The Axcet Blog

Small Businesses, Health Insurance and the PEO Option

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As a small business owner, the cost associated with providing health insurance to employees combined with the amount of time spent navigating various plans can be stressful and may even cause you to lose sleep. Don’t worry; you’re not alone. An eHealth report, Small Business Health Insurance: Costs, Trends and Insights 2017, found 80 percent of small business owners were concerned about the cost of health insurance and 62 percent said just a 15 percent increase in group premiums would make it unaffordable. Additionally, 30 percent of business owners reported their concerns about health insurance costs were causing them to delay new hires, while 61 percent said it negatively impacted their ability to provide bonuses and pay raises to their employees.

Why Do Small Businesses Offer Health Benefits?

While the Affordable Care Act (ACA) brought the issue of health insurance into the spotlight, it has long been a source of pain for small business owners. Under the ACA, U.S. businesses with 50 or more full-time employees for one year or more are required to offer health insurance. So, what about those with fewer than 50 employees? A study found half of those businesses still provide workers the option to sign up for health benefits even though they aren’t legally required to do so. Why? The majority of business owners surveyed said it was part of their overall business strategy. By offering health benefits, they are better able to hire and retain quality workers. They typically offer higher quality plans, extend the coverage offer to their workers’ dependents, and also included dental and vision.

How Do Small Businesses Afford Quality Health Benefits?

When it comes to big business benefits, often small businesses can neither afford nor manage them. The solution? A Professional Employer Organization (PEO), like us. PEOs provide services to between 156,000 and 180,000 small and mid-sized businesses, employing between 2.7 and 3.4 million people. When small to medium-sized businesses enter into an agreement with a PEO, it’s likely the only opportunity for their employees to gain access Fortune 500-level employee benefits like health insurance, dental and vision care, life insurance, retirement saving plans, job counseling, adoption assistance, educational benefits and more. Plus, with a PEO, you’ll receive much more than just affordable rates and a variety of health insurance options. PEOs handle the full range of HR services - think of it as your very own team of experienced HR professionals - just outsourced instead of in-house. They process payroll, handle recruiting, hiring, onboarding, employee training, compliance, workers’ compensation and much, much more.

How Does the PEO Relationship Work?

The PEO relationship works through “co-employment”, and this is also how PEOs are able to offer Fortune 500-level benefits to its clients’ worksite employees. According to The National Association of Professional Employer Organizations (NAPEO), co-employment is the contractual allocation and sharing of employer responsibilities between a PEO and its client. The client employees are employed by two entities - the business owner and the PEO. The client employer maintains control of all business decisions and operations, while the PEO, or co-employer, manages the human resources side, including remitting wages and withholdings of the client's workers, and issuing Form W-2s for the compensation paid under its Employer Identification Number. Read more about the role of the PEO.

How Does Co-Employment Impact Benefits?

Because all of the PEO’s clients’ employees are grouped together, becoming employees of the PEO through co-employment, a much larger group is formed. This enables the PEO to gain access to similar health insurance rates as large corporations.

Employee Benefits Management

When you choose Axcet HR Solutions as your PEO, we’ll afford you a personal, dedicated Benefits/HR consultant. This certified expert navigates the benefits minefield for you, makes sure you’re legally compliant, manages the ever-growing paperwork and takes this headache off your shoulders. Find out more about our Employee Benefits Management services today!

Bonus Free Report - How to Offer the Right Mix of Medical Plans

Offering employees the right mix of medical plans is one of the most important decisions you can make in ensuring employees have the coverage they need to stay focused on the job at hand. This guide for employers will teach you what you need to know, including benefit plan design, contribution strategies and why they matter.

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Download Now

 

Written by Gerald Diddle