Utilizing the health insurance available through a StaffMarket member PEO is optional. If you want to offer health insurance to your employees, StaffMarket will ensure that responding PEOs include quotes for health insurance as part of their overall PEO services quote.
Understanding PEO health insurance options and pricing is often a challenge for even seasoned business managers, controllers and CPAs. However, the continually escalating cost of health insurance makes understanding options a financial imperative for all businesses.
A proper analysis of the cost for health insurance starts with a review of your coverage group. A document called a benefits census is commonly used to identify the gender, age, and coverage level (employee only, employee plus spouse, employee plus children or family) of each person in the group. This information allows bottom line comparison on pricing for both the employees and the employer.
In general all PEOs want to see that at least 50% of the persons eligible in the group are interested in enrolling in the insurance or have other coverage. Having a high participation rate prevents "adverse selection" (where only the persons with high plan usage enroll).
Most companies want to make paid or subsidized health insurance part of their employee benefit package. As a business, you need to decide what level of contribution your company will make to subsidize the monthly insurance premium. For example, many companies pay 100% of the employee only premium and 50% of the difference for employee plus spouse. Most PEOs offer flexibility in how subsidies are established and premiums are collected. Companies with low contribution rates often find associated low participation rates in their groups. Employees may think "if the company isn’t helping me out, I am not interested in enrolling". Establishing a significant contribution rate from your company often translates into higher participation rates and this in turn provides superior plan alternatives and pricing.
Starting with the network
Ultimately determining your health insurance costs should be based on how you and your employees use it. For many companies it makes sense to start by reviewing the health networks available in your area. If lots of doctors and hospitals in your area are members of a particular network, then insurance carriers using that network may offer the best options for your company. For companies with employees in one primary area, placing a few calls to doctors in your area may give you insight into the best networks in your area. If you identify a particularly strong network in your area, StaffMarket will make sure each PEO knows of your preference for insurance companies using that network. Since many insurance companies often have more attractive coverage provisions for "in-network" versus "out-of-network", it makes sense to review insurance options for networks in your area.
Health plan costs can vary based on the type of plan you request. Most StaffMarket member PEOs can quote prices for HMO (Health Maintenance Organization), PPO (Preferred Provider Organization) and POS (Point of Services) plan types. StaffMarket recommends that employers review several plan types.
Each PEOs health insurance offering will have prices identified for:
Putting it all together
Once your StaffMarket RFP has resulted in PEO quotes for health insurance, it is time to lay them "side-by-side" for comparison. To determine the overall cost of each plan for your company, the quoted premium for each type of coverage is multiplied by the number of persons enrolling in the coverage type (employee only, employee plus spouse, employee plus children or family) and summed. This will be the total costs for coverage for your group.
StaffMarket will be glad to assist your company obtain and evaluate PEO quotes that include health insurance coverage for your company.For an example PEO health insurance quote analysis for a six person company… click here.