OneSource Business Solutions Blog
Employees routinely say that access to affordable health benefits is essential to deciding whether to stay with a company. If your company has trouble finding cost-effective group health insurance, your employees may not stick around.
Larger companies can find group health coverage more easily than small and mid-sized businesses. Larger companies can also negotiate lower premiums because of their size. Smaller companies do not have the same luxury, and offering health insurance coverage can often be cost-prohibitive.
With the right partner, you can give your team what they want — better benefits. Partnering with a Professional Employer Organization (PEO) gives your company the ability to provide better health coverage options while also reducing your costs.
What does a PEO do?
A PEO is an HR outsourcing partner that can provide your business with a cost-effective solution to your HR needs. A PEO will remove the complex and mundane HR tasks from your in-house HR team, allowing them to focus on more critical strategic company goals. Tasks a PEO can handle include:
- Payroll
- Remitting taxes
- Compliance
- Benefits administration
By shifting your internal HR team's focus to creating a more engaging culture, you can attract and retain top talent in your industry.
What is a PEO Medical Insurance Plan?
When comparing PEO companies, you want a partner who can provide you with stellar medical coverage at a price you can afford. A PEO medical insurance plan is health coverage offered at affordable rates like those that large corporations enjoy. A PEO can do this through co-employment and becoming the employer of record for your employees.
As the employer of record, your PEO can remit payroll and taxes for your employees. You keep control of your company's day-to-day operations and the decision-making authority over whether to hire, fire, or discipline employees. Through this relationship, your PEO can also provide health insurance options to your employees.
How do PEOs reduce the cost of health insurance?
A PEO has this same relationship with every client. That means that, in the eyes of an insurance carrier, the PEO is one massive company. This is one of the ways a PEO helps to lower the cost of employee health insurance.
The benefit here is using economies of scale. By negotiating great rates for health coverage, your PEO passes those savings onto your business through lower premiums. This gives your employees exactly what they want — high-quality health coverage at affordable prices.
How Do PEOs Improve Coverage?
When you attempt to get group health insurance directly from insurance carriers, you may face substantial hurdles. If your company is too small, the insurance carrier may not even offer you any options. Even if they do, the options are usually catastrophic coverage plans with extremely high premiums. This is because the insurance company is looking to minimize their risk and your risk pool is too small.
By partnering with a PEO, you get access to more choices. Not only can you provide a wide range of plan options, but you can also make sure the premiums offered work with your company's needs.
With a PEO, you can offer more than just one form of health insurance. You can also provide your employees with Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA). These can help your employees save money by offering tax incentives to make their money go further.
All of these options combine to give you Fortune 500 benefits at the same prices Fortune 500 companies pay. As a small business, this gives you a massive leg up creating a culture of engagement and loyalty that will keep your employees.
How to Get Direct Cost Savings on Employee Benefits
PEOs are unique in HR outsourcing solutions because they provide direct cost savings on employee benefits. When you work with a PEO, you will see cost savings immediately.
Partnering with the right PEO provides your business the HR outsourcing solution you need to get great medical insurance at great prices.
