- Posted by: Winter Green-Ike
- Category: Culture & Retention, Recruitment & Selection, Small and Mid-Sized Business
One of the best things that you can offer your employees as a business owner is benefits. It is important that you take care of your team to retain the talent that you worked to develop, but as a small business benefits administration can be costly to start up and maintain. Some of the challenges are:
- The prices are too high
- The prices seem to increase every year
- Shopping for better deals takes a lot of time
- Not enough participation to get a group plan
- Compliance rules keep changing, with penalties for non-compliance
- Communicating the benefits to employees is complex
- Some benefits have high startup costs
- Employee turnover creates extra administrative work
It would seem at first that smaller businesses are at a disadvantage in what they can offer their employees compared to larger businesses, but that isn’t always the case. Enter the professional employment organization (PEO) as a means to offer top tier benefits on a small business budget.
Last time we talked about how outsourcing HR can help a business survive a recession and provide other benefits besides cost-cutting. This week we wanted to share more in-depth on how businesses can be benefited by PEOs—by saving on employee benefits offerings.
PEO Employee Benefits
Employee benefits can be a big attractor towards prospective employees and increasing the general welfare of your current employees. The only catch is that benefits can be costly if you’re a small business owner with a few mid-salaried employees. Benefits offered to employees can range from life insurance, tuition reimbursement, health coverage, dental, etc. and can average to $11.50 benefits cost per hour on average wage/salaries of $24.72 per hour.
These costs can add up for the business and mitigate the number of benefits that an employer can really offer their employees. This is where PEOs can come in to reduce the cost of benefits packages for employers of 1-50 employees, by bundling your employees with their other clients you can receive the buying power of large group rates. This allows you to save large amounts on the cost of benefits while maximizing what you can end up offering your employees. The costs are more stable from year to year, and the PEO handles the shopping and negotiating for you.
The human resource burden and compliance regulations any business has to contend with are also daunting. The ever-growing list of HR acronyms (ACA, OSHA, COBRA, etc.) can be mindboggling and expensive to keep up with, but by contracting with a PEO your business can drastically reduce the amount of burden when dealing with benefits administration. Some common problems that businesses face when deciding to go with a PEO can be:
- Increasing costs
- Benefits administration
- Retirement plan administration
- Compliance & administration
PEOs offer several benefits and advantages around benefits administration available to their clients. Common things that PEOs can help small business offer their employees are:
- Health Insurance
- Limited Medical
- Life Insurance
- Dental Insurance
- Vision Care Insurance
- Long & Short term disability
- Voluntary benefits
- 401(k) plan &other retirement plans
- Section 125 plan
Overall, choosing to go with a PEO shouldn’t just be based on wanting cheaper benefits administration. Although it is one of the main benefits of partnering with a PEO, it should be appropriate for your business to decide if it is the right choice. If you are still on the fence on whether it is the right choice for you, then feel free to get in touch with one of our business development reps for a free consultation or check out some of our other blogs on PEOs.
Need help deciding what benefits are best for your business? SolveHR takes the guesswork out of choosing benefits with our experts who are trained to find a solution tailored to your business’s needs. Contact us to find out how our transactional HR services can simplify the administration work that goes into managing benefits so you can focus on what matters—growing your business!
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Written by: Matthew Muriel
Meet Matthew! Matthew is our content writer and has been working with us for a year. He enjoys working for SolveHR because it allows him to practice his copywriting and allows him to build experience in his fledgling career. Matthew studied at the University of Texas at San Antonio and earned his degree in English with a concentration in Professional Writing. He values learning new processes in the HR industry and then conveying those ideas to the company’s clients. When he isn’t working, he enjoys reading nonfiction, with his favorite book that he recently read being The Gene by Siddhartha Mukherjee. If he could go anywhere in the world he would travel across the United States and visit all of the national parks.