Health Benefits Outsourcing: Reduced Cost and Increased Coverage

It's no secret that employees want a top-notch benefits package that includes quality and affordable health insurance. Meeting that challenge, however, is difficult, especially for small and mid-sized companies. Health benefits outsourcing can be a solution.

Ordinarily, getting competitive health insurance can be cost-prohibitive because your company's risk pool is too small for the insurance company. Insurance companies only want to insure larger companies because their risk pool is so much larger and the insurance company's risk of paying out massive claims is mitigated by the number of employees paying premiums. This is why Fortune 500 companies are able to offer stellar healthcare plans to their employees at reasonable costs.

By outsourcing your company's benefits administration, you can gain access to Fortune 500 benefits at Fortune 500 prices. Not only do you increase your employee satisfaction by providing quality and affordable healthcare, but your HR outsourcing partner also takes on the task of administering benefits so you can focus on your core business needs.

The Importance of Benefits

Attracting and retaining top talent in your industry requires a best-in-class benefits package. Employees consistently say that, besides salary, the most important item a company can offer them is a competitive benefits package.

To your employees, benefits matter. As a result, you want to give them quality benefits to keep them loyal and engaged with your company. But you simply may not be able to afford the sky-high prices of health insurance offerings.

Working with a Professional Employer Organization (PEO), you can join their existing health plan. This process of health benefits outsourcing can offer healthcare options to your employees at prices you can afford. 

Outsourcing Employee Benefits

Shopping for health insurance is overwhelming. Insurance companies offer dozens of plans, many of them extremely similar, and all with varying costs. You cannot possibly budget if you do not know how much offering health insurance will cost you. You cannot guarantee to your employees that you will keep offering health insurance, either, given how quickly health insurance costs rise year over year.

PEOs give you the ability to put some structure around these uncertainties. Through co-employment, your PEO is able to get your company quality healthcare at reasonable prices. Co-employment is a relationship between you and your PEO where the PEO becomes the employer of record for your employees. This enables the PEO to run payroll, remit taxes, perform other HR administrative tasks. But it also allows your PEO to group all of their client employees together to be able to negotiate great health insurance rates. 

In no way does co-employment take away from you any decision-making power or authority over your day-to-day operations. The hiring, firing, and discipline of your employees remain solely under your control. 

Benefits of Outsourcing Administrative Tasks

When you outsource your health benefits, that usually includes administration of those benefits. That's a good thing, because benefits administration is complex and ripe for mistakes.

Through your PEO, you can relieve yourself or your internal HR team of Consolidated Omnibus Budget Reconciliation Act (COBRA) administration. COBRA provides former employees with the ability to continue health benefits for a period of time after they no longer work for you. Failing to offer eligible employees this option can result in penalties to your company.

Beyond administration, PEOs will keep you compliant with all relevant federal and state regulations.

For instance, the Employee Retirement Income Security Act (ERISA) is a federal regulation that all companies need to be aware of to follow properly. ERISA governs retirement plans and the administration of those plans. Just like COBRA, failing to comply with ERISA regulations can result in costly penalties to your business.

COBRA and ERISA are just two of the many federal, state, and local benefits laws that employers must follow. Even making an innocent mistake can result in a violation of these laws, putting your company in jeopardy. Working with a PEO, you get peace of mind that your business will remain compliant with these, and all other applicable laws. Your PEO staffs HR experts, specializing in each of these employment areas. Partnering with these experts allows you access to their comprehensive knowledge, which keeps your employees engaged while keeping your business compliant.

You can Get Health Benefits at Reasonable Costs

You want your business to succeed. If your employees are loyal and efficient, they will succeed with your company. One of the best ways to keep your employees loyal is to offer a best-in-class benefits package, including quality and affordable health insurance options.

This is no simple task for small and mid-sized companies. But through a co-employment relationship with a PEO, you gain access to affordable benefits. You can also increase your internal team's efficiency by outsourcing complex benefits administration to your PEO. Your PEO will complement, not replace, your internal team by taking on burdensome tasks such as compliance. This frees up your internal team’s time and energy to focus on what counts: core business competencies.

Partnering with a PEO can have immediate benefits to your company. Providing health insurance can seem costly, but with the right PEO, you can see a positive ROI on your health benefits outsourcing investment.