The Benefits of A PEO in Addressing Health Care Reform

Most businesses owners view health care reform as just another headache from Washington they didn’t need. They are looking for solutions to ease this added pain. For those who were not already considering outsourcing their payroll, benefits, compliance and other employee-related and human resources needs to a Professional Employer Organization (PEO), the reality of healthcare reform has them gravitating toward  this comprehensive HR resource. They recognize the broader benefits of a PEO relationship and also how a PEO can help them manage their compliance with this latest legislation.

PEOs can be a tremendous resource in helping businesses with the due diligence and compliance aspect of the new legislation. Compliance with complex tax-related changes, changes pertaining to certain health care plans such as health savings accounts (HSAs), and associated tax reporting is assumed by the PEO and is one less worry for business owners. Additionally, through their health care offerings, PEOs give businesses access to a menu of competitive health insurance options for their employees, including the most cost-effective consumer-driven plans such as HSAs . Additionally, and in view of the higher healthcare insurance burden now placed on businesses, the PEO’s wellness programs and other related value-added benefits such as discounts to health and fitness clubs, which help contain healthcare costs, are another strong incentive. This, in turn, helps businesses attract and retain the best employees.

A Mercer LLC survey found that small employers (i.e., those with between 10 and 499 employees) experienced an average 9.9% increase in health care plan costs compared with 3.6% increase in plans offered by larger employers. One of the primary reasons cited for the differential was compliance with the new health care reform legislation, which is impacting smaller employers’ more than larger employers. When served by a PEO, the playing field becomes much more level for small businesses.


On December 16th, 2011, posted in: PEO Knowledgebase, Small Business Tips by
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