Unlocking Scale in Employer-Sponsored Workplace Benefits

A 2024 survey of nearly 1,000 working Americans found that less than half (47%) report feeling financially healthy. In the US, workplace benefits like medical insurance and tax-advantaged savings accounts have a direct impact on employees’ financial health and stability; but employers are struggling to afford the benefits their employees need and expect. 

This is especially true for small and mid-sized businesses (SMBs), many of which have struggled for years to afford even the most basic benefits. Only 56% of small employers offer health insurance, and 98% of those said they’re concerned that the cost of medical benefits will become unsustainable in the next 5-10 years.

Employers of all sizes are looking for more accessible, affordable benefits that can scale with their workforce without exponentially increasing costs. Fortunately, a convergence of factors, from government legislation to evolving technology, has paved the way for a new wave of modern benefits providers. These tech-forward companies are quickly gaining traction, and stand to revolutionize the benefits industry as we know it.

Unlocking Scale: The Revolution in Employer-Sponsored Benefits

What are workplace benefits?

Before we dive into the new benefits on the rise, it’s important to understand what we mean by workplace benefits, or employer-sponsored benefits. To put it simply, these are perks or financial incentives that are available to employees through their employer. While most of these are available to individuals, they’re typically far cheaper when accessed through an employer (or sponsor).

Common workplace benefits, or employer-sponsored benefits, include:

• Health insurance
• Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs)
• Retirement plans, like a 401(k), 403(b), or pension 
• Financial Wellness tools or access to a financial advisor
• Physical and mental wellness programs or tools, like a gym membership or access to a mental health counselor 
• Equity 
• Student loan assistance or tuition reimbursement
• Commuter benefits

Most of these programs are nothing new, although fringe benefits like student loan assistance, commuter benefits, and pet insurance have risen in popularity in recent years. But the latest wave of benefits providers have approached these traditional benefits in novel ways that have allowed them to offer their services to employers more affordably. 

The state of workplace benefits

Employees rely on workplace benefits, especially at a time when inflation, high interest rates, and skyrocketing healthcare costs have made it increasingly difficult for individuals to save: 56% of Americans say they cannot afford a $1,000 emergency expense.

But employers are also struggling to afford the benefits their employees expect. The average per-employee cost of health insurance alone rose 5.2% in 2023 to a whopping $15,797. That number is even higher for SMB employers—over $16,000. And that’s just one workplace benefit. Employees are also seeking access to tax-advantaged savings accounts, emergency assistance, and fringe benefits like help paying down debt and funding their commute.

As a result of these macro economic trends, accessibility and affordability have been the defining trends in the employer-sponsored benefits market over the past five years. The federal government has responded by introducing new legislation and incentives aimed at encouraging benefits enrollment. These changes have lowered the barrier to entry for a new breed of employer-sponsored benefits to emerge in what has otherwise been a closed and complex industry. 

Scaling workplace benefits: the tech advantage

New legislation may have opened the door for a new breed of benefits providers to enter the market, but technology is the linchpin that has allowed them to compete with established incumbents on price and the accessibility of benefits administration. 

Despite the intense competition in the workplace benefits industry, these companies have thrived by optimizing their products for ease-of-use, affordability, and scale—a combination perfectly tailored to small employers, some 95% of which have been underserved by benefits providers. 

Their secret to success? HRIS and payroll integrations. 

By accessing employers’ data directly via APIs, modern benefits providers are powering time- and cost-saving automation that renders their products more efficient and more profitable. They also take on a greater portion of the administrative burden associated with benefits management, making them even more attractive to businesses big and small. 

Unlocking Scale: The Revolution in Employee-Sponsored Benefits

In our latest white paper, we explore the new-age benefits providers that are leveraging technology to deliver high-quality, high-impact benefits experiences for employers of all sizes—from 10-person startups to enterprises with tens of thousands of employees. 

Download your free copy now to learn more, including:

• The economic trends that are driving a fundamental shift in workplace benefits
• The new employer-sponsored benefits that are on the rise 
• How modern providers are leveraging new technology to optimize their products for under-served markets
• Success stories from real providers—and the actual impact integrations have had on their business