THealth insurance open enrollment is right around the corner and for all business owners and HR directors out there, it's time to look at a fresh option.
For years, administrators would review their health insurance renewal with their brokers.........10, 20, 25% increases, and with really no other choice, would either renew as is, or increase copays, deductibles or reduce other benefits in order to manage costs. The traditional way of purchasing insurance was either through a small group or individual plan. Fortunately, there now is another option that has become increasingly popular, and that is, purchasing health coverage through a P.E.O. or Professional Employer Organization. In short, a PEO is an HR company in which a business owner retains to outsource his/her HR services. Generally, payroll, worker's comp and health insurance are the three essential services that a PEO will need the business owner to outsource. Although, payroll is the heart of the PEO, the reason PEO's are attractive is because of the savings in health insurance premiums. Simply, with thousands of worksite employees, the PEO has greater leverage negotiating rates with insurance carriers than a small business owner does. Rates can be as much as 25% less than standard group plans with better coverage. A PEO is not for everyone. The key to determining whether a PEO arrangement is for you, will be if the administration or admin fees are that high that the admin fees essentially neutralize any savings from health insurance premiums. We had a recent client with 14 employees, that after admin fees, was able to net a $52,000 savings on the overall package. I will note that to receive a quote from a PEO will not be like your typical small group proposal. Underwriting is required and they'll need 2-3 weeks to produce an accurate quote, so after doing research, if you're considering a PEO, don't wait until December to begin the process, start now.
The author, Eli Gelb, is President of EYG Group Benefits, a group and individual health insurance brokerage firm servicing the NY metro area for the past 25 years. If you are a business owner or an individual and would like to speak with Mr. Gelb regarding your group or individual health insurance needs, please call 845-290-0488 x101 or visit www.eyggroupbenefits.com and schedule a free consultation.
