What Is PEO? An Employer's Guide

If you’re looking at insurance options for your employees, you might be trying to decide if PEO is right for your business. You may wonder if it’s cost-effective and will satisfy your employees. Here’s what you should know about PEO's.

What Is PEO Insurance?

PEO stands for “professional employer organization.” A PEO outsources, among other things, payroll, human resources, workers compensation, and employee benefits.

When you’re using a PEO to outsource your employee benefits (specifically health insurance), that’s often known as PEO insurance.

How Does PEO Group Insurance Work?

If you choose to use PEO group health insurance services, you select a PEO and sign an administrative outsourcing agreement with the organization. That agreement gives the PEO permission to provide insurance for your employees. The PEO selects the right insurance for your employees based on your needs and budget.

Who Should Use PEO Insurance?

A PEO (and PEO group insurance) isn’t the right fit for every company. PEOs and PEO insurance are generally considered acceptable solutions for small businesses. That’s because small businesses frequently lack the resources to handle a number of HR functions, including health insurance. Outsourcing those processes to a provider that understands the needs of small businesses and the insurance options available to them can be a cost-effective solution.

The Pros of Using PEO for Small Business

Small businesses can benefit from using PEOs for their insurance needs in the following ways:

• PEOs save small businesses time and effort; the company doesn’t have to research insurance options because someone else has taken on that burden.
• Small businesses don’t have to worry about legal compliance, because the PEO handles those issues for them.
• Outsourcing insurance benefit administration allows small businesses to focus on their core competencies rather than managing their employee benefits.

The Cons of Using PEO for Small Business

While there are definite and significant advantages to using a PEO for small businesses, there are also some disadvantages.

• You might find that the business relationship doesn’t provide you with the flexibility or the benefits that you need. 
• Your PEO could change its terms or its offerings.
• Your employees may be dissatisfied with the PEO insurance, and you could find yourself trapped in a contract you can’t easily or affordably escape.
• A PEO is a bundled service and may add costs for your organization for services you do not need or cannot utilize.

EnrollMe: A Better Way Forward for Small Businesses

• Increases employee satisfaction: Employees have more choices; they’re not limited by expensive traditional corporate healthcare plans. They are free to choose the plan that works best for their personal circumstances and budget.
• Provides healthcare portability: Plans are portable, which means employees don’t have to worry about losing healthcare coverage if they change jobs, and employers no longer have to subsidize continuing coverage after an employee leaves the organization.
• Provides self-service options and built-in education:  There are also educational resources and tools, giving employees self-service options to find the right insurance for them.
• Lowers regulatory risks: EnrollMe does the heavy lifting to ensure compliance with all applicable regulations at the federal and state levels, relieving HR teams of the burden of keeping up with ever-changing requirements.
• Reduces administrative burden: HR teams are busy enough without the constant time and energy drain that accompanies healthcare plan administration. With EnrollMe, HR teams no longer have to worry about healthcare plan administration.
• Provides a lower cost option: Most PEO providers do not offer an al a carte solution. If you don't need or want the other HR services provided in a bundled PEO offering, the EnrollMe digital healthcare marketplace could be the lower cost option.

EnrollMe is that rare solution that satisfies the needs of both small business owners and employees. Its innovative approach offers employees the freedom of choice and offers employers freedom from administrative burdens and their attendant costs.

Want to experience EnrollMe in action? Schedule a demo today to explore what EnrollMe can do for your small business.