By Andrew Carlsgaard, analytics director, MAPP
In the competitive and dynamic landscape for hiring and retaining skilled employees, US manufacturers, particularly the small- and medium-sized businesses, face significant and unique challenges when providing healthcare and other employee benefits. These challenges are intensified by industry-specific factors, such as an aging workforce, slim profit margins and increasing competition for skilled labor. As a result, the ability of these businesses to remain competitive and retain talent is closely tied to how effectively they manage their employee benefits offerings. The 2025 Health and Benefits Report, with data from Manufacturers Association for Plastics Processors (MAPP), Association for Rubber Products Manufacturers (ARPM) and American Mold Builders Association (AMBA), aims to provide US manufacturers with the most current data on the state of healthcare and benefits amongst manufacturing peers and to equip decision-makers with the knowledge required to minimize increased costs while still providing maximum value to their employees.
Coverage and Costs
Healthcare costs are among the top concerns for all manufacturers, especially for smaller or mid-size operations with fewer than 200 employees. These businesses often operate with limited financial flexibility, making them especially vulnerable to annual health insurance premium increases. A 2023 survey from the National Federation of Independent Business found that 94% of small employers (less than 50 employees) consider it challenging to manage health insurance costs, with nearly half reporting they
had to take lower profits or incur losses to cover these increases. 1 Compounding the issue, employees at small businesses typically face higher out-of-pocket costs than those at larger firms, sometimes paying nearly twice as much for family coverage. 2 In addition to these difficulties, the 2025 Health and Benefits Report findings show an upward trend in cost, with yearly fully insured healthcare plan costs per participating employee increasing 7% from 2023 to 2024 ($9,738 to $10,384, respectively; Chart 1). Nearly three-quarters (74%) of surveyed employers with under 50 employees utilize fully insured plans.
Workforce Pressures and Benefits
The nature of the manufacturing workforce adds further pressure to industry employers. Manufacturing employs an older workforce compared to the national average, which increases the likelihood of chronic health conditions and workplace injuries. The US Bureau of Labor Statistics reports that the median age for manufacturing workers exceeds that of many other sectors, placing additional pressure on employer-sponsored insurance due to increased healthcare utilization. 3 These higher health risks potentially can elevate premiums and impact productivity and absenteeism. The surge in healthcare costs associated with these factors can strain the financial resources of small- to mid-size manufacturing companies, forcing them to make difficult strategic choices. These decisions often involve weighing employee benefits and wages against investments in growth and innovation. The 2025 Health and Benefits Report data also indicates that organizations with fewer than 150 employees allocate a larger portion of their overhead expenses to healthcare; these smaller operations generally have less tolerance for increased healthcare costs (Chart 2).
Employers also need to be mindful that talent acquisition and retention suffer when benefits are not competitive. The manufacturing sector faces a well-documented skills gap, with an estimated 2.1 million jobs potentially going unfilled by 2030 due to a shortage of qualified workers. 4
Meanwhile, a Robert Half survey found that over one-third of US workers (35%) cite better benefits and perks as the primary reason for seeking a new job, making benefits a decisive factor in the labor market. 5 The volatility of the manufacturing sector further complicates budgeting for these benefits. External market forces – such as supply chain disruptions, fluctuating material costs or demand cycles – quickly can impact cash flow. This unpredictability makes it difficult for manufacturers to commit to long-term healthcare contracts or plan for future increases in benefit expenses. The intersection of high costs, regulatory challenges and workforce demands disadvantages for small- and medium-sized manufacturers when offering competitive benefits compared to their larger peers.
However, solutions such as industry group health plans, captives, Professional Employer Organizations (PEOs), human resources technology platforms and targeted use of legislative incentives can help alleviate some of the pressure. Many manufacturers may struggle with workforce stability and long-term growth without addressing these systemic issues.
Strategies to Mitigate Costs
Additionally, there are other options for manufacturers looking to maintain or improve their offerings while not hurting profitability. To mitigate the impact of rising healthcare costs, employers in the manufacturing sector reportedly have been exploring various strategies (Chart 3), such as implementing high-deductible health plans (emphasizing employee contributions to HSAs or FSAs), offering wellness programs and changing insurance providers for better rates. This shift further is evidenced by over half (54%) of survey respondents providing at least one high-deductible health plan (HDHP) in the current plan year (up from 46% in the prior year), while less than a quarter (22%) offer the once-ubiquitous Health Maintenance Organization (HMO) plan. Innovative solutions, such as Health Reimbursement Arrangements (HRAs) and self-funding, also are gaining traction but face barriers due to financial risks and administrative complexity. 6 Technology and data-driven platforms can simplify benefits administration and offer more customized options essential for meeting diverse workforce needs. 7
Improving Employee Satisfaction
Lastly, non-medical voluntary benefits, like dental and vision coverage, are becoming more popular as they provide crucial benefits without excessive cost increases. Traditional approaches often fall short for smaller and medium-sized manufacturers, highlighting the need for tailored solutions that align with their unique needs and constraints. 8
To navigate these challenges effectively, manufacturers must seek centralized, unbiased resources to improve their decision-making confidence. Technology and benefits design advances offer promising solutions by simplifying enrollment, enhancing customization and providing real-time cost management tools. By leveraging these innovations, businesses can better manage healthcare expenses and improve employee satisfaction without sacrificing financial stability.
In conclusion, healthcare costs remain a pressing issue for small- to mid-size employers in the US manufacturing sector, potentially inhibiting their ability to offer competitive benefits and invest in their businesses. Addressing the healthcare and benefits challenges leaders require a multifaceted approach combining exploration of innovative solutions, forming strategic partnerships and informed decision-making. This proactive approach is vital for the health and well-being of their workforce and for mitigating cost and risk. Moreover, it provides a valuable benefit that can enhance the attractiveness of their businesses to prospective employees and allow them to live healthier lives.
In addition to the 2025 Health and Benefits Report and the annual Wage and Salary Report, MAPP offers resources and strategies that support its members through the annual renewal process by identifying potential threats and how to minimize them. Additionally, MAPP’s Captiv8 opportunity provides transparency, financial control and strength from the aggregation of participating members.
Further analysis is available by purchasing the 2025 Health and Benefits Report through www.mappinc.com (the report is available free of charge to survey participants). The 2025 State of the Industry Report and 2024 Wage and Salary Report (updated rates as of July 2024) also are available at www.mappinc.com. To become a member of MAPP, email info@mappinc.com.
References
- NFIB: Small Business Health Insurance Survey
- Commonwealth Fund: Trends in Employer Health Insurance Costs
- U.S. Bureau of Labor Statistics: Labor Force Statistics from the Current Population Survey
- The Manufacturing Institute: 2.1 Million Manufacturing Jobs Could Go Unfilled by 2030
- Robert Half: Small Businesses – Attract Talent With Employee Benefits and Perks
- Training: Boosting SMB Efficiency: Innovative Solutions for Benefits Administration
- Ease: 2023 SMB Benefits and Employee Insights Report.
- Equal Ventures: Persistent Pains For SMBs Call For New Benefits Solutions
