How small businesses are thinking about benefits in 2020

Written by: Caitlin Bronson
Published on January 15, 2020.

(Don't miss our infographic at the end!)

About the survey

More than 60 percent of small businesses offering a health reimbursement arrangement (HRA) are planning on increasing their employee benefits in 2020, a new survey from PeopleKeep reveals.

The survey, administered to 400 current PeopleKeep customers, asked small business owners to share their thoughts on why they chose an HRA and what their plans were for expanding health benefits next year.

In this post, we’ll share the top findings from our research as well as an infographic displaying even more conclusions.

Businesses want to do right by their employees in a cost-effective way

Businesses largely agreed on their motivations for offering an HRA. 22 percent said they couldn’t afford group health insurance and the same percentage said it was simply “the right thing to do” for employees. Another 20 percent said they wanted to make employee retention more effective.

The remaining reasons were recruiting (12 percent), retaining one or two specific employees (7 percent), moving from a taxable stipend to a tax-free benefit (5 percent), and recruiting one or two specific employees (4 percent).

HRAs aren’t the only reimbursement-based benefit businesses are offering

HRAs are unique in the health benefits space because rather than asking the business to choose a specific policy, they allow businesses to reimburse employees for individual policies the employees choose themselves.

In the employee benefits space in general, though, reimbursement-based benefits are common. They support businesses in their efforts to control budget while providing additional compensation to employees.

Likely for those reasons, businesses that offer an HRA are also reimbursing employees for other expenses.

The most commonly reimbursed expenses include professional development and continuing education (reimbursed by 61 percent of businesses), cell phone (28 percent), and transportation (13 percent).

Businesses are also offering traditional benefits, such as paid time off (offered by 48 percent of groups) and retirement (26 percent).

Businesses with room in their budget want to expand benefits in 2020

As the competition for talent continues to heat up, businesses are planning on fortifying themselves with even better benefits in 2020.

In fact, more than 60 percent of small businesses are prioritizing an increase benefits for the coming year and one in 10 say they already have planned increases in place.

Among those groups that aren’t planning an increase, lack of funds was the biggest factor (48 percent said they didn’t have the budget). Only 21 percent said they didn’t think increasing benefits was necessary.

Wage increases and health benefits continue to be the top priority

Perhaps unsurprisingly, the top priorities for businesses looking to utilize extra budget were increasing wages (42 percent) and increasing HRA allowances (18 percent). These two items continue to be the most prized by employees, so their positioning here fits.

But businesses have other ideas, too. Sixteen percent of those surveyed are considering adding a retirement benefit, and 5 percent are hoping to contribute to employees’ health savings accounts (HSAs).

Fourteen percent of businesses say they’re looking into other benefits apart from health and retirement.


By and large, small businesses using HRAs are feeling bullish about 2020 and are ready to increase their benefits spend.

With an eye toward doing right by their employees as well recruiting and retention, these businesses are looking to expand their wages and health benefits offerings. They’ll also continue to offer other valued reimbursement-based benefits, such as cell phone, transportation, and continuing education.

Our survey data, visualized

peoplekeep, infographic, small business, health benefits

Topics: HRA
Originally published on January 15, 2020. Last updated January 15, 2020.


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