Small Business Health Insurance and the PEO Solution

As a small business owner, the cost associated with providing benefits to employees, combined with the time spent navigating small business health insurance, can be overwhelming. If this sounds familiar, you’re not alone. According to the National Federation of Independent Businesses, 65% of small business owners who do not offer health insurance refrain because of prohibitively high costs. Yet, providing quality health insurance is crucial for attracting and retaining top talent.

Many owners and managers are surprised to learn that excellent (and affordable) group health insurance options for small businesses aren’t necessarily out of reach. So, what are the best options for small business health insurance? Enter professional employer organizations (PEOs). By pooling together the employees of multiple small businesses, PEOs can provide access to Fortune 500-level health insurance options at an affordable rate.

In this article, we'll explore available options for small business health insurance, explain why it's a necessity and discuss how PEOs make quality health insurance accessible.

We’ll also delve into the specific advantages of partnering with a PEO, from understanding the basics of co-employment to discovering how PEOs manage HR tasks. Gain a comprehensive view of how to afford the best small business health insurance and where to turn if you need expert advice in making the ultimate call.

Why Do Small Businesses Offer Health Benefits?

While the Affordable Care Act (ACA) brought the issue of small business health insurance into the spotlight, benefits have long been a source of frustration for small business owners. Under the ACA, U.S. businesses with fifty or more full-time employees for one year or more are required to offer health insurance. 

For businesses that employ fewer than fifty full-time employees, the decision to offer health insurance can be a tough one to weigh. Over half of businesses that are not required to provide health insurance under the ACA still offer the benefit to their team members. While there is no mandate to provide the benefit, many business owners report that this step is part of their overall business strategy. By offering health benefits, small businesses are better able to hire and retain quality workers. 

RELATED: Four Reasons to Offer Employee Health Benefits (Even if You're Not Legally Required To) >>

How Do Small Businesses Afford Quality Health Benefits?

Partnering with a PEO offers employers a way to afford quality small business health insurance. PEOs provide services to between 156,000 and 180,000 small and mid-sized businesses, providing access to affordable health insurance to millions of employees.

When small to medium-sized businesses partner with a PEO, they have the opportunity to offer their employees access to Fortune 500-level employee benefits like medical insurance, dental and vision care, life insurance, retirement saving plans, job counseling, adoption assistance, educational benefits and more.

With a PEO, you’ll receive much more than just affordable rates and a variety of health insurance options. PEOs handle a full range of HR services. Think of it as your very own team of experienced HR professionals, just outsourced instead of in-house. PEOs process payroll, manage recruiting, compliant hiring, onboarding, employee training, HR compliance, workers’ compensation administration and far more.

How Do PEOs Offer Affordable Small Business Health Insurance?

One of the key benefits of the PEO relationship works through the concept of “co-employment.” 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. In a PEO partnership arrangement, the client’s employees are technically 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 human resources tasks, including remitting wages and withholdings for the client's employees and issuing Form W-2s for the compensation paid under its Employer Identification Number. 

By serving as an employer of record, a PEO is able to offer low-cost options for small business health insurance to your employees using rates calculated for a much larger employee pool than the employer-client would be able to tap into on its own. For this reason, partnering with a PEO is a popular method of offering the lowest rates for small business health insurance. You can read more about the role of the PEO here.

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Axcet HR Solutions: Helping You Source the Best Small Business Health Insurance

When you choose Axcet HR Solutions as your PEO, we’ll afford you a personal, dedicated Benefits/HR consultant. This certified expert can navigate the various options for small business health insurance with you, making sure you’re following compliance guidelines, helping you manage the ever-growing paperwork, and ultimately, taking the heavy load of employee benefits off your shoulders. Find out more about our employee benefits management services today.

Read more about going the PEO route for small business health insurance here.