Deciding Between a PEO and a Broker for Employee Health Benefits

You’ve put a lot of time and effort into building the perfect team to keep your business running smoothly. When it comes to crafting compensation packages, you know how important it is to select the right benefits – a great benefits package is crucial for recruiting and retaining top talent. While you’re considering your organization’s benefit offerings, it’s important to be sure you’re working with the best partner to meet your needs.

There are a lot of different companies that could help you get there, but how should you go about choosing the right one? It will help to know whether the partner you’re considering working with is a PEO, a health broker, or an organization that can offer the services and benefits of both.

What is the Difference Between a PEO and a Health Broker?

A health care broker, or, as they’re occasionally called, health benefits broker, specializes almost exclusively in selecting health insurance packages for your employees. Health brokers are experts in insurance; they’re independent licensed agents who are regulated by the government. Brokers are not beholden to a specific insurance company, so they will take all of your needs into consideration and recommend a health benefits package based on your employee demographics and your organization’s budget.  

PEO is an abbreviation for Professional Employer Organization. A PEO is a company that offers access to health insurance to employees at small to mid-size businesses for the same low rates they may have access to if they were employed at a larger business. Lower premiums aren’t the only advantage of working with a PEO partner, though. Because PEOs are able to leverage the employee count of multiple small to mid-size firms, they can offer more comprehensive benefits packages. This can translate to access to mental health services, fitness perks, and 401k options that smaller firms may not be able to otherwise afford to offer.

PEOs typically don’t always stop at health coverage, either. Many PEOs also work with businesses to provide help with a full range of HR tasks, including payroll and compliance. 

Why Should I Work with A PEO or a Health Broker?

The ACA, or the Affordable Care Act, does not mandate that a small to mid-size business with less than 50 full-time employees must offer health insurance.  In other words, if your firm has fewer than 50 full-time employees, and you cannot offer health coverage, you will not be fined or otherwise penalized.

However, the data is clear that whether a business offers health coverage as part of their benefits package goes a long way with recruitment and retention of talent. A 2018 survey revealed that 78% of employees reported being more likely to stay with an employer because of their benefits.  More specifically, another recent study has found that 56 percent of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job. Employees don’t just want the cheapest premiums, either. In fact, 58 percent of employees surveyed in the same study reported they would rather have coverage that is comprehensive, as opposed to coverage that is just affordable.

What are the Advantages of Using A PEO or a Health Broker?

Unfortunately for small to mid-size companies that value providing health care offerings, employees can get stuck with higher costs than they could if they worked for a bigger firm. This creates a unique problem for small to mid-size firms who are offering health coverage in part because they value the effect great health care has on recruitment and retention. 82 percent of employees surveyed reported that cost was the number one reason they were dissatisfied with their current health plan.

This dilemma is why many companies decide to work with a health broker or a PEO in selecting their health insurance coverage options. A health insurance broker is able to leverage their experience working with insurance companies to negotiate a rate between many different health coverage providers. And as explained above, a PEO can group employees at your company with the employees at other companies in order to achieve lower premiums for all involved. Instead of viewing your company in isolation, when working with a health insurance broker or a PEO, a health insurance company sees your company as one with greater bargaining power.

Of course, companies are able to go at it alone. Companies can decide which health insurance coverage option meets both the needs of their employees and their budgetary restrictions without help from an outside organization such as a health insurance broker or a PEO. However, working with a partner makes sense for those companies that value offering the most comprehensive coverage to their employees while keeping premiums low.

How Do I Choose Between a PEO and a Health Broker?

Both PEOs and health brokers are experts in employee benefits. With either option, you’ll streamline your benefits selection process and save your company time and energy.

If you’re looking for only health care coverage, you can choose from either a PEO or a health broker. If your organization has verified your employees are happy with their current health coverage, you may consider a PEO for help with compliance, payroll, or the outsourcing of other aspects of a typical human resources department.  If you’re looking for both health coverage selection assistance as well as assistance with a more complete range of human resources tasks, you may want to consider going with a PEO.

Do I Have to Choose Between a PEO and a Health Broker?

You don’t have to choose between a PEO and a health broker! Earlier, we described the benefits of health brokers and the benefits of PEOs; in brief: health brokers are experts in providing health insurance and negotiation amongst different providers, while PEOs can assist your organization with a wide range of human resources tasks. Some companies offer a mix of both services. For example, Benely is a health broker that can also provide PEO services through some of the top PEO services in the country. Benely offers both solutions, so you can get the most out of your partnership, and never have to settle.

Ready to learn more about taking charge of your organization’s health insurance, benefits, and human resources needs? It always helps to talk to an expert, and Benely is here to help. Contact Benely for assistance in finding the perfect coverage for your employees, help with a range of HR tasks, and more.