By
Gerald Diddle
on
Dec
29,
2022
7 min read
0 comment(s)
Most employers understand how important it is to include health coverage in their employee benefits packages – even when they’re not legally required to do so. Health insurance essentially is table stakes for attracting and retaining top talent. Employees value health insurance more than higher pay and expect employers to provide it, especially now, when jobs are plentiful and the people available to fill them are few.
The law expects it, too, when companies reach a certain size. Under the Affordable Care Act, any organization that employs 50 or more people (including full-time equivalent employees for 120 days or fewer during the calendar year) and does not offer health insurance will be heavily penalized.
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Whether you are legally bound or just choose to offer health care benefits, getting the right balance of options and costs can be a heavy lift.
Small and mid-sized businesses take different approaches to finding and administering their health insurance plans. Very few try to do it themselves – even if they have an internal HR team – because they understand that the process of comparing health insurance options and administering benefits is complex and time-consuming.
There’s a steep learning curve for anyone who isn’t well-versed in the intricacies of finding, choosing and managing health insurance benefits.
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Since handling the process strategically and efficiently requires in-depth procedural knowledge and specific HR expertise, many small and mid-sized companies in Kansas, Missouri and the Kansas City metro turn to an insurance broker or a professional employer organization (PEO) like Axcet HR Solutions for help. If you’re considering outsourcing your health benefits administration, you should know there are distinct differences between these two types of external partners.
On the front side, a PEO and insurance broker both guide you through the process of selecting health insurance plans and enrolling your employees. But their similarities end after enrollment is completed. Here are the pros and cons of each:
For most Kansas, Missouri and Kansas City companies, especially smaller ones that could never afford highly competitive plans on their own or with a broker, it’s more advantageous to work with a PEO for employee health benefits for several important reasons.
Through a model called co-employment, PEOs can include their small and mid-sized clients’ workers in a single, employee group. Co-employment is essentially just a contractual agreement that allocates certain employer responsibilities – like benefits administration – to a PEO. The PEO’s client – the small or mid-sized business – maintains direction and control over all business decisions and operations.
The advantage of co-employment, which is unique to PEOs, is that it creates a larger group and more buying power with insurance carriers than a small business could get on its own – or that an insurance broker would have working on behalf of an individual small business.
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Carriers view smaller companies and their smaller employee groups as higher risk. They price their premiums higher to cover that small group risk. But when a company partners with a PEO, it can become part of the thousands of employees that make up the PEO’s large group. That’s how a PEO can offer more desirable, yet affordable, health care options – options to which brokers do not have access. It’s simple math – the smaller the group, the higher the risk and the higher the premiums.
Conversely, the larger the group, the more health care amenities available, the higher the discounts and the lower the costs for each small company that participates in the PEO’s plan.
So, a PEO enables small businesses to leverage group plan pricing and offer their employees the same kinds of high-quality benefits typically only available at larger Fortune 500 corporations – coverage their employees will understand, value and use and which they almost certainly could not afford otherwise. That helps level the playing field for smaller employers, allowing them to make more competitive job offers that attract and retain highly qualified talent.
After enrollment, an insurance broker provides very little to no additional services to its small business customers until it’s time to start the annual health insurance evaluation process for the next year. A PEO, on the other hand, provides extensive, ongoing support and personalized employee benefit plan services. Considering that there’s still a lot to do between annual renewal periods, smaller companies get a lot more for their money with a PEO.
Employee benefit plan administration is a daunting and critical task. The demand for attention is constant. Answering employees’ questions, addressing challenges with claims and other ongoing to-do list items can be an almost-daily requirement. A PEO will handle every one of them quickly and expertly, without a business owner having to worry about anything.
A PEO like Axcet delivers specialized, personalized expertise that alleviates the heavy administrative burden employee benefits represent, saving client companies countless hours and major inconveniences and headaches.
Small businesses in Missouri, Kansas and Kansas City – as in every state – are obligated to meet federal and state legal requirements for health benefit plans. Mishandled, employers could create disgruntled, disengaged employees and face significant government non-compliance penalties.
These requirements also are revised frequently, which challenges smaller companies to stay aware of, let alone comply with, ever-changing regulations. Under a co-employment agreement with a PEO, however, maintaining compliance becomes the responsibility of the PEO – one more burden off the small to mid-sized business owner’s mind and perpetually growing task list.
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If you’re ready to relieve the stress that comes with providing employee health insurance benefits and stop worrying about annual renewal negotiations, benefits plan administration, legal regulations and other health insurance complexities, schedule your free consultation with Axcet today. We are the oldest Kansas City-based PEO, with employee benefits experts who can help you navigate from beginning to end the process of providing benefits your employees will appreciate and use while giving back time you can allocate to focus on growing your business.