With the rising costs of health insurance, many businesses are looking for more affordable options for their company and employees. As PEOs provide solutions for their clients, this is an avenue worth exploring.

Many businesses turn to PEOs to help save money on healthcare costs, and that is often the case. Let’s look at how a PEO can help.

Here are a few ways to save on health insurance by using a PEO:

1. PEOs that have large group health plans can also have a big problem.  Employer groups that have experienced more claims than the average are tempted to seek out PEOs for health insurance savings.  Yet these are the very groups that a PEO doesn’t really want impacting its rates.  To compensate for this, some PEOs have found ways to charge all clients a lot more using non-transparent billing and little-explained fees, in the other areas of service to clients.  And the health insurance rates go up steeply after the first year.  If too many high-risk groups find their way into a PEO’s group plan, the carrier responds by pulling out the following year or raising rates, so that the PEO’s plan becomes less competitive.
2. Other PEO’s have found a way to reduce clients’ costs for health insurance and HR, by simply having really strong employee benefits departments with unique offerings. 
   For example, Accent Employer Solutions followed a genius in the PEO industry who led the successful integration of two different plans that work together with per-employee costs averaging a remarkable $360 per month.   The combined plans are rich with such features as $15 copays on doctors and specialists, along with low deductibles and out of pocket costs, even for complicated health issues ranging from serious accidents to difficult diseases.  Provider access is among the best in the industry, using one of the two or three highest access networks available in North America. Available in 48 states, the combination medical program has captured a near 100% re-up among Accent clients plus is attracting new customers who can’t find quality benefits at this price point anywhere else. This is an example of how strong PEO medical benefit programs can leverage volume buying and industry power, plus allocate the software and advanced benefit teams necessary to a provide great employee experience while simplifying the pass-through billing for small businesses.
3. Another way a good PEO can help employers is by sourcing and administering benefits that quite simply cost the employer less money.   A strong PEO can administer them and understands them.   It can implement HSA’s paired with the right plans with multiple options, all too complicated for a small employer, but not for a PEO and its benefits technology.  The employer who finds his way to a resourceful PEO soon realizes that costs are substantially down, all because his PEO has the resources and motivation to help its clients.  Plus, the employer isn’t stuck with on-boarding employees or dependents, or with answering their questions, or with reconciling the benefits, or any of the other tasks that come with detailed administration of multiple plan offerings that produce strong savings.

How does an employer find a good PEO?

One of the best ways is to contact PEOs that are local, and this definitely includes smaller ones, not just the household names.   Visit with a knowledgeable representative on the phone, with your questions ready.  This saves time and gets you out of a lengthy face-to-face meeting until you have some basic facts first.

Ask the PEO if it offers completely transparent billing and invoicing, with all line items separated for worker’s comp, each class of employer taxes, benefits by each individual plan or product, and the PEO’s fee.  Next, ask the PEO representative how they get clients’ health insurance costs own, and what internal group products they might have.  Finally, ask the PEO what rates and fees it charges besides its HR administrative fee, including annual fees, set-up fees, employee add and delete fees, out of cycle checks and the like.  Ask the PEO what its worker’s comp rates are like compared to state manual rates for all businesses.  A PEO that prides itself on affordability, transparency, and gives some intelligent answers as to how they help clients with health costs can then be put on the list for a visit and detailed quote.  Don’t forget to check Yahoo and Google for reviews of that PEO, or anything you can find out about them that might save yourself from spending time on a partner who isn’t the right fit.