We analysed 4500+ employee benefits plans. Here’s what we found.

We published The State of Employee Benefits 2024 a week ago. It was a 90-day project, with multiple teams coming together to craft this commentary on benefits benchmarks, employee expectations, and emerging trends. 

A quick note on the data and research, this report borrowed insights from: 
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• Analysis of 4500+ employee benefits plans 
• A benefits survey with participation from 112 people leaders
• Analysis of 18000+ claims raised by employees 
• A bevvy of secondary research, including IRDAI, ICMR, Columbia, Remote, and more.
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Read the full report here
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I recently had the opportunity to present our key findings to some of India’s most progressive people leaders at an exclusive unveiling of the report in Bangalore. I wanted to share some excerpts from the keynote – trends I found very interesting. 

But first, some context. 

India still has a healthcare problem. According to a WHO report, out-of-pocket healthcare spending impoverishes close to 55 million Indians annually, with ~17 per cent of households incurring catastrophic health expenditures. 

Around 40% of India’s population are neither covered by government-funded schemes, nor have the financial power to purchase a retail health insurance policy. 

This section of the population, also called India’s missing middle, largely depends on their employers for insurance. 

India’s healthcare story is being written by companies that care

When we looked at data from IRDAI’s handbook, it was evident that group health insurance is king. While retail health policies have grown, they largely cater to people with deeper pockets. 

India Inc is improving quality of coverage, too

When we compared the median benefits offered this year to The State of Employee Benefits 2023, we were pleasantly surprised. Despite an environment of prudence and budget cuts, companies have continued to invest in their team’s health. 

While the report covers trends across 80+ benefits, here are four key insights: 

When Saurabh and I started Plum in 2019, we wanted to positively impact the health and financial wellbeing of every Indian – through companies that care. These stats not only validate our belief, but also convey that India’s best founders and people leaders share it. 

We’ve never been more bullish about building Plum. 

Size doesn’t matter, intent does

One of the most common ways to cater to companies is to segment them by size. This not only helps companies compare themselves against their peers but also offers insight into how their plan evolves as they grow. 

We segmented plans across four categories: 0-100 employees, 101-250 employees, 251-750 employees, and 751+ employees. 

Our first insight was rather obvious: the average benefit plans tend to become more comprehensive as companies grow.

BUT… then we did some more analysis with the top 10%ile companies.

We saw that the top 10%ile of all companies, irrespective of size, offered very similar benefits, whether it was a high sum insured of 10L, maternity cover of 1L, or OPD coverage.

We saw many 10-person companies providing benefits that were as good as what a global company or an unicorn would provide. More young founders are ensuring their teams are taken care of, and this is a remarkably encouraging fact. 

This prompted Akshay Golechha, our VP of New Business, to propose that we should be classifying companies based on their approach to employee benefits, as much as size. He’s promised to write a blog about this so I will leave the analysis to him. :) 

Read the full report here

Indian Unicorns and Global Companies are redefining benefits benchmarks 

We looked at plans offered by the unicorns in India. We also looked at the plans offered by global companies setting up shop in India – think Twilio, Tinder, Atlassian, Notion etc.

Both of these cohorts are raising the bar regarding employee benefits, and are changing the landscape of employee benefits in the country for the better. 

This is because the unicorns are in the market often looking for talent that’s also evaluating opportunities at the FAANG companies. 

The bar has been raised, the talent market has become hyper-competitive, and the median needs to match up to it if they want to attract and retain the best talent. 

Costs remain a concern

Given the current climate, it would be remiss (even irresponsible) not to talk about the number one concern on everyone’s minds right now: costs. Over 60% of people leaders we surveyed admitted that rising costs were high on their list of concerns. 

The most common cost mitigation measures that we’ve observed fall under three themes: 
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• Cost sharing through copays, limits, and more 
• Downgrading coverage from ESCP (employee, spouse, child, parent) policies to ESC (employee, spouse, child) or ESC+P (employee, spouse, child + voluntary parent) policies 
• Reduction of total sum insured 

We’ve analysed all these measures, their impact on your wallet and employee morale, and our recommendations on how you can do this sustainably. Read page 15 of our report. 

However, when you cut benefits, you should consider not just the impact on costs, but also the impact on employee morale and health. We see this happening far too often. And it doesn’t always end well.

70% of employees believe the quality of benefits matters in their decision to stay at a company. Because when they don’t stay, companies spend a lot more. In our study, we observed that short-term cost-cutting measures might hurt more than you think. 

In fact, we want to help set the narrative on how to think of these costs.

Introducing the 2% Club

In all our research, we found that top companies spend just 2% of their salary budgets on employee healthcare and benefits.

That’s actually a very healthy number. While countries like the USA spend close to 7% considering healthcare costs in India, we find 2% to be a very suitable proportion. 

As an exercise, we explored what a 1% shift in your salary budgets could translate into, from a CTC and benefits point of view. 

Consider this: A mere 1% results in a 200% increase in the sum insured, coverage for parents, amazing maternity benefits, primary care, accident cover, and great perks. 

Today, access to information, technologies, and even to capital has become simpler. From our vantage point, we get to see how companies and talent interact.

We see how companies that invest in talent outgrow their peers, and we believe that the single greatest contributor to competitive advantage is talent. 

This is the most important investment we all make for the long-term. And when you invest in their health and create a culture of care, they will bring their best selves to work.

We felt it was almost our responsibility to share our insights with the world. Which is why we publish The State of Employee Benefits every year. Which is why I wrote this blog. 

If you found this blog interesting, you should check out the report. It’s not yet another benchmarking report. We believe the real fun is in the whys, not the whats, and that is what we’ve set out to do.  

The State of Employee Benefits is always evolving, and so will the report. See you next year.