Every fall, the same thing happens. The renewal shows up, the number is higher than last year, and with open enrollment a few weeks away, most owners sign it and move on.
That’s understandable. It’s also expensive. According to the KFF 2025 Employer Health Benefits Survey, family premiums for employer-sponsored health insurance averaged $26,993 in 2025, up 6% from the year before, while general inflation ran 2.7% and wages grew 4%. For most small businesses, benefits are the largest cost after payroll itself. And unlike payroll, few owners ever look closely at what they’re buying.
The bigger problem isn’t just rising premiums. It’s paying top dollar for a benefits package your employees don’t understand.
After working with growing businesses across the Midwest, we see it again and again. When employees can’t tell you what their benefits are worth, you’re paying full price for a recruiting and retention tool that isn’t doing either job.
Medical: the funding model matters as much as the plan
Most small employers think of health insurance as picking a carrier and a deductible. The bigger decision is how the plan is funded. Traditional fully insured plans are simple, but you pay for everything whether your group uses it or not. Level-funded plans let a healthy group keep part of what it doesn’t spend, and they’ve become mainstream: KFF reports that 37% of covered workers at small firms are now in level-funded plans, which combine self-funding withstop-loss protection.
Level funding isn’t right for every group. But if nobody has run the comparison for you, youdon’t know whether you’re leaving money on the table. The same goes for your contribution strategy. How much you pay toward employee-only versus family coverage often matters more than the plan design itself.
Dental, vision, life and disability: small cost, big perception
This is where many businesses miss easy wins. Ancillary benefits cost much less than medical, yet employees notice them and use them. Bundling dental and vision with one carrier can lower costs. Group life and disability coverage protects employees’ families and costs relatively little per person. Voluntary options let employees buy coverage they want at group rates with no cost to the business. A well-built ancillary package can make a mid-range medical plan feel like a great overall offering.
Compliance: the risk nobody sees until it’s a problem
Does your business have a Section 125 plan document in place so employees can pay premiums pre-tax? An ERISA wrap document? Were your PCORI fees filed this summer? These aren’t exciting questions. But missing documents and filings are common in small businesses, and they turn into real problems during an audit, a dispute, or a sale. A good advisor should be tracking these for you, not waiting for you to ask.
Communication: the part that makes the rest pay off
You can build the best plan in your market and still get no credit for it if employees don’tunderstand it. The strongest benefits programs we see have one thing in common: employees can explain what they have. That means enrollment meetings people actually get something out of, a one-page summary they’ll read, and an advisor who answers their questions so HR and the owner don’t have to.