Know All About PEO Health Insurance

EO insurance

You have successfully launched your business and hired a few dedicated employees; congratulations, you have come a long way. This is a stepping stone towards your business’s growth. As a business owner, your next step might be to create a team of dedicated members, and with this comes the responsibility of handling them.    

From creating a benefits package to developing a robust payroll mechanism, as the number of employees increases, so do the responsibilities. According to a 2021 report, around 55% of business owners find creating a health insurance package the most important job.   

Along with this, the chaos of finding a reliable insurance provider is an added stressor.  

To streamline the whole process, it is better to delegate HR-related duties to professionals like PEO (professional employer organization). They will help you provide your employees with an excellent healthcare insurance plan.   

Here, we will illuminate this topic and discuss how the best PEO service providers can help you in the long run.   

How Much Does Offering Health Insurance Cost Employees? 

Offering health insurance to employees involves a significant financial commitment from both employers and employees. The cost structure typically includes premiums, deductibles, co-pays, and out-of-pocket expenses. Here is a quick take on each one of them: 

  • Premiums: This is the amount paid monthly by the employer and employee to keep the insurance policy active. Employers often cover a substantial portion of these premiums, but employees are usually responsible for a percentage, which can vary widely based on the plan. 
  • Deductibles: Before the insurance starts to cover medical expenses, employees must pay a certain amount out-of-pocket each year. High-deductible plans usually have lower premiums but can lead to higher employee initial costs. 
  • Co-pays and Co-insurance: After meeting the deductible, employees often pay a co-pay for services, such as doctor visits, or a co-insurance, a percentage of the cost. 

The total cost to employees can vary significantly depending on the plan’s structure, the insurance provider, and the specific benefits offered. On average, employees pay anywhere from a few hundred to several thousand dollars annually, depending on their coverage level and healthcare needs. 

 What is a PEO in Insurance? 

The PEO insurance refers to health insurance plans offered through a Professional Employer Organization. A PEO organization provides comprehensive HR solutions for small and mid-sized businesses. These solutions include payroll processing, benefits administration, regulatory compliance, and more. Regarding health insurance, PEOs leverage their large pool of clients to negotiate better rates and more comprehensive plans from insurance providers. 

By joining a PEO, businesses can offer their employees access to high-quality health insurance plans that they might not be able to afford or manage independently. They will help you handle various administrative functions, allowing the client company to concentrate on its core operations. 

What Benefits Does PEO Insurance Offer? 

PEO insurance has several distinct advantages that can significantly benefit employers and employees. Here are some of the primary benefits: 

  • Reduced Cost Plans: 

One of the most significant advantages of insurance PEO is cost reduction. PEOs pool employees from multiple client companies, creating a large group with more negotiating power with insurance carriers. This allows PEOs to secure lower premiums and better coverage options than a small business could obtain. Additionally, the economies of scale achieved through a PEO can lead to lower administrative costs, further reducing the overall expense of offering health insurance. 

  • Reducing Compliance Burden: 

Navigating the complicated setting of health insurance regulations can be daunting for any business. PEOs have expertise in regulatory compliance and ensure that their client companies adhere to all relevant federal and state laws. This includes the Affordable Care Act (ACA), ERISA, COBRA, and other regulations that govern employee benefits. By partnering with a PEO, businesses can reduce the risk of infringement and avoid costly penalties, as the PEO takes on much responsibility for compliance management. 

  • Taking Responsibility for Employee Benefits: 

Managing employee benefits is time-consuming and demands attention to detail and up-to-date knowledge of the latest regulations and market trends. PEOs take on the responsibility of administering these benefits, freeing up valuable time and resources for the client company. This includes enrolling employees in health plans, managing claims, and handling communications with insurance providers. Employees also benefit from having a single point of contact for all their benefits-related questions and issues, improving their overall experience and satisfaction. 

How Does PEO Health Insurance Work? 

The PEO health insurance integrates the client’s employees into the PEO’s more extensive pool of insured individuals. Here’s a step-by-step overview of how it operates: 

  • Initial Assessment and Partnership: 

The process begins with the business partnering with a PEO. This involves an assessment of the company’s current HR practices, benefits offerings, and compliance status. Once the partnership is established, the PEO assumes responsibility for these areas. 

  • Employee Enrollment: 

The client company’s employees are enrolled in the PEO’s health insurance plan. The PEO provides various plan options that cater to different needs and budgets. During enrollment, employees select the plan that best fits their requirements. 

  • Plan Management: 

The PEO handles all aspects of plan management, including premium payments, claim processing, and regulatory compliance. It also negotiates with insurance providers on behalf of its clients to ensure competitive rates and comprehensive coverage. 

  • Ongoing Support: 

The PEO insurance offers ongoing support to the client company and its employees. This includes assisting with benefits questions, resolving issues with insurance claims, and providing regular updates on any changes in the healthcare landscape that might affect the company or its employees. 

  • Compliance Assurance: 

The PEO continuously monitors regulatory changes and ensures the client company complies with all applicable laws. This proactive approach helps prevent potential legal issues and fines related to benefits administration. 

  • Cost Sharing and Benefits Distribution: 

The costs associated with health insurance are shared between the employer and employees based on the structure agreed upon during the initial setup. The PEO manages the distribution of benefits and ensures that all parties are clear about their contributions and entitlements. 


PEO health insurance offers a strategic advantage for businesses looking to provide employees with high-quality, affordable health benefits. By leveraging a PEO’s collective bargaining power, companies can access reduced-cost plans, ease the compliance burden, and streamline benefits administration. This enhances employee satisfaction and retention and allows businesses to focus more on their essential activities, knowing that their HR and benefits needs are expertly managed. 

About Us

Being a full-service professional employer organization (PEO), we provide employment-related services, such as employee benefits, human resources, risk management and payroll. We also offer ongoing supervisory training to employees regarding employment laws, procedures and policies.

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