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How PEOs Can Benefit Small Group Health Plans

July 17, 2016 by Tammie McKenzie

How PEOs Can Benefit Small Group Health Plans | by Tammie McKenzie

Despite all the hoopla in the media the past few years about what effect Obamacare will, has, or is having on health insurance premiums and benefits, one fact remains: size still matters. Undeniably, larger firms have historically received better rates on their health benefits purely as a function of their size and correspondingly larger “risk pool”. Unfortunately, smaller businesses do not have the same ability to leverage size as a way of obtaining more affordable premiums and access to expanded benefits for their employees – at least not alone.

Banding together with PEOs

According to the Affordable Care Act, the exact definition of a “Small Group Employer” is in the hands of the states. Except for a few states, most states currently, define a Small Group Employer as an employer with 2 to 50 workers. The ACA was set to expand that definition this year to include employers with between 51 to 100 employees who have traditionally been counted among the large employers. However, the PACE Act, signed in October, undid the ACA’s mandatory expansion of the definition. In any case, small employers today still face the same challenge of securing competitive health benefits and affordable insurance rates as a result of their smaller sizes.

This is where PEOs come in.

PEO Health Plans Houston Tx can be provided by your local PEO (or Professional Employer Organization), a third-party umbrella corporation that co-employs a client firm’s employees. Typically, a PEO will have co-employment arrangements with many clients, thereby combining all of their clients’ employees into a single, very large risk pool. The benefits of pooling together through a PEO-relationship for small businesses are tremendous. By creating a larger pool, PEOs can negotiate cheaper rates on behalf of their clients. The larger the pool, the more leverage, and as a result, the better the discounts available. One of the residual benefits of teaming up with a PEO has to do with employee retention and talent recruiting. By offering access to more affordable and more comprehensive benefits, client firms can not only attract top flight talent, but they’ll also be able to keep them. The perceptual benefits of lower turnover alone can be a tremendous boost for employee morale, and a solid start towards creating the kind of thriving and popular company culture all successful businesses large and small possess.

In the era of Obamacare, PEOs continue to play a pivotal role in promoting growth in the small businesses sector. Evidence shows that employing a PEO can be the difference between achieving a new level of success or exiting the business sector altogether.

See why PEO Broker is regarded as one of the top PEO companies in the PEO industry. Take advantage of our complimentary PEO Evaluation where we will help identify the perfect PEO tailored to your business’s unique fit and needs.

 

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