The Power of PEO and Healthcare Costs

Unless you’ve been living under a rock you’ve heard about the debate about health insurance – whether you agree or disagree it’s still a hot topic. The changes in Health Care costs, rules & regulations have affected every business & each of us personally. For years, everyone under the sun has been trying to find a way to lower premiums while still having the financial security of a medical carrier on your side.

In recent years, employers have seen their medical premiums increase significantly while their medical plans decrease in coverages with larger deductibles. With the addition of Health Savings Accounts (HSA)Flexible Spending Accounts (FSA)Health Reimbursement Accounts (HRA) employers & employees have worked to shed some of the increases & decreases to the plan coverages. As you can imagine this has been a losing proposition for companies and their employees making even the most basic of health care exceedingly expensive.

Professional Employer Organizations (PEO)  have emerged as a bright spot for employers & employees. If you’re not familiar with PEOs here’s how they work – a company joins a PEO pays an administration fee and their payroll, tax administration, health care benefits & management, workers’ compensation insurance and HR administrative services.

When a company joins a PEO they become co-employed by their employer & the PEO. So therefore the company is able to participate in the PEOs major medical plan along with the other services listed above. The medical plans offered through the PEO are significantly less expensive and much richer benefit offerings from National top tier carriers such as Aetna, UHC, Oxford, Blue Cross Blue Shield, Cigna, etc. 

The medical plans offered through the PEOs are equivalent to Fortune 500 plans – at a significantly reduced costs because the PEOs are buying their medical coverage for all of their client companies. This is different from say a 50 person company buying their benefits because their are thousands to hundred of thousands of people on the medical plan/s of a PEO. Undoubtedly this results in creating savings on the health care costs which in turn is passed on to you.

While lowering the costs and enriching the benefits of your company is great – the PEOs handle all of the claims, COBRA management, enrolling of your employees and all administrative tasks involved with your medical plan. Being compliant with state & federal  mandates is imperative to staying in business and navigating the ever-changing face of healthcare in America.

Often times companies are drawn to explore PEO for health care savings, however, they soon realize the value of the PEO is much deeper than just health care costs. If you are looking at a PEO for your business it’s important that you understand how they work & examine what value beyond medical benefits they offer specifically to your organization.

While finding the right PEO it’s imperative to do your homework & compare all options available – we help thousands of companies every year to find the best solution for their most precious asset – their human capital.

If you would like to see how PEO could help your organization Dinsmore Steele can help because we are the largest human capital agency in the country & with over 400 PEOs we can find the right one for your specific needs.

To get your free copy of our Intro to PEO, click here.