Tackling Costs: To PEO or Not to PEO?

To those of us in business, it’s no surprise that the Patient Protection and Affordable Care Act (aka, PPACA, Healthcare Reform or Obama care) has little to do with making healthcare affordable. In the second half of 2012 premiums increased about 15% on average, but some organizations saw double-digit increases. This trend can’t be allowed to continue because companies can’t afford it.

The traditional routes of reducing coverage, eliminating the best healthcare plans or passing along even more of the costs to employees are also unacceptable. They do a disservice to employees, who are faced with significant challenges in this economy. So, removing coverage or increasing costs only create greater stress for everyone involved. Something’s gotta give!

We think there’s a lot to be said for the public or private exchanges. While they will assuredly not decrease costs, they will allow businesses to cap their expenditures by changing the model. But these exchanges won’t be ready until 2014. So what to do in the interim? We have several ideas and will be happy to assess your particular situation if you’d like to contact us.

Is a PEO Right for Your Organization? We realize that many of you have looked for a way out of expensive benefit premiums in 2013. You’re wondering if a Professional Employer Organization (PEO) approach is the right path. Another possibility is to use a solutions provider to help manage the complexity of benefits administration. There are several ways to look at the question of whether a solutions provider or a PEO is better for your company. Three major areas to consider are: human resources, solution and cost.

• Human Resources – if your organization does not have or need a dedicated human resource administrator then a PEO provides a great advantage. The PEO has payroll/HR resources in abundance and gaining access to those resources can be a major plus. If your strategic plan or business model requires an HR administrator then a PEO may still make sense as an additional resource to do project work, or to outsource particular functions (e.g., recruiting, employee communication, etc.).
  Most organizations, though, require a dedicated human resource staff to best align their resources to the business goals. These companies should consider hiring an HR consultant or a services solutions firm that provides HR consulting. For small to mid-sized companies, getting part-time help at part-time rates results in the best of both worlds: a tailored solution for a lower price.
• Solution – a PEO has a host of platforms to deliver solutions for payroll, HRIS, time and attendance, etc. If you are non-technical, relying on the PEO to choose for you can be a positive. The negatives are that you’ll pay more for that privilege, and have less input into the process.
  Another possibility is to seek out solutions providers that have a single sign-on system, combining payroll, HR and benefits administration. And, these solutions are tailored to your needs. Some of these solutions also include: online timesheets, online leave requests, online expenses and project reporting for cost analysis.