What a professional employer organization can do for your business, Pt. 5: benefits managementArticle added by Eric Snethkamp on April 18, 2011

Eric Snethkamp

Austin , TX

Joined: November 28, 2005

My Company

Expert PEO

It’s common for business owners to mistakenly believe they can’t afford to offer benefits. But a good PEO can work with an employer to show the business ways to include these services at very little cost, or at a cost savings over what their current benefits costs are as an employer.

In part one of this six-part series of articles, we discussed the basics of a professional employer organization and its main benefits. Part two discussed payroll and tax administration. Part three discussed human resources services. Part four discussed safety and risk management services, and in this installment, we will cover the benefits management services offered by a good PEO.

Over the years, offering employee benefits increasingly has become a necessity for businesses looking to attract and keep quality employees. And lately offering these benefits has grown more costly and difficult.

The costs are found not only in providing the benefits themselves but in the time and effort spent in sourcing, administering and understanding the details associated with each benefit. Staying up to date with compliance issues can also wreak havoc on a company’s profitability. The liability associated with making mistakes with employee benefits can turn what was once a good hearted gesture into a real nightmare. This is far from the ideal situation for most small to medium size businesses and their HR personnel.

Enter the professional employer organization. The title speaks volumes for a good PEO: a staff of professionals each trained and experienced in a specific area associated with employer issues, all dedicated to making employing easy.

Here is a list of some of the employee benefits that can be handled by a good PEO in addition to those listed in previous articles in this series:
  • All types of health insurance

  • COBRA administration

  • Benefit administration

  • Payroll deductions

  • Invoice reconciliation

  • Dental and vision insurance

  • Life insurance

  • 401(k)

  • Section 125 plans

  • Flex spending accounts

  • Accidental death and dismemberment insurance

  • Long term and short term disability
It’s common for business owners to mistakenly believe they can’t afford to offer benefits. But a good PEO can work with an employer to show the business ways to include these services at very little cost, or at a cost savings over what they currently pay.
Offering health insurance to your employees may be the most essential benefit associated with attracting and keeping quality people. A good PEO can come up with a wide variety of options for an employer to offer as part of a benefits package. From low cost limited plans to full coverage plans, there are many ways to combine different types of insurance at different cost levels to fit just about any budget.

It is also possible for an employer to pass along a portion or all of the cost of a limited health insurance plan to the employee if that is what works. A good PEO has built relationships with a variety of health insurance providers and has a great deal of working knowledge resulting in customized plans to fit a variety of situations. Plus, the confusion of health care reform, new rules, new penalties and the ever-changing details associated with health insurance administration can make even experienced HR personnel more than a bit anxious.

Because a good PEO maintains thousands of employees for their clients, it is necessary for the PEO to employ a staff of professionals whose job it is to fully understand every changing detail associated with health care reform, health insurance and benefits administration and management. This is no small feat even for the PEO, let alone a small to medium size business.

401(k)s are also at the top of the list of desirable employee benefits. PEOs can offer your staff retirement plans that rival those of the biggest companies and at little or no cost to the business owner. The ability to compete with larger companies for the best employees makes the PEO partnership even more valuable. Having the retirement plan administered by the PEO and not your staff also saves you time and money contributing to your profitability.

Looking at the list of employee benefits above, it should become evident that a good PEO offers a broad range of quality benefits. It should also become evident that the time, effort and level of specialized knowledge necessary to administer these benefits can become time consuming and costly to most businesses. Benefits administration frequently occupies the majority of HR personnel time. Outsourcing the administration of benefits not only allows your business to focus on what you do well — run your business — it protects you from costly mistakes and a frustrated HR staff.
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