What Is A PEO Health Plan?

If you run a growing business, you know that there’s a lot of administrative duties that you’ve got to stay on top of to keep your business running. Trying to navigate the health insurance market can be exhausting and time-consuming. This is especially true since the Affordable Care Act has changed the health insurance marketplace so drastically.

Joining with a professional employer organization (PEO) is one way to simplify the process of finding a health plan for your business. However, different PEOs offer different options for you and your employees. That means finding the right PEO could replace the search for the right health plan.

If you’d like help finding a PEO that offers the sorts of health plans that are right for your business, contact NetPEO today. As a PEO broker, we’re here to help you find the right PEO for your business needs. Even if you’ve had bad luck with a PEO in the past, NetPEO is dedicated to making sure that you’re completely satisfied with your next PEO partner.

What is a PEO Health Plan?

A PEO health plan is a group health insurance plans offered through a Professional Employer Organization. These plans pool employees from multiple small and medium-sized businesses, giving participants access to coverage options usually reserved for larger companies.

In simple terms, a PEO health plan allows small businesses to:

• Offer competitive health insurance and other benefits

• Reduce administrative burdens

• Gain access to better pricing and insurance coverage options

By working with a PEO, your employees become part of a larger risk pool, which helps in negotiating better rates with insurance carriers and offering more comprehensive plans.

How PEO Health Plans Work

PEO health plans function differently from traditional insurance. Here’s how:

3.1 Co-Employment Structure

When you partner with a PEO, your employees are technically co-employed. This allows the PEO to manage HR functions, including payroll, compliance, and benefits plans, under its umbrella.

3.2 Pooling Employees

PEOs aggregate employees from multiple businesses into a single insurance pool. This larger pool allows small employers to access benefits usually reserved for large companies.

3.3 Plan Administration

The PEO handles all administrative tasks, including enrolling employees, managing claims, and staying updated with compliance regulations. This means less time spent on paperwork and more time focusing on your core business.

3.4 Employee Access

Employees gain access to health insurance and other benefits through the PEO. They receive professional support for any questions or issues regarding their health insurance plans or other types of insurance offered.

Benefits of a PEO Health Plan

A PEO health plan comes with numerous advantages for both employers and employees:

4.1 Cost Savings

Small businesses often face high premiums when working with a single insurance company. By pooling employees, PEOs negotiate better rates with insurance carriers, making quality insurance coverage more affordable.

4.2 Reduced Administrative Work

Managing employee benefits can be time-consuming. PEOs handle enrollment, compliance, and payroll, freeing up your HR team.

4.3 Better Coverage Options

Because of the larger employee pool, PEOs can offer more comprehensive coverage options, including dental, vision, and mental health coverage, as well as offering additional perks that enhance your benefits package.

4.4 Risk Management and Compliance

PEOs stay updated with changing healthcare regulations, reducing your risk of penalties and fines.

4.5 Employee Satisfaction and Retention

Providing robust health insurance and other benefits improves employee benefits satisfaction, morale, loyalty, and retention.

Understanding the Role of a PEO

PEOs are companies that small and mid-sized businesses partner with in order to outsource HR functions. Rather than tackling payroll, benefits administration, and legal compliance issues by yourself, you can outsource these tasks to a PEO. How much you outsource is dependent on what the needs are for your company and what services the PEO offer.

When you partner with a PEO, you sign a co-employment agreement with the company. What this does is it makes the PEO the employer of record for your employees. This affects the name of the company on your employees’ paychecks and their tax records. It does not mean that you lose any control over how you run your own business.

Costs and Pricing Structures

Pricing for PEO health plans varies based on:

• Number of employees

• Type of coverage (medical, dental, vision)

• Employee demographics

• Location

• The insurance carriers available through the PEO

PEOs typically charge a flat administrative fee plus the cost of insurance premiums. While costs vary, many small businesses save money compared to purchasing individual plans, especially when offering additional benefits to employees.

How to Choose the Right PEO for Your Business

Choosing the right PEO is crucial. Here are some tips:

Evaluate Plan Options

Look for a PEO that offers flexible coverage options to meet your employees’ needs.

Check Compliance and Support

Ensure the PEO stays updated with federal and state regulations and provides compliance assistance for employee benefits and benefits plans.

Compare Costs

Request a detailed breakdown of administrative fees and health insurance plans.

Review Employee Experience

Ask current clients or employees about their experience with the PEO’s benefits administration and health insurance and other benefits.

Assess Service Levels

Good PEOs provide dedicated support for HR functions, insurance carriers, and benefits inquiries.

Common Misconceptions About PEO Health Plans

Misconception 1: PEOs are only for large companies

Reality: PEOs are ideal for small employers looking to compete with larger firms.

Misconception 2: PEO health plans are too expensive

Reality: By pooling multiple businesses, PEOs reduce costs while offering better coverage options.

Misconception 3: You lose control of your business

Reality: You retain control over operations, employees, and company culture while outsourcing administrative tasks.

The Importance of Finding the Right PEO

Keeping your employees happy is an important step in reducing turnover, as job satisfaction affects whether your employees stay with you or leave to find a different employer. If you join a PEO that offers a health plan that doesn’t fit well with your employees’ needs, you may find yourself looking for new workers.

Finding the right PEO can be harrowing. According to NAPEO, you have nearly 1,000 choices when it comes to potential PEO partners. Making sure that you find the one that offers the right services for your business, including a health plan that fits your needs, can end up consuming a significant amount of your time.

NetPEO is here to simplify the process of finding a PEO partner for your growing company. Rather than offering a single solution, our PEO brokers work with you to understand the unique needs and challenges of your business. Based on what you tell us, we find you a selection of PEOs from our trusted network of partners.

We also understand that your needs evolve over time and that sometimes business relationships don’t work out. That’s why we regularly follow up with you to make sure that your PEO partnership is meeting and exceeding your expectations. If you’re not completely satisfied with your current PEO, we’re here to help you find one that is a better fit for your current needs.

Have NetPEO Help You Find the Right Health Plan

If you need to get access to a better health plan through a PEO, call us at (678) 376-1212 or send us a message using the form on this website. We’ll speak with you about your health plan needs, as well as any additional HR issues that you might want help addressing.

Concerned about pricing? NetPEO is completely free to business owners looking to find a PEO partner. You’ve got nothing to lose and could gain a better health plan for you and your employees. So, call today!