Health insurance plays a massive role in your ability to attract, retain, and engage the top talent in your industry. 56% of employees admit that the quality of their health insurance dictates whether they'll stay at a job. 55% of employees say that health insurance is the driving factor in their job satisfaction, and 59% of employees say that their health plan either increases or decreases their loyalty to their employer.
But what if you can't afford a fantastic health plan? That's the unfortunate case with far too many small businesses. Insurance companies use "risk pool advantage" to dictate the costs of health insurance. The more employees you have, the less you pay. For small businesses, this can be a massive issue. The larger organizations you're competing with will have access to better benefits at a lower cost. So, when you look for new talent, those large organizations have more leverage to poach them. You may deal with retention issues, hiring issues, and even loyalty or productivity issues with your employees. And it's all because you don't have the manpower to score fair deals at the benefits negotiating table.
But what if you could make benefits your strength — not your weakness? Professional Employer Organizations (PEOs) give you the power to secure better benefits at lower prices.
What is a PEO?
A Professional Employer Organization (PEO) provides comprehensive HR solutions (e.g., administration, payroll, workers' compensation, benefits, compliance) to your business. The scope of tasks that PEOs can assist business owners with is massive. By providing a comprehensive and holistic HR ecosystem, PEOs help businesses grow an average of 7 to 9 percent faster while decreasing employee turnover by up to 14%.
PEOs act as cost-saving tools that can increase compliance, reduce risk burdens, and alleviate time concerns (the average small business owner spends up to 40% of their time dealing with HR tasks). PEOs act as supplemental HR professionals for larger corporations that can focus on some of the more repetitive and time-consuming HR tasks. It depends on your unique business needs.
What is PEO Medical Insurance?
While there are plenty of advantages that come with hiring a PEO, one of the most important is more affordable benefits. PEO medical insurance is a form of health insurance businesses can access through a co-employment relationship with a Professional Employer Organization. Co-employment is a legal tool that PEOs use to help you secure better benefits.
For example, your business may have 150 employees. But if you work with a PEO, they won't be negotiating with those 150 employees. They'll be negotiating with employees from all the PEO’s client businesses. So, instead of bringing a few hundred employees to the negotiating table with health insurance brokers, they bring a few thousand.
This is economies-of-scale at work. The result is superior benefits at a lower cost for every PEO client. This applies to medical insurance, wellness benefits, workers' compensation insurance, and all of the other optional benefits you need to keep your employees happy and loyal.
What Are the Benefits of PEOs Besides Medical Insurance?
The benefits of PEOs span far beyond medical insurance. PEOs are comprehensive in their HR coverage. A reputable PEO should be able to handle:
- Payroll
- Benefits (e.g., wellness plans, life insurance.) and health insurance
- Compliance
- Workers' compensation insurance
- Granular HR needs (e.g., employee handbooks, claims management)
PEOs can process payroll and remit taxes on behalf of your business, thanks to co-employment. Since the PEO is an employer of record for your employees, they can legally handle some of the more nuanced aspects of your HR ecosystem. The PEO tax implications can be a serious time-saver and money-saver for businesses. You don't have to worry about processing taxes; it's baked into the PEOs offering.
On a compliance level, this means less worry for business owners. PEOs have the expertise and manpower to comb through your local, state, and federal compliance and tax requirements. They can discover exactly which compliance needs your business should be following, and they can use those needs to create holistic workflows that reduce risk and increase productivity.
Outpace Your Competitors With a PEO
Being small has its advantages. You're lean, agile, and willing to chase down each client with purpose, vigor, and authenticity. But it can also be a serious restriction. When it comes to benefits, small isn't better. Health insurance brokers will try to force you into low-quality benefits packages at exorbitant prices. With a PEO, you get access to best-in-class benefits without destroying your bank account.
