As your business grows, you know that you will need to take steps that help you attract top talent and retain your best employees. Providing more employee benefits can help your business succeed. Employee health insurance stands out as one of the most effective ways to improve recruiting and retention.
Unfortunately, it’s extremely difficult for a business owner or manager to evaluate health insurance benefit options unless they have experience working in the industry. Save yourself time and money by comparing PEO vs. brokers for employee health benefits.
Do you want to hand over employee benefits and other HR tasks to an experienced professional employer organization? Schedule a consultation with America’s Back Office to learn more about your options.
PEO vs. Brokers: Accessing Group Health Insurance Policies
Technically, you can purchase health insurance for your employees on your own. The process would require reaching out to insurance providers, negotiating rates, and committing to a plan. There are plenty of opportunities for something to go wrong.
Considering that the average employer-sponsored health insurance plan for a single person costs about $7,200, you cannot afford to take any risks. It makes more sense to outsource the work to a PEO or insurance broker.
Should you choose PEO vs. brokers? There are potential advantages to both options.
Potential Benefits of Using a Health Insurance Broker
Health insurance brokers are professionals regulated at the state level, so you can expect them to follow local regulations and put your needs front and center. An experienced broker should have connections with several insurance providers that operate in your area. That makes it possible for the broker to give you several policy options.
You do run into at least one disadvantage when you use a broker to buy health insurance policies for employees. Brokers earn most – or all – of their incomes by taking a commission from the insurance they sell. When they connect sign you up for an insurance policy, they add a percentage to get paid.
The amount that insurance brokers charge can vary significantly, so it’s worth asking them about payment before you start browsing policies. Regardless of the percentage, you will end up paying a higher price than companies that buy directly from the insurance provider. Considering the high price of health insurance, that will likely come to thousands of dollars per year.
How a PEO Might Help You Save Money on Healthcare Insurance Benefits
You have limited control over how much you spend on health insurance policies. Depending on how many employees you have, your state might let you buy policies through a government-run marketplace. Even then, companies don’t have much incentive to lower their prices. To some extent, you’re at the mercy of the insurance providers that serve your area.
When you have a PEO evaluate your insurance benefits and policy options, you still have to pay the insurance companies. You do not, however, pay an ongoing commission on top of the policies’ price.
By avoiding the broker’s commission, you can potentially get the same health insurance coverage at a lower cost to you. The health insurance provider receives the same amount of money, but you spend less because you don’t pay the broker a percentage on top of the cost.
Don’t spend more money than necessary on employee health benefits that don’t offer excellent coverage. America’s Back Office has years of experience working with insurance providers. Schedule a consultation to learn how our PEO services can help you save money, time, and work.
Are You Required to Offer Employee Health Benefit?
Maybe it sounds best just to avoid health insurance altogether. Who wants to get involved in such a complicated, expensive industry?
Considering that employees list health insurance as a top benefit, it probably makes sense for you to spend money on policies that offer good coverage. You can always require employees to cover a portion of the price to make insurance more affordable for the business.
Additionally, you might find that the federal or state government requires you to offer your employees health insurance.
ACA Requirements
The American Care Act (ACA) has helped more Americans access health insurance at affordable prices. It’s far from perfect, but it includes several common-sense regulations that have improved healthcare outcomes in the United States.
ACA has had some negative repercussions for employers, though. In most cases, businesses with 50 or more full-time employees must offer health insurance. Otherwise, the government will charge them penalties.
Some of ACA’s employer mandate requirements include:
- Offering affordable cover that does not cost more than approximately 10% of the employee’s household income (“approximately 10%” because the rate changes annually).
- Insurance plans must meet a minimum value that pays at least 60% of healthcare costs.
Keep in mind that Congress can change aspects of ACA at any time. At some point, they may even replace ACA with new legislation. The evolving nature of government healthcare requirements makes it critical for you to work with an HR professional with a deep understanding of the law. A PEO can fill that role for you.
The penalties for falling short of ACA’s requirements are pretty steep. In 2021, employers would get charged:
- $2,570 per full-time employee for not offering any insurance benefits.
- $2,570 or $3,860 per full-time employee for offering insurance below the minimum value.
- $2,570 or $3,860 per full-time employee for insurance policies that do not meet the definition of “affordable.”
(The difference between $2,570 and $3,860 depends on whether an employee receives a federal subsidy for buying coverage on the Marketplace. Essentially, you get fined extra because the government paid for a portion of the person’s policy.)
Again, you can avoid all of these problems by outsourcing your insurance needs to a PEO.
Attracting Top Talent With Health Benefits
There are reasons to use offer health insurance regardless of whether the government requires it. Most importantly, it helps you attract and retain top talent. The best employees in your industry know that they deserve more than reasonable pay. They want benefits packages that make life easier. Those packages typically include:
- Paid time off
- Paid sick leave
- Retirement savings accounts (such as a 401k)
- Health insurance
Health insurance benefits also lower employee turnover. You spend a lot of time and money onboarding employees. Each one of them represents a major investment in your business’s success. Losing successful employees adds costs and pressure to your organization. Not only do you lose a highly trained employee, but you have to find and train a replacement. It could take months before the new hire starts meeting key performance indicators.
How America’s Back Office Can Help
Health insurance is a highly complicated topic for employers. Many decision-makers feel apprehensive about the subject because they worry about providing good coverage and meeting government requirements while controlling costs.
America’s Back Office can help you solve challenges concerning health insurance and other HR topics, including background checks and recruiting. Schedule a consultation to talk to one of our professionals about the benefits of working with a PEO when choosing employee health benefits. We can put together a personalized package that meets your business’s unique needs.
