How Benefits Strategy Impacts Workforce Equity

Picture a mid-sized distribution company with about 600 employees that recently completed a benefits renewal. Leadership is proud of the package: a PPO and an HDHP with an HSA option, dental and vision, a solid EAP, and a generous employer contribution toward premiums. On paper, it looks competitive. Then the benefits consultant pulls utilization data segmented by employee type.

The picture that emerges is less flattering. Full-time salaried employees, roughly 30% of the workforce, account for nearly 70% of plan utilization. Among hourly warehouse workers, enrollment in the HDHP is high, but claims activity is minimal. Not because those employees are healthier. Because they cannot afford the deductible. The mental health benefit has a 45-day wait for an in-network appointment in most of the company’s markets. The dependent care FSA is largely unused because the enrollment window is poorly communicated and the eligible expenses are not well understood.

This is not an unusual story. It is, in fact, the norm. Most benefits packages are designed with a set of implicit assumptions about who the “typical” employee is—what they earn, how they access care, what kind of family they have. When those assumptions do not align with the actual workforce, the result is a plan that works well for some employees but is inaccessible to others. That gap is a benefits equity problem, and it carries real operational and financial consequences.

What Workforce Equity Actually Means in a Benefits Context

Equity in benefits is not about giving everyone identical coverage. It is about designing a plan where all employees, regardless of wage level, job type, family structure, or geography, have meaningful access to the benefits they are offered. The distinction between access and enrollment matters enormously here.

An employee can be enrolled in a health plan and still have no functional access to care if the deductible consumes two weeks of their take-home pay. A part-time employee can technically qualify for dental coverage and still be priced out by the premium share. A caregiver can have access to an EAP and still be unable to use it because sessions are capped at three and available only during business hours.

The populations most frequently underserved by standard plan designs share a common profile:

• They tend to be lower-wage or hourly workers who carry disproportionate cost-sharing burdens,
• Part-time employees facing steeper premium contributions or narrower plan options,
• Employees in non-traditional family structures whose dependents fall outside standard eligibility rules,
• Geographically distributed workers who encounter thin networks or no in-network providers in their area, and
• Employees managing chronic conditions or behavioral health needs who run into utilization management barriers that erode the value of their coverage.

In each case, the equity question is the same: for whom does this plan actually work, and who falls through the gaps by design?

The Most Common Inequities Hidden in Standard Benefits Plans

Most disparities in benefits utilization are not the result of bad intentions. They result from plan designs built around a default employee profile that does not reflect the full workforce. Four patterns appear with regularity.

1. High-Deductible Plans That Are Unaffordable for Lower-Wage Employees

HDHPs are frequently positioned as the “consumer-driven” option, and employers often pair them with HSA contributions to offset costs. But for an employee earning $18 to $22 per hour, a $1,500 individual deductible is not a manageable out-of-pocket risk—it’s a barrier to seeking care.

The 2024 Commonwealth Fund Biennial Health Insurance Survey found that 23% of working-age adults with year-round insurance were underinsured. And among those, 57% reported forgoing needed care because of cost.

A separate 2023 Commonwealth Fund affordability survey found that 43% of adults with employer coverage said they struggled to afford healthcare. For lower-income employees, the problem is structural: the Fund’s methodology flags someone as underinsured when their deductible alone equals 5% or more of household income—a threshold easily crossed by a $1,500 deductible on a $30,000 salary.

2. Mental Health Coverage With Network Gaps

Parity requirements have expanded mental health coverage on paper, but network adequacy remains a persistent problem. Plans commonly list dozens of in-network behavioral health providers in a region. Yet, a significant share of those providers are not accepting new patients or have wait times exceeding six weeks. For employees in acute need, a six-week wait is not meaningful access.

According to SAMHSA’s 2023 National Survey on Drug Use and Health, nearly a third of adults with serious mental illness received no treatment in the prior year, and the treatment gap is even wider for those with any mental illness more broadly.

This problem is compounded in rural or suburban markets where provider density is lower. Employers who do not audit network adequacy, not just network size, are overstating the value of their mental health benefit.

3. Dependent Eligibility Rules That Exclude Non-Traditional Families

Standard dependent eligibility definitions, typically including legal spouses and dependent children under 26, exclude domestic partners, grandchildren being raised by an employee, or adult dependents with disabilities who age out of coverage.

These exclusions are often invisible to HR teams because they affect employees who never enrolled dependents in the first place. Benefits surveys and direct outreach frequently surface this gap: employees who opted out not because they had other coverage, but because their family structure did not fit the eligibility criteria.

4. Voluntary Benefits That Skew Toward Salaried Employees

Voluntary benefit platforms—legal services, identity theft protection, supplemental life, critical illness coverage—are often presented uniformly across the workforce. But the enrollment economics vary by income. A $12-per-paycheck supplemental plan is a reasonable line item for a $90,000-per-year manager and a meaningful financial decision for a $38,000-per-year frontline worker. When enrollment in voluntary benefits is concentrated among higher earners, it signals a design and communication problem, not just a difference in preferences.

How to Identify Equity Gaps in Your Current Plan

Identifying equity gaps requires going beyond overall utilization metrics and looking at how plan performance varies across employee segments. Four diagnostic tools form the foundation of that analysis.

1. Utilization Data Segmented by Employee Type

Break down enrollment, claims activity, and benefits utilization by wage band, employment status (full-time vs. part-time), job function, and geography. Patterns of low utilization in specific segments are rarely random—they reflect cost, access, or awareness barriers that aggregate data obscures.

2. Benchmarking Against Peer Employers

Plan design alone does not tell you whether your benefit is competitive or equitable for different employee populations. Benchmarking your premium contribution structure, cost-sharing design, and plan options against employers in the same industry and labor market reveals where your plan may be falling short. A benchmarking report, read correctly, does more than identify gaps; it tells you whether those gaps are structural or fixable at renewal.

This is where a benefits advisor with robust benchmarking data earns its keep, not just by identifying a gap, but by contextualizing whether your HDHP deductible, dependent eligibility rules, or employer HSA contribution is out of step with what comparable employers offer comparable workforces. Internal data tells you what is happening; benchmarking tells you whether it has to.

3. Employee Feedback and Survey Data

Direct employee input, through annual benefits surveys, focus groups with specific employee populations, or exit interview analysis, often surfaces equity issues that utilization data misses. Employees who opted out of coverage, chose not to use the EAP, or skipped preventive care will not appear in claims data as a problem. They will show up in turnover, absenteeism, and engagement scores.

4. Claims Pattern Analysis

A population health review examining which conditions drive the highest costs and utilization can reveal unmet needs that the current plan design is not addressing. High rates of emergency department utilization for conditions that should be managed in primary care often indicate that lower-wage employees avoid office visits due to cost-sharing, then seek care in the most expensive setting when conditions become acute.

Research consistently finds that a substantial share of emergency department visits, studies estimate 30 to 40 percent, are for conditions that could be treated in primary care or urgent care settings. For lower-wage employees who defer routine care due to cost-sharing, the ED often becomes the default point of access, at far greater cost to both employee and employer.

Taken together, these data sources form the foundation of a benefits equity audit, and they’re most useful when built into a benefits strategy designed from the start to account for workforce variation, rather than retrofitted after the fact.

Strategic Levers for Closing the Gaps

Closing equity gaps doesn’t always require spending more. It requires spending differently and designing more intentionally. Five levers consistently move the needle.

1. Restructure Cost-Sharing by Income Band

A number of employers have moved toward variable premium contribution structures that scale with employee compensation—lower-wage employees pay a smaller percentage of the premium, while higher earners pay more.

This approach requires careful actuarial and legal review, but it is feasible and increasingly adopted by employers who are serious about making coverage accessible across their workforce. The alternative, a flat-dollar or flat-percentage contribution that ignores wage variation, functions as a regressive benefits tax.

2. Audit and Expand Network Adequacy

For mental health, primary care, and specialty services, network size is not the same as network adequacy. Require your carrier to document appointment availability and wait times for in-network providers, not just directory listings. Where gaps exist, evaluate supplemental access options—telehealth contracts, direct primary care arrangements, or carve-out behavioral health networks with demonstrated access standards.

3. Expand Dependent Eligibility

Extending coverage to domestic partners and broader family structures is a plan design decision that directly addresses one of the most common equity gaps. The cost impact can be modeled, and for most employer populations, it’s more modest than anticipated. More importantly, it removes a structural exclusion that has nothing to do with how hard an employee works or how valuable they are to the organization.

4. Consider Moving to a Self-Funded Model

Fully insured plans offer simplicity but limit flexibility. Self-funded or level-funded structures give employers direct access to claims data, the ability to carve out specific benefits, and the design latitude to build a plan that fits their specific workforce rather than an insurer’s standard product portfolio.

Employers large enough to manage the risk complexity gain meaningful design latitude—a point worth exploring in depth if your organization hasn’t yet evaluated whether a self-funded or fully insured structure better fits your workforce.

5. Invest in Targeted Benefits Communication

Access is not just about plan design; it’s also about comprehension. Benefits communication that assumes a college-educated reader with a desk job and reliable internet access will reach some employees and miss others.

LIMRA research found that nearly half of employees feel unprepared during open enrollment and don’t know enough about their benefits to make informed decisions, and that employers who communicate benefits frequently throughout the year see a 10- to 30-point increase in employee understanding compared to those who communicate only during open enrollment.

Why This Matters Beyond Compliance

The business case for benefits equity is straightforward, even if it is rarely framed that way in renewal conversations.

Retention Is the Most Direct Line

In tight labor markets, particularly for hourly, frontline, and service-sector roles, benefits are a meaningful factor in whether employees stay or leave. When the benefits package doesn’t work for the employees most likely to leave, it is not functioning as a retention tool.

The Society for Human Resource Management estimates the cost of replacing an hourly worker at 50 to 200 percent of annual wages. A plan design change that costs $200,000 in additional employer contributions but reduces turnover by 10 percent in a 500-person hourly workforce is not an expense—it’s a return.

Absenteeism and Productivity Losses Are a Second Line

Employees who avoid care because of cost or access barriers do not disappear from the cost equation. They show up later with more acute conditions, more missed workdays, and higher claims. Preventive care utilization, chronic disease management, and behavioral health access all have documented relationships with presenteeism and absenteeism. Benefits designs that suppress utilization rates among lower-wage employees are also driving productivity costs up.

Long-Term Claims Trajectory Is the Third Lever

This is the third lever that CFOs and actuaries pay attention to, even when HR teams don’t. A workforce that delays primary care, skips preventive screenings, and manages chronic conditions reactively generates higher claims costs. Addressing access barriers is not just an equity intervention—it’s a claims cost management strategy.

Employer Brand and Talent Acquisition

Employer brand and talent acquisition increasingly depend on how a benefits package performs, not just what it offers.

In a market where candidates compare benefits in detail before accepting an offer, plans that visibly serve the full workforce are a differentiator. Plans that clearly work better for some employees than others are a liability that candidates, employees, and their networks notice.

One version of this challenge deserves specific attention: nonprofit organizations.

Mission-driven employers frequently operate under tighter budget constraints. Yet, their workforces tend to skew toward lower and mid-range wage bands, part-time or variable-hour roles, and employees drawn from the communities they serve.

Nonprofits navigating this tension have more design options than many assume, more than tight budgets typically suggest, and the equity framework is the same; the levers are just calibrated differently.

The Ongoing Work of Benefits Equity

A one-time benefits audit is a starting point, not a solution. Workforce demographics shift. Plan performance changes as enrollment composition changes. Carriers modify network contracts. New benefit categories emerge that address needs the current plan does not. The employers who close equity gaps and keep them closed treat this as a continuous analytical process, not a renewal-year checkbox.

That means tracking utilization by employee segment every year, not just total claims. It means setting specific targets: enrollment rates among hourly employees, mental health utilization rates, and preventive care completion rates for lower-wage populations. It means holding vendors accountable to access standards, not just network directories. And it means having a benefits advisor who brings both data and plan design expertise to translate what the numbers show into concrete decisions at renewal.

The question is not whether your benefits strategy affects workforce equity. It does—by design or by default. The question is whether you are making those design choices deliberately, and whether the plan you are funding is actually working for everyone who works for you.

Ready to assess whether your benefits strategy is working equitably across your workforce? Talk to an Exude consultant about a benefits equity review, and build a plan that performs for every employee, not just the average one.