What data sources are used for employer benefits benchmarks on this platform?

Benchmarks are compiled from multiple authoritative sources: KFF Employer Health Benefits Survey (annual survey of 2,000+ employers), HCCI (Health Care Cost Institute) claims data, EBRI (Employee Benefit Research Institute) surveys, Milliman Medical Index, Mercer National Survey of Employer-Sponsored Health Plans, PBMI (Pharmacy Benefit Management Institute) Drug Benefit Report, and actuarial firm benchmarking studies. Each benchmark category page documents the specific data sources and methodology.

How are peer groups constructed for benchmark comparisons?

Peer groups are constructed based on employer size (number of covered employees), industry (NAICS code), and geographic region. Employer size bands: small (50–99), mid-small (100–249), mid (250–499), mid-large (500–999), large (1,000–4,999), and very large (5,000+). Industry groupings follow KFF and Mercer survey categories. Geographic adjustments account for regional cost variation (Northeast and West Coast are typically 15–25% above national median; South and Midwest are typically 5–10% below).

How current are the benchmark data points?

Benchmark data is updated annually as new survey data becomes available. KFF Employer Health Benefits Survey data is published each fall (September–October) covering the prior plan year. HCCI and EBRI data is typically published 12–18 months after the reference year. Each benchmark page displays the data year and last-reviewed date. For the most current benchmarks, supplement platform data with your TPA's or consultant's proprietary benchmarking data, which may be more current.

How should I interpret benchmark comparisons for my plan?

Benchmarks represent central tendency (median or mean) for a peer group — they are not targets or standards. Being above benchmark on cost does not necessarily mean your plan is poorly managed; it may reflect a sicker population, richer benefits, or a high-cost geographic market. Being below benchmark may indicate underutilization or data quality issues. Use benchmarks as a starting point for investigation, not as a definitive verdict on plan performance. Engage a benefits consultant to interpret benchmarks in the context of your specific plan.

What is the difference between PEPM and PEPY benchmarks?

PEPM (per employee per month) and PEPY (per employee per year) are the two standard units for employer health plan cost benchmarking. PEPM = total plan cost ÷ number of covered employees ÷ 12 months. PEPY = total plan cost ÷ number of covered employees. Both metrics use covered employees (not covered lives/members) as the denominator, which means dependent coverage costs are included in the numerator but not the denominator. This is the standard convention for employer benchmarking.

Benchmarking methodology

How We Build Our Benefits Benchmarks

Benchmarks are only as useful as the data behind them. This page explains the data sources, normalization methods, peer group construction, and interpretive framework behind the employer benefits benchmarks published on Employer Benefits IQ. Our goal is to give plan sponsors the context they need to evaluate their plan's performance honestly — not to produce benchmarks that make every plan look average.

Primary data sources

KFF Employer Health Benefits Survey

Annual survey of over 2,000 employers covering premiums, cost-sharing, plan types, and enrollment. The most widely cited source for employer health benefits data.

HCCI (Health Care Cost Institute)

Claims-level data from major commercial insurers covering over 40 million covered lives. Used for utilization, unit cost, and site-of-care benchmarks.

Milliman Medical Index

Annual cost-of-care analysis for a hypothetical family of four with employer-sponsored PPO coverage. Used for total cost trend benchmarks.

SHRM Benefits Survey

Annual survey of HR professionals covering benefit offerings, employee contributions, and voluntary benefit adoption rates.

Segal Health Plan Cost Performance Report

Actuarial benchmarks for self-funded plans covering PEPM costs, utilization rates, and plan design parameters by industry and region.

CMS National Health Expenditure Data

Federal data on national health spending by payer and service category. Used for macro trend context.

Peer group construction

Comparing your plan to the wrong peer group produces misleading conclusions. We segment benchmarks along five dimensions:

Industry sector: Manufacturing, healthcare, technology, retail, financial services, and government/education sectors have materially different cost and utilization profiles.

Employer size: Small (50–199), mid-size (200–999), large (1,000–4,999), and jumbo (5,000+) employers face different market dynamics, negotiating leverage, and plan design options.

Funding arrangement: Self-funded, level-funded, and fully-insured plans have different cost structures and benchmark comparisons. Self-funded benchmarks exclude insurer profit and risk margins.

Geographic region: Healthcare costs vary significantly by region. Northeast and West Coast markets typically run 15–25% above national averages; South Central markets run below.

Plan type: HDHP/HSA, PPO, HMO, and POS plans have different cost-sharing structures. Benchmarks are normalized to plan type where possible.

How to interpret benchmark results

Below 25th percentile

Your plan is performing better than 75% of peers on this metric. Investigate whether this reflects genuine efficiency or underutilization.

25th–50th percentile

Your plan is performing better than average. There may still be optimization opportunities, particularly in pharmacy and high-cost claims.

50th–75th percentile

Your plan is performing at or slightly above average cost. This is the most common range and often signals opportunities for targeted intervention.

Above 75th percentile

Your plan is in the highest-cost quartile. This warrants a structured review of plan design, vendor contracts, and utilization patterns.

Important limitations

•Benchmarks reflect population averages — your plan's demographics, geography, and industry mix will cause legitimate deviations from the benchmark.

•Self-reported survey data (KFF, SHRM) may not reflect actual plan costs as precisely as claims-based data.

•Benchmarks are updated annually but healthcare costs change continuously — treat benchmarks as directional, not definitive.

•A plan that benchmarks "well" may still have significant optimization opportunities that benchmarks do not capture.

Explore the benchmarks

Cost per employee benchmarks Pharmacy benchmarks Stop-loss benchmarks Plan design benchmarks Utilization benchmarks All benchmarks

Get a personalized benchmark analysis

Our benchmarking intake process matches your plan against the right peer group and identifies your highest-priority optimization opportunities.

Start your benchmark analysis