The Small Business “Bene-Fit” Gap Report

Introduction

Today's workforce needs aren’t one-size-fits-all anymore, but many small businesses still feel forced into one-size-fits-all benefits.

Small businesses face a familiar dilemma—rising healthcare costs demand predictability, but increasingly diverse employee needs demand choice. With today's workforce spread across multiple locations, employees have different healthcare needs. Many employers assume their only options are to pick a single plan and risk missing the mark, or struggle with benefits costs that feel prohibitive.

Justworks commissioned this research with The Harris Poll to examine how small business decision-makers and workers think about health benefits, and why the gap between what employees expect and what employers can deliver has grown. The research reveals that while teams are more distributed, diverse, and demanding than ever, the benefits landscape hasn't caught up.

The stakes aren't abstract. For growing businesses competing with larger companies for talent, benefits choice is increasingly a hiring and retention issue, not just an HR preference.

Key Findings

Small businesses aren't losing talent because they don't care about benefits. They're struggling to find benefits that actually fit modern teams, while workers on the other side of the hiring table are making flexibility a priority.

Key findings from the “Bene-Fit” Gap Report include:

1. Benefits flexibility is becoming a talent gap. Half of small business decision-makers are concerned about the impact of benefits on hiring and retention. Of those, 80% say it is difficult to find a health benefits solution that works for employees' different needs, and 96% say offering employees more choice in their health coverage is important.

2. Employers and employees are aligned on choice, but the tools haven't caught up. 89% of small business decision-makers say it is important to offer employees more choice in their health coverage, while 86% of employees say flexibility in choosing their health insurance provider is important when evaluating a job offer, highlighting growing demand for benefits solutions that deliver both flexibility and certainty.

3. Workers expect to personalize health coverage. 87% would consider working for a small business offering a monthly reimbursement to choose their own health insurance, and flexibility in choosing a provider is an important consideration when evaluating a job offer.

The Bene-Fit Gap

For years, business benefits conversations centered on a single question: Can we afford to offer health insurance?

That question still matters. Cost and affordability remain the top challenge small business decision-makers face when offering coverage–34% cite it as their biggest challenge. But a second question is now just as urgent. Even when we offer it, does it fit everyone on our team?

The data suggests the answer, too often, is no–or at least, not confidently.

52% of small business decision-makers worry at least quarterly that their current health benefits may not fully meet their employees' needs, with businesses in the 25-99 employee segment more likely to be concerned (57%) than are those with fewer employees. While nearly half (49%) of small businesses are concerned their current benefits offering could make it harder to hire or retain talent, and more than a third (36%) are considering how and if they offer benefits at all. And only about half (55%) believe a single employer-provided health plan can realistically meet the needs of all their employees.

At the same time, workers are signaling that flexibility matters when they evaluate where to work. 86% say the ability to choose their health insurance provider is important in a job offer. 87% would consider joining a business that offered a monthly reimbursement to select coverage that fit their doctors, prescriptions, and needs.

Traditional group plans remain a strong fit for many companies. But for businesses whose size, workforce needs, budget, or eligibility requirements call for a different approach, the gap between what teams expect and what owners can deliver often grows, especially when benefits administration falls to spreadsheets and manual coordination.

The “Bene-Fit” Gap is the disconnect between what employers want to provide and what employees need. Employers want to take care of their teams. Employees expect benefits that fit their lives. But most benefits systems are still built around a single approach.

Benefits Flexibility Is Becoming a Talent Gap

Growing businesses have always competed for talent. What's changed is what talent expects.

Nearly half (49%) of small business decision-makers are concerned their current benefits offering could make it harder to hire or retain employees. Among these talent-concerned small business decision-makers, the pressure is even sharper. 80% say it is difficult to find a benefits solution that works across different healthcare needs, family situations, and locations, and 96% say offering employees more choice in their health coverage is important.

Healthcare costs are adding urgency. 42% of these talent-concerned small business decision-makers say rising healthcare costs are making them reconsider how they offer benefits, with another 9% reconsidering whether to offer them at all. This isn't a story about employers not caring. It's about leaders who see the stakes clearly and don't feel they have the tools to respond.

"Small businesses aren't losing talent because they don't care about benefits. They're struggling to find benefits that actually fit modern teams."

Additional stats for this section:

• 52% of small business decision-makers worry at least quarterly that their current health benefits may not fully meet employees' needs

• Nearly half (49%) are concerned benefits could make it harder to hire or retain talent (all respondents)

• 34% cite cost and affordability as their biggest challenge in offering health benefits

Employees Want Benefits That Fit

Lead stat: 86% of employees feel flexibility in choosing their health insurance provider is important when weighing a job offer.

Workers are signaling what they want. Small business decision-makers see it, and they're trying to respond. Among small businesses with under 100 employees:

• 89% of small business decision-makers say it is very or somewhat important to offer employees more choice in their health coverage

• 59% say it is difficult to find a health benefits solution that works for employees' different needs

• 44% say more plan choice would make them more likely to offer or improve health benefits

• 27% say the biggest benefit of having access to multiple health coverage models is finding the right fit for their team's diverse needs

That last finding points to something broader than any single product: decision-makers see value in having more than one coverage model to choose from. This is not because one approach is universally better, but because different businesses have different needs.

In a companion survey of employable U.S. adults, when an Individual Coverage Health Reimbursement Arrangement (ICHRA)–a model that lets employers provide a set amount for employees to choose their own individual coverage–was described, workers highlighted what appealed most: 

• 36% cited flexibility to use leftover funds toward eligible healthcare expenses like therapy or contact lenses

• 33% cited more choice based on doctors, networks, and prescription fit

The takeaway: employers know that employees demand benefits that reflect their lives, not a single plan chosen on their behalf.

"Employers know that employees demand benefits that reflect their lives."

Additional stats for this section:

• 55% of small business decision-makers would rather do almost anything–including waiting in line at the DMV (14%) or handling payroll manually for a month (14%)–than choose a health insurance plan for their company

• 18% say choosing health benefits feels overwhelming

Workers Expect to Personalize Health Coverage

Lead stat: 86% of employees say flexibility in choosing their health insurance provider is important when evaluating a job offer.

When asked how they would prefer employer-provided health benefits to work, employable adults did not coalesce around a single model. Workers showed openness to how benefits could work in practice:

• Open to either model, depending on quality and cost (33%)

• Employer chooses one plan or set of plans (29%)

• Employer gives a set monthly amount to choose own plan (27%)

• No preference / not sure (10%)

This matters for how we read the rest of the data. Traditional employer-selected group plans remain a meaningful preference for nearly three in ten workers (29%), and a third more are open to either approach depending on quality and cost. Alternative models, including employer-funded individual coverage, are not viewed as a downgrade. For businesses that don't qualify for traditional group coverage, or whose teams have diverse needs a single plan can't serve, employees are equally open to other approaches.

From there, the demand for flexibility becomes clearer. 86% of employees say flexibility in choosing their health insurance provider is important when evaluating a job offer–including 53% who say it is very important. Workers aren't rejecting employer-sponsored health benefits. They're rejecting a model where someone else picks their plan without regard for their doctor, their prescriptions, or their family's needs.

When asked whether they'd consider working for a business that offered a monthly reimbursement to choose their own health insurance–covering doctors, prescriptions, and other qualifying medical expenses–87% said they would be at least somewhat likely to consider it, with 40% saying very likely.

69% of workers cited flexibility as the most appealing element of an ICHRA, with an additional 14% citing the portability of the offering if they leave the company. Combined, this suggests that when individual coverage models enter the conversation, workers respond to the same themes–personalization and control–that make group plans work for others.

"Workers increasingly expect to personalize healthcare the same way they personalize everything else."

What the Data Suggests

The “Bene-Fit” Gap isn't permanent, but the research points to a shift in how small businesses should approach their benefits strategy.

Workers want choice. Small businesses want to provide it. The challenge is that traditional one-size-fits-all models, rising healthcare costs, and the complexity of plan selection make "fit" hard to achieve, especially for teams with people in different locations, life stages, and healthcare situations.

The surveys suggest both sides are open to new approaches. The data shows clear demand, demonstrated by the fact that 88% of owners found ICHRA appealing when described, 86% wanted to learn more, and 44% say more plan choice would make them more likely to offer or improve health benefits. Among workers, 87% would consider an employer offering a monthly benefits reimbursement. And on the complexity side: 55% of owners would rather do almost anything, including waiting in line at the DMV, than choose a health plan. 18% say the decision feels overwhelming.

The data shows clear demand for optionality, not a wholesale rejection of traditional coverage:

Among small business decision-makers:

• 88% found ICHRA appealing once the model was described to them

• 86% expressed interest in learning more about ICHRA

• 44% say more plan choice would make them more likely to offer or improve health benefits

• 27% see the biggest value of multiple coverage models as finding the right fit for diverse teams

Among workers:

• 87% would consider working for an employer offering a monthly reimbursement to choose their own coverage

• 69% cited flexibility and choice as the most appealing aspects of ICHRA when described

• 27% prefer a model where the employer gives a set monthly amount to choose their own plan

On benefits complexity:

• 55% of small business decision-makers would rather do almost anything than choose a health insurance plan for their company

• 18% say choosing health benefits feels overwhelming

Taken together, the data illustrates that the demand for personalized, flexible health benefits is real on both sides of the hiring table. Small business decision-makers aren't resisting change, many are looking for it. The gap isn’t about intent. It’s whether the benefits landscape offers approaches that fit modern teams without adding operational burden.

The future of small business benefits isn't another checkbox. It's finding the right fit for the business, and for every person on the team.

Research Method

Employer survey: This survey was conducted online within the United States by The Harris Poll on behalf of Justworks on June 22, 2026, among 528 U.S. adults ages 18 and older who are benefits decision-makers at businesses with 1–99 employees. The sample includes businesses with 1–24 employees (50%) and 25–99 employees (50%). Respondents were selected from among those who have agreed to participate in Harris Poll surveys. Results were not weighted and are representative only of those surveyed. All statistics in this report reflect the full sample of 528 qualified respondents unless otherwise noted.

General population survey: This survey was conducted online within the United States by The Harris Poll on behalf of Justworks from June 16–18, 2026, among 1,326 U.S. employable adults (1,434 weighted to the U.S. general adult population). Respondents were selected from among those who have agreed to participate in Harris Poll surveys.

"Talent-concerned small business decision-makers" refers to respondents who indicated they are very or somewhat concerned that their current benefits offering could make it harder to hire or retain talent.

For more information about this research, contact [email protected].