The rising healthcare costs make it harder and harder for smaller companies to offer high-quality health benefits to their employees. Meanwhile, the absence of such benefits can lead to retention issues, wellness problems, low productivity, and missed recruitment opportunities.
By partnering with a Professional Employer Organization (PEO), companies can solve benefits-related issues and improve their bottom line. Besides handling payroll processing, retirement planning, safety training, payroll tax filing, and onboarding, a PEO saves your company time and money.
Let's look at how taking advantage of PEO healthcare options can streamline business operations and retain top talent.
1. Incurs Savings through Economies of Scale
An overwhelming reason small businesses can't provide excellent health benefits to their employees is high premium costs. Since budgets are often limited, business owners usually have to choose between options instead of arranging a comprehensive package.
That doesn't just make the workforce unhappy. It also prevents top talent from choosing such a company. Six out of ten people say that benefits are a major factor when considering whether to accept a job offer.
Professional employer organizations use economies of scale to provide better benefits to their clients, acting as the employer of record for all of their client companies. It gives them better rate negotiation leverage by creating a large pool of employees who need benefits.
A PEO uses this large group as leverage to negotiate better offers from insurance companies. Eventually, all participants gain access to high-quality benefits at a reasonable price.
2. Helps Companies Provide More Comprehensive Coverage
Comprehensive health coverage is highly important for employees. Besides giving them traditional health benefits, you gain an opportunity to explore employee assistance programs (EAP) and wellness plans.
Focusing on wellness can benefit the company's productivity, employee morale, and workplace environment. Employees that gain access to wellness benefits tend to use fewer sick days, feel more engaged, and achieve goals faster. Additionally, workers who take advantage of wellness options are 40% less likely to experience burnout.
Meanwhile, health benefits are only a part of the benefits package. By cutting costs on healthcare offerings, companies can look toward other options, including recognition programs and voluntary benefits.
Expanding the benefits package increases your chances to retain and attract talent without hurting the HR budget.
3. Allows Coverage Tailored to Employee Needs
Usually, companies have a diverse workforce with different needs. Some have many aging workers. Others have employees who constantly work in a stressful environment. By offering employees the health benefits that suit them best, you demonstrate your knowledge of their needs. For example:
- Baby boomers prefer robust retirement plans.
- Gen X workers prefer an excellent work-life balance and a competitive 401 (k) plan.
- Millennials want work flexibility and other perks in the workplace.
- Gen Z workers may want education opportunities and tuition reimbursement.
A tailored benefits package improves workplace morale and turns employees into your brand ambassadors for recruitment purposes. Meanwhile, well-tailored benefits can streamline productivity and improve employee engagement.
By partnering with a PEO, you can access a much wider choice of benefits options than before. It allows you to tailor benefits to the specific needs of your employees while keeping expenses at a reasonable level.
4. Provides Supplemental Coverage
Besides the standard health insurance, many employees expect companies to provide additional options, such as vision and dental coverage. It is usually impossible for smaller businesses, as they can't afford such premiums.
Since professional employer organizations leverage economies of scale, they provide clients with opportunities to offer these additional coverages. A high-quality dental plan can become a deciding factor for a person choosing between two employers.
5. Manages Benefits Administration for You
Benefits administration is a time-consuming administrative task. Small business owners say they spend 1.6 hours per week on benefits administration and up to 8 hours during open enrollment periods.
If you have a small HR department, it can't afford to spend that much time dealing with benefits because it takes the focus away from critical decision-making processes.
If you partner with a PEO, the company takes over all benefits administration tasks, including enrollment. With their help, your HR department gains valuable time to exercise retention tactics, streamline recruitment, and improve the workplace environment.
Support Your Staff By Partnering with a PEO
A professional employer organization doesn't just help you provide high-quality health benefits to your employees. It can help minimize administrative burdens, cut HR costs, expand your benefits package, and take over payroll taxes.
Amidst the rising healthcare costs and high turnover rates, partnering with this type of outsourcing partner can put your company ahead of the competition.