Small businesses pay more for health insurance than larger companies for less comprehensive coverage. But there’s a way to turn the tables—a Professional Employer Organization (PEO).
A PEO’s medical insurance gives small businesses access to better health coverage at the rates charged to larger companies. But that isn’t the only way a PEO can hold down your company’s medical costs. PEOs also help your business control costs related to worker injuries by reducing the frequency of injuries and managing your workers’ compensation.
Health insurance is one of the most sought-after benefits from workers. Employees will leave a job to go to a competitor with a better benefits package. Unfortunately, for many small businesses, providing competitive benefits simply isn’t possible.
That’s where a PEO steps in, providing access to their master benefits plan negotiated at scale by experts. The reason many small businesses have trouble getting affordable health coverage is because their risk pool is too small for the insurance company. If a business has ten employees and one of them has a major medical emergency, the insurance company might lose money.
Because a PEO partners with its clients, the PEO is able to negotiate better rates with their larger risk pool. The insurance company is willing to provide less expensive coverage because they’re taking on less risk. In this way, a PEO gives you access to Fortune 500 benefits at Fortune 500 prices.
Workers’ compensation insurance coverage is required for every business, with few exceptions. Workers’ comp pays out benefits to any employee who suffers an injury at work. You may have difficulty finding affordable workers’ comp, especially if you have a history of workers suffering injuries.
With a PEO, however, you can join their workers’ compensation plan. Through this plan, you don’t need to pay any deposits since the PEO has already covered it. You enter their workers’ comp plan on a pay-as-you-go basis, making it easier for you to budget for this mandatory cost.
You also get access to the PEOs experience modifier, or e-mod, rate. Insurance companies use this rate to determine the workers’ comp premiums. It’s calculated by the claims history. So the more injuries and workers’ comp claims filed by employees, the higher the premiums. A PEO likely has fewer claims in its history making this a cost-effective move for you.
You might think it’s impossible to control how and when your employees get injured at work. While there is some chance involved, you can take proactive steps to reduce the frequency and the amount of time injured employees are out of work.
Training is one of the best ways to keep employees safe at work. By showing them safe working procedures, you can decrease the injuries they receive.
But building a training program is no easy feat. Depending on your industry, there may even be federal or state compliance requirements. Tackling this becomes much easier with HR experts guiding you.
When you work with a PEO, you get access to their HR experts who can help you build a robust safety training program. This program can effectively reduce the number and severity of injuries your workers suffer.
Creating a return-to-work program is vital for your company’s medical cost control procedures. When an employee suffers an injury at work, they are entitled to receive workers’ compensation benefits that cover their medical expenses and missed income. The longer they receive those benefits, the more likely it is that your workers comp premiums will rise.
With a return-to-work program, you can provide a path for your injured employees to return to work in a part-time or limited capacity. By getting them back to work, they are no longer eligible to receive workers’ comp benefits, thus controlling your costs.
We know that engaged and satisfied employees are less likely to make mistakes that result in injuries. By creating an environment where employees feel cared for, you can achieve high levels of loyalty and employee engagement.
You do this by shedding some of the mundane and complex HR duties so you can focus on building the right culture for your business. With a PEO, they can take on those excess HR duties, giving you back the time you need to focus on employee engagement and satisfaction.
A PEO controls your medical costs by reducing your workers’ comp premiums, keeping your employees safe, and helping them get back to work faster. This comprehensive support provides your company with this and so many other benefits. And it’s cost-effective; the average ROI of a company that partners with a PEO is 27.2%. It’s time for your business to take control of your medical costs and that starts by partnering with a PEO.
Acting as the Chief Operations Officer, Brandon actively promotes an environment of creativity, collaboration, and individual ownership to empower Questco team members to deliver exceptional client experiences.