Benefits Renewal Season: Insights from US Benefits Survey
This article is a deep dive into key learnings from Accorded’s 2023 Survey of US Benefits Leaders. See the full research summary here →
This renewal season, employers find themselves caught in the throes of challenging market dynamics. Leading economists point to rising interest rates as proof that a recession is imminent. However, the US unemployment rate continues to fall – signaling an increasingly competitive labor market. Benefits leaders are saddled with the uneasy task of reducing budgets to prepare for a possible recession, while trying to retain and attract talent in a competitive market.
To better understand how employers are planning on managing these opposing forces, we asked 100 benefits leaders at self-funded US companies what was top-of-mind this renewal season.
|We found that HR teams are prioritizing re-negotiating their current contracts with existing point solutions. However, this should not be interpreted as a signal that employers are moving away from these solutions; in fact, the second-most popular renewal strategy this year is to add new targeted health vendors.|
This year’s top strategic actions
The most popular strategy this year is to re-negotiate contracts with existing health vendors. Given the threat of a recession, it’s possible that benefits leaders see re-negotiation as an opportunity to reduce their budgets.
Figure 1: Percentage of respondents who plan to take this action. Respondents were presented with a menu of strategic actions and asked which they plan to take this renewal season.
Since HR teams often employ a collection of strategies during renewal season, we also asked respondents to share the relative priority of each of these strategies. This changes the picture a bit, and adding new targeted health vendors emerges as the most highly prioritized strategy – but still closely followed by re-negotiation.
Figure 2: Average prioritization of respondents who plan to take this action.
Notably, only 1 in 5 respondents plan to change their medical or pharmacy administrators. However, it was prioritized very highly amongst the subset of respondents who plan to make this change. As a relatively more time-intensive action, this may signal that employers who make this switch expect it to be their full focus this season.
|Smaller employers will be the driving force behind adding new targeted health vendors. Benefits leaders at organizations with less than 1,000 employees are the most likely to add new targeted health vendors.|
Figure 3: Planned actions by employer size. Percentages refer to the ratio within a cohort. For example, looking only at responses from benefits leaders at organizations with less than 1,000 employees, 70% of those respondents selected “Add new targeted health vendors” as an action they plan to take this year.
Plans to renegotiate are consistent across all employer size segments.
The key takeaway?
- If you’re a benefits leader – Have an ROI discussion with your vendors this season. Nearly half of your peers are planning to renegotiate. Are you ready to do so as well?
- If you’re a targeted health vendor – Prepare for challenging but positive discussion this year by bringing data-driven ROI reporting to the table. Benefits leaders may be getting ready for tough negotiations, but their commitment to point solutions has not diminished.
Both sides of the table can come together to improve employee benefits and access, while managing costs.
Want to prepare for negotiations this year? Learn how the Accorded Platform is supercharging benefits teams and their consultants with the ROI analysis they need for renewals this year. Schedule a demo →