Small Business Health Insurance – Everything You Need to Know

small business health insurance break down

In a highly competitive small business health insurance landscape, companies are increasingly turning towards Professional Employer Organizations (PEOs) to outsource their critical HR tasks. While engaging a PEO is a no-brainer for most firms, the process of choosing one which is a perfect fit for your business can be a daunting challenge.

Let’s just take the example of United States where over 700 PEO service providers are active and offer an array of services to businesses. Moreover, these service providers range from national level giants to niche players who cater to specific segments.

Now if you are looking to choose one for your business, you may end up researching and negotiating with a host of companies before you can even make a worthwhile shortlist. If that was not all, you would also have to ensure that the company you finally decide to work with offers all relevant services that you are looking to outsource.


Asking for Small Business Health Insurance Quotes

Asking a PEO for a quote is often a cumbersome process. For starters, there would be forms you need to fill up based on the kind of services you are looking to outsource. When you do receive a quote, you are likely to receive a long-detailed proposal based on the data you have filled up.

Often such proposals would come with bundled rates without a breakdown of specific components. These differences may result out of addressing components like administrative fees and worker compensation etc in a varied manner.

If that was not all, you would also have to ensure that the price you negotiate with your PEO is fair and you are not been taken for a ride. At the same time, you might also have to check the scope of the services you are signing up for and what all it entails.


There is nothing like a Standard PEO Proposal – You’re Going to Need Help with That

Comparing two proposals from rival PEOs can be like comparing apples with oranges given the fact that their proposals may compromise of a different set of services and offer varied coverage. Now if you are looking to save yourself all the trouble of finding out the PEO who is a perfect fit for your business, you can simply reach out to a PEO Brokersmall business health insurance

Who is a PEO Broker and Why Would You Would  Engage One?

Given the fact that traditional PEOs have not been actively brokered, the term PEO Broker has been borrowed from similar agencies active in other industries. Essentially, they are intermediaries who help PEO Service providers to expand their business footprint. At the same time, they look at helping their client companies to figure out the perfect partner for outsourcing their HR tasks and finding small business health insurance.

PEO organizations have over time looked to increase their footprint across different industries and geographical regions. PEO brokers serve as a sales team or an intermediary who achieves it for them at a fee and they make great sense for service companies.

The basic operating principle for brokers is very simple; it involves taking a revenue share for the deals they crack for the PEOs. For service companies, they end up saving tons of money on expensive sales teams as they only need to pay a variable fee only when a client has signed on.

While PEO brokers are highly sought out by service providers, there are some exceptions. Some PEOs do not engage brokers and rather rely on their internal teams to complete their sales process. These include some leading PEOs including the likes of ADP and Insperity, who are quite rigid about only engaging an internal sales team. However, it is critical to note that these companies are well known and have spent huge sums to build their brand name.

That, plus there are some niche and regional service companies who tout the superiority of their service offering  and refrain from engaging external small business health insurance experts.

Yet at a broader level, PEO brokers have become increasingly popular among services providers, especially in any high-churn business ecosystems. With news of mergers and acquisitions in the PEO space, service providers often look at brokers to get that extra edge in the small business health insurance market.

From a client perspective, a PEO broker is of great help as he/she can connect the company with a suitable service provider. Moreover, such brokers over the years build up both expertise and connections across the business ecosystem and can effectively fulfill the needs of their clients.


Who else can help me find a suitable PEO – my Insurance agent seems like a good bet, right?

At times some businesses tend to rely on Insurance Agents for getting in touch with PEOs. Providing health insurance is a key task for every employer, they are typically in touch with Insurance agents for getting suitable coverage for their employees. However, over time Insurance agents experience a lot of challenges arising out costs associated with standalone policies to carrier specific issues.

With the Affordable Care Act in force, these challenges have magnified especially when they are working with small and mid-sized firms.  Such clients at times suffer the double whammy of rising costs associated with standalone policies while they find a reduction in small business health insurance choices.

Now many insurance agents were smart enough to recognize that to stay in business they need to alter the strategy. So, they tied up with a bunch of PEOs and then started working out insurance quotes through them for their clients. Some insurance agents are quite resourceful and can fill the PEO questionnaires for their clients and even help them in executing service agreements.


Can Engaging an Insurance agent to find a PEO, backfire on me?

Most certainly – an Insurance agent will have a limited scope of expertise and is by no means the right person to help you find a suitable PEO for your business. Moreover, they have way fewer PEO relationships as opposed to a specialist PEO broker and are unlikely to get the best price rates. They are also constrained by the lack of comparative benchmarking data on small business health insurance that PEO brokers typically possess.


Well What About using my Business Consultant or CPA to find me a PEO?

There are whole lot specialty professionals who might come across with a recommendation for you to work with a specific PEO. Business Consultants are the usual suspects as they typically have the faith of their clients. These consultants are typically hired by firms to work on specific pain points and bring the business to the next level. Over time they may advise clients to work with a specific PEO with whom they are comfortable with.

Corporate lawyers and even CPAs can also assist some clients in figuring out PEOs for their businesses. Their access to clients and understanding of business often gives them the privilege of making such recommendations. However, it is important to note that most of these specialty professionals are compensated by their clients and not paid by the PEOs.


So am I better off with specialty professionals?

The simple answer: it depends – While it might be easy on your part to work with a known resource, every specialty professional is expected to have his specific zone of knowledge. They are unlikely to have a comprehensive knowledge of the PEO ecosystem and would not have the kind of access that PEO brokers have across service providers of small business health insurance of different sizes. More often than not though, they will just recommend you to a PEO they are comfortable with and would barely hand hold you through the deal.


Looking to connect with a PEO Service Provider – Go Ahead with a Reputable PEO broker

A reputed PEO broker will have all the information at his disposal to pair your company with the right PEO service provider. Let’s look at the key areas where a PEO broker can help you.


Conduct a Proper Business Analysis to make a Perfect Pairing

To start off with a PEO broker will conduct a deep dive into your business and would interact with your company leadership to understand your specific needs. They are also likely to interview different stakeholders about their specific goals and expectations arising out of the proposed outsourcing arrangement.

Based on these inputs the broker will figure out the best course of action with respect to outsourcing HR tasks. Thereafter they will figure out a PEO that best meets your business needs and engage in the process of hiring the firm at the best possible terms


Leverage Broader Relationships to Provide Value

PEO Brokers have strong connections across different kinds of service providers including niche and national ones. They always make it a point to keep multiple options available with them so that they can pair the most suitable one with a prospective client.

They are also likely to have the necessary reach with the top management in leading PEO service firms and can leverage these relationships to benefit of the client. That includes that they can even figure out if specific niche PEOs are needed for your requirement based on the industry feedback they typically have with them.


Save you from filling Complex forms and Churning through Detailed Proposals

PEO brokers typically prefer to share a standard questionnaire which they subsequently customize to meet the needs of different PEOs. In other words, they can provide you with multiple quotes without you needing to fill-up different RFPs.

This is simply done by supplementing information from the clients and converting them into PEOs format for implementing small business health insurance negotiations of underwriting and quoting. Further, they can even analyze the complex quotes and bring the salient aspects before you in a clear-cut fashion to help you make an informed decision.


Secure Better Rates

A PEO service agreement can run up into a costly arrangement if it is not worked out in a proper manner. With a PEO broker in place, you are likely to secure the best possible rates for the key tasks that you plan to outsource.

Much of it is possible because brokers tend to give a huge amount of business to PEO service firms and are in a better position to negotiate attractive terms for their clients. Moreover, they have competitive information at their disposal which makes it easier for them to secure better rates.


Execute Clearly Defined Service Agreements Which Advance the Interests of Clients

small business health insurance

The PEO broker is expected to make sure that the service agreement and scope of work are tuned to the advantage of the client. The aim here is to ensure that the client objectives are met properly and overall value is derived out of the co-employment contract. For small to mid sized clients, some brokers may even engage in a multistage contract negotiation process, to clear out the scope to address minute details pertaining to small business health insurance.

Using a PEO broker is often a great choice to weed out the intricate complexities that are associated with finding an apt service provider. Not only can they help find a perfectly matched PEO service provider for you, their presence goes a long way in ensuring the co-employment arrangement works out in the desired fashion.


Click Here for help figuring out a PEO that is just the right fit for you.