Over the past several years, healthcare costs have been rising consistently. In 2023, the health benefits costs are expected to increase by 5.4% (compared to a 3.2% hike in 2022). Instead of increasing gradually, these costs tend to rise at steep jumps and impact the HR budget significantly.
Adjusting to the increasing healthcare costs can be problematic, especially for small businesses. However, medium-sized companies and enterprises are also feeling the effect. Regardless of size, companies constantly look for ways to save on employee health benefits.
Let's take a closer look at the available options.
Healthcare costs are constantly increasing for a variety of reasons, including:
As the demand for health services rises, so does the supply. As healthcare providers inflate the price tags, insurance companies increase costs accordingly.
With the current trend of an aging population and the increase of chronic diseases, healthcare costs will likely continue rising for at least ten more years.
Rising healthcare costs increase health insurance premiums, rendering high-quality benefits inaccessible to small businesses. SMBs often have to choose between better health benefits and other advantages for their employees, such as 401 (k) plans or voluntary benefits.
That makes it harder for smaller companies to become employers of choice and retain top talent. Professional Employer Organizations (PEOs) can help stabilize healthcare costs for their clients. By becoming a co-employer, a PEO groups all client companies in one large pool and takes advantage of group healthcare plans. Many clients and their employees allow a PEO to negotiate better rates with insurance companies.
Partnering with a PEO helps businesses take advantage of high-level premiums at lower prices. That is a significant benefit for companies with small budgets because the rising healthcare costs affect them at a much slower rate.
Meanwhile, PEOs constantly look for new ways to help their clients take advantage of lower premiums. They negotiate with insurance providers and explore all available options.
Professional employer organizations focus on providing their client companies access to the most advanced benefits at reasonable prices. By partnering with a PEO, you have the opportunity to offer existing employees and top-talent candidates high-quality healthcare, dental, and vision coverage at an affordable rate.
Enhanced benefits can help improve employee satisfaction, reduce churn, streamline productivity, and boost workplace morale. All these can contribute to improving the company's bottom line.
In addition to arranging accessible benefits, a PEO can take care of a wide variety of administrative tasks, including:
Besides saving your company money, a PEO can take the administrative burden off your internal HR team's shoulders and allow them to focus on pressing HR tasks. Out of all HR outsourcing options, a PEO is the only one that provides access to better benefits while leaving you complete control over HR decisions.
While healthcare costs aren't likely to stop increasing in the nearest future, they shouldn't prevent you from offering high-quality benefits to your employees.
Working with a PEO allows you to provide health benefits to your workforce without hurting your budget. Access to lower-cost premiums arranged by the PEO lets you gradually adjust to rising healthcare costs.