Have you heard of PEO health insurance? If you haven't, you could be missing out on the ability to tap into Fortune 500-level employee benefits at an affordable rate for your small business employees.
If you're like most smaller companies and start-ups, you know all too well that the cost of providing healthcare for employees can be shocking. Aside from the high cost of premiums, the time involved in sourcing, comparing and selecting benefits options is a significant expenditure of small business resources.
Although the Affordable Care Act (ACA) only mandates employers with 50 or more full-time employees to offer affordable health insurance to full-time employees, many small businesses with fewer than 50 employees still provide health insurance to employees.
After all, taking care of your company’s biggest asset (your people) is critical in keeping team members productive, engaged and with your company for the long haul.
So how are small businesses able to afford to offer great benefits to their team members without spinning their wheels or breaking the bank? Many of them partner with a certified professional employer organization for PEO health insurance solutions.
Wondering if PEO healthcare could be the answer for you? In this article, I’ll shed light on the details involved in PEO health insurance, so you can make the best decision for your company. Here are three key things to know before you go with a PEO health insurance plan.
PEO Health Insurance Is More Affordable
According to the National Federation of Independent Businesses’ Executive Director of Research, Holly Hade, “The cost of health insurance is by far the biggest challenge for employers who offer health insurance and for those who do not offer it. Small employers compete for talent in filling open positions and are aware that health insurance is an important benefit for many employees and job seekers.”
Still, the NFIB reports that over half of small businesses offer benefits anyway, with 88% of businesses with 30-50 employees offering health insurance as of April 2023.
The way insurance premiums are calculated considers a multitude of factors, but one of the most significant is the size of an employee pool. This is why mega-corporations save hundreds or even thousands of dollars per employee on premiums. Small businesses should be able to reap those benefits, too. PEO health insurance makes this possible.
The trick to saving money on employee health insurance comes down to negotiation strength and bargaining power. Many of the small employers who are able to offer health insurance are doing so by leveraging the negotiating power of a group of other employers through an aggregation strategy.
When small businesses opt for PEO health insurance, they avail themselves to the PEO’s larger pool and, therefore, the PEO’s greater bargaining power. In this scenario, the PEO becomes the employer-of-record for benefits administration purposes and, as an added benefit, the PEO can handle a wide range of related tasks for the small business, such as payroll, tax administration and administrative support.
PEO Health Insurance Ensures Compliance
Not only can a healthcare PEO help you source, compare and select the right health insurance options for your small business and handle administration, payroll and payroll taxes, but it can also help make sure your business is compliant with the myriad of applicable federal, state and local laws.
In all fifty states, the following laws and regulations (among others) generally come into play when we’re talking about employee health insurance:
The Affordable Care Act (ACA)
While businesses with fewer than 50 employees are generally not required to provide health insurance coverage to employees under the ACA, it does require small businesses that provide health insurance to their employees to report certain information to the IRS.
Even for small businesses, ERISA imposes fiduciary responsibilities, as well as certain reporting and disclosure requirements on employers that offer benefit plans, including annual reporting and summary plan descriptions.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
COBRA applies to all businesses with 20 or more employees and requires businesses to continue offering health insurance to employees who depart from their employment under certain circumstances.
When you select a PEO health insurance plan, the HR experts at the PEO can help you understand when and how COBRA, ACA, ERISA and other laws and regulations apply to you and how to make sure you’re managing the provision of health benefits the right way.
There are so many ways to provide health benefits for your employees. An experienced PEO can guide you through which type of coverage is best for your employees’ and business’ unique needs.
The PEO health insurance experts at Axcet can help you navigate the difference between plan options, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), high-deductible health plans (HDHPs) and more. Plans differ between several key factors, including premiums, deductibles, patient providers and so on. The general age and health of your workforce may cause a certain plan to be more attractive than another.
Sometimes, full coverage health insurance simply isn’t the most cost-effective route for your small business to take, all things considered. Every company is different, and its needs (as well as the needs of its employees) are unique. Depending on the size and location of your business, there may be several alternatives to offering full-coverage health insurance, which you can discuss with your healthcare PEO.
When you work with an experienced PEO, health benefits don’t have to be limited to traditional offerings. Some of your options might include offering an HSA (Health Savings Account), FSA (flexible spending account) or a defined contribution plan. These alternative options can help small businesses balance their budgetary constraints while still offering valuable benefits to their employees.
Partnering with a PEO: Health Insurance Made Possible
When it comes to choosing the right benefit plans for your employees, it’s important to get the decision right. The Society for Human Resources Management confirms the trend employers across the country are experiencing firsthand: 88% of employees give significant consideration to an employer’s benefits offerings when deciding whether to take (or stay at) a job.
If you’re looking for help choosing the perfect plan, lowering your health insurance costs or getting your arms around the compliance aspect of it all, Axcet HR Solutions is here to help. Axcet is a certified professional employer organization that specializes in helping small businesses and start-ups with all of the human resources tasks they need to handle, so they can focus on growing and scaling their core business. When you work with Axcet, you’ll find the perfect PEO health insurance plan (or other appropriate benefit offerings) for your team.