Although many small businesses are willing to provide comprehensive healthcare coverage for their employees, the cost of providing health insurance is skyrocketing. Employers get better rates when they have more employees to insure. Larger firms, such as Fortune 500 companies, can offer better employee benefits due to economies of scale.
On the other hand, small and medium-sized businesses (SMBs) pay more for the same offerings.
SMBs must compete with the health benefits offered to Fortune 500 companies; in most cases, the outcome does not favor them.
Getting health insurance for employees from a professional employer organization (PEO) allows your business to offer Fortune 500-level health plans at a lower cost than would not be possible if you purchased insurance by yourself. The article below will answer the question of what PEO is as well as the benefits of PEO health insurance.
WHAT IS A PEO IN HEALTH INSURANCE?
A professional employer organization is a comprehensive outsourced HR service that provides access to affordable healthcare plans for your employees. Other benefits PEOs can procure include workers' compensation and disability insurance.
A PEO can handle other outsourced functions, including HR compliance with federal and state regulations, benefits administration, payroll processing, and retirement plans. To access the benefits a PEO offers, an employer needs to share certain employment responsibilities with the employer.
CO-EMPLOYMENT AGREEMENT: PEOs AS THE 'EMPLOYER OF RECORD'
A co-employment agreement is a partnership with a PEO. By signing the agreement, a PEO acts as the employer of record for your employees concerning legal and financial matters. A co-employment agreement with a PEO gives the business access to better health insurance for employees while costing less. Under the partnership, a PEO bargains for better employee benefits while the business owner employs the workforce and handles all day-to-day decision-making.
THE BENEFITS OF PEO GROUP HEALTH INSURANCE
When you partner with a PEO, you will experience the advantage of providing better health benefits to employees at affordable costs.
It can be daunting for SMBs to obtain quality health insurance for their employees.
The challenge is that insurance companies look at each business as its own ecosystem. Insurance carriers charge relatively higher premiums when businesses have fewer employees to offset the potential risk.
However, with PEO co-employment, thousands of employees are grouped and have a higher purchasing power to acquire affordable premiums.
Employees can access PEO's health when a business partners with a PEO. Offering health insurance to employees through PEOs ensures quality and cost-effective insurance options are available. PEOs offer SMBs a similar buying power that Fortune 500 firms have, and your employees can access health benefits usually reserved for Fortune 500 companies.
HOW PEOs ADMINISTER GROUP HEALTH INSURANCE PLANS
PEOs are a great resource to offload administration tasks related to acquiring health insurance. Partnering with PEOs allows business owners to free time for revenue-generating tasks. Managing health benefits can be very time-consuming in the early stages of a business, and the business owners may not be well-versed in the arena.
A PEO is responsible for building a relationship with your insurance broker, negotiating for lower health insurance premiums, and giving detailed information for you to make informed decisions. They will also help in handling administrative paperwork, processing, and dealing with the burden of providing benefits.
Hiring PEO means business owners can handle other essential tasks like business growth with the peace of mind knowing that a team of HR experts is supporting the company.