from a plan.

How the plan is funded

In a self-funded plan, the employer pays employees' health claims from its own funds. In 2025, 80% of covered workers at firms with 200 or more workers were in self-funded plans, against 27% at firms with 10 to 199 workers. Among the smaller firms, 37% of covered workers were in level-funded plans, which KFF describes as a small self-funded component combined with stop-loss insurance that limits the employer's liability. The funding choice decides who carries the cost of a bad claims year, so it belongs in any review where the company's size or claims pattern has changed.

Cost sharing employees can afford

The average single deductible was $1,886 in 2025 among workers whose plan had one. Among firms with 200 or more workers offering health benefits, 20% rated their employees' concern about the affordability of cost sharing as high and 27% as moderate in the same survey. KFF notes that raising employee cost sharing is one way employers manage rising costs, but a plan employees cannot afford to use loses most of its value to them. Check deductibles and out-of-pocket maximums against what your lowest-paid enrolled employees earn.

Network, pharmacy and wellness

Ask the carrier or administrator whether the network gives timely access to primary care, specialists and mental health services where your employees live. Review pharmacy coverage decisions with their cost. Among firms offering health benefits in KFF's 2025 survey, 16% with 200 to 999 workers, 30% with 1,000 to 4,999 and 43% with 5,000 or more covered GLP-1 drugs for weight loss. Wellness programs are common: 56% of firms with 10 to 199 workers and 83% of larger firms offering health benefits had at least one program for smoking cessation, weight management or lifestyle coaching in 2025. Judge yours by participation and results; the employee wellness program statistics page collects adoption and evidence figures.

Retirement plan checks: participation, limits and tax credits

Access is not participation: in March 2026, 52% of private industry workers took part in an employer retirement plan, fewer than the share with access in the benchmarks table, according to BLS (opens in a new tab). If your own participation lags, look first at the plan's design. The IRS describes automatic enrollment (opens in a new tab) as an effective way for many employers to increase participation in a 401(k) plan.

A review should cover:

• Plan type. A traditional 401(k) allows employer contributions subject to a vesting schedule but must pass annual nondiscrimination tests. A safe harbor 401(k) is not subject to those complex annual tests when its requirements are met, according to the IRS. Its required employer contributions are generally fully vested when made, but a qualified automatic contribution arrangement (opens in a new tab) may require full vesting only by two years of service. Ask your adviser which rules apply to your plan.
• Contribution limits. For traditional and safe harbor 401(k) plans in 2026, the employee deferral limit is $24,500. If the plan permits catch-ups, employees can add $8,000 from age 50, or $11,250 at ages 60 to 63. Total annual contributions to an account, excluding catch-ups, cannot exceed the lesser of $72,000 or 100% of the participant's compensation, per the IRS limits page (opens in a new tab). SIMPLE 401(k) plans have lower limits, and all of them change each year.
• Tax treatment. Employer contributions are deductible on the employer's federal income tax return within the limits of section 404 of the Internal Revenue Code, the IRS says.
• Small employer credits. Eligible employers with 100 or fewer employees can claim a startup-cost credit (opens in a new tab) of up to $5,000 a year for three years. Eligible employers that add automatic enrollment can claim $500 a year for three years. The IRS sets conditions for both.

Take these points to your plan's adviser and tax counsel before you change the plan. They cover 401(k) plans. If you also sponsor a defined benefit pension (opens in a new tab), its review is separate work. The IRS notes that employers can generally contribute, and deduct, more each year than under a defined contribution plan; it also requires an enrolled actuary to determine the plan's funding levels and an annual Form 5500 with Schedule SB.

Federal rules a benefits review should confirm

These are the main federal requirements a review touches. States add their own mandates, so confirm the detail with counsel for each location where you employ people.

Two annual reporting duties sit beside these rules. Have the administrator confirm the Form 5500 filing requirements, and any exemptions, for each health and retirement plan; the Department of Labor notes that exemptions depend on the number of participants and the plan design. If you are an applicable large employer, confirm the ACA information returns on offers of coverage (Forms 1094-C and 1095-C) to the IRS and employees.

The gag clause rule matters for the review itself. It prohibits contract terms that stop a plan from getting provider cost and quality information or de-identified claims data. If your carrier, administrator or network cannot give you the data you need to judge the plan, ask why. The rule ties that access to HIPAA privacy rules, so agree with the administrator how claims data will be shared and who on your side may see it.

For the ACA test, the IRS (opens in a new tab) measures affordability by what an employee must pay for the least expensive coverage the employer offers that provides minimum value. It compares that cost with an annually adjusted share of household income, or uses one of the IRS safe harbors; have counsel confirm the test you use.

When to bring in a benefits adviser, and how to brief one

If you already use a broker or consultant, the review is the moment to decide whether that arrangement still fits. An adviser earns its place when the work needs access to insurers and stop-loss carriers, actuarial analysis of a self-funded plan, benchmarking you cannot get yourself, or compliance depth your team lacks. A separate guide compares employee benefits consultants and brokers, with their services and terms.

The Department of Labor's guidance on choosing service providers for a group health plan gives a sound process for any adviser search. Give each candidate complete and identical information about the plan and the services you need, get proposals from more than one, and compare them on the same terms. It also suggests asking which services an estimated fee covers and which it does not, and whether the provider receives third-party compensation such as commissions or revenue sharing.

On my podcast in 2022, I said one of my favorite things to do was to go to my business adviser and ask, "what am I not thinking about?" The same question works with a benefits adviser: put it to your current broker during the review and to any adviser you interview. A useful answer is specific to your workforce and your plan.

Frequently asked questions

What is an employee benefits program?

It is everything an employer provides beyond wages and salaries: health, dental and vision coverage, retirement plans, paid leave, life and disability insurance, and other support such as wellness programs or tuition help. BLS counts paid leave, supplemental pay, insurance, retirement and savings, and legally required benefits such as Social Security and Medicare in its benefit costs. For how benefits fit with pay, see the guide to designing a compensation strategy.

How often should you review employee benefits?

At least once a year, ahead of the renewal of your largest plans, with a deeper review of providers and plan design every few years or when the workforce changes. Department of Labor guidance for ERISA-covered health plans says employers should review their service providers at reasonable intervals.

Which employee benefits are most common?

Paid leave, retirement plans and medical coverage are each available to most US private industry workers, according to BLS; the benchmarks table above gives the March 2026 access rates. Widely offered is not the same as valued: your survey tells you which benefits your employees care about.

How much of the health premium do employers pay?

On average, employers paid about 84% of the premium for single coverage and 74% for family coverage in KFF's 2025 survey, after workers' average shares of 16% and 26%. The split varies widely by firm size, so compare yours with employers of your size.

How do you communicate benefits so employees use them?

Explain each benefit, who is eligible and how to enroll in one place employees can find, and repeat it at hiring, onboarding and open enrollment. Show what each option costs the employee. Hold sessions where people can ask the carrier or administrator questions directly. Describe the benefits in job postings and on your careers page too: candidates compare them with other offers.