You need to take care of your team: the employees who are at the heart of your business and instrumental to its ongoing success. It’s the right thing to do for them – and it benefits your company as you attract and retain top talent.

Providing quality health insurance benefits is a big part of ensuring this happens … but how can you, as a small to mid-sized business owner, access competitive health plans that meet your employees’ needs?

There are two solutions that typically work for many businesses: a professional employer organization (PEO) or an insurance broker. Here’s a look at some of the differences between the two, to help you make the right choice:

Choosing Between a PEO and an Insurance Broker

About PEOs

As a co-employer, a PEO takes care of benefits and taxes for your employees. Because PEOs pool their client employees together, they can use this purchasing power to obtain higher quality with lower premiums. You may have fewer plans from which to choose, but the more cost-effective premiums can amount to significant savings, making a PEO partnership well worth the investment.

• The advantages of working with a PEO include access to higher quality healthcare plans typically reserved for larger companies, along with more affordable premiums. Also, you can use a PEO for additional HR services including payroll, compliance, risk management, and more.
• The disadvantages of a PEO partnership may include limited coverage options. Brokers, on the other hand, can typically offer plans from virtually every insurer. You also have recurring fees when working with a PEO, paying either a percentage of your payroll or a flat fee per employee every month.

About Insurance Brokers

A PEO is an HR firm. An insurance broker is licensed by the state where your business is located and shops for health insurance on your company’s behalf. A broker will recommend various plans to you, then you enroll in the one that works best for you.

• Brokers don’t realize any earnings until their clients sign contracts with insurers. This commission structure means they have a strong incentive to find the best plan possible for you. Additional advantages of an insurance broker partnership include lower service costs, a greater variety of insurance options, and the fact that you only interact with a broker until you enroll in a plan (if this is an option you prefer).
• Possible cons of using an insurance broker include lower-quality insurance, the chance of being disappointed with deductibles, copays, and out-of-pocket limits attached to plans.

Whether or not you’ve made a decision, Key HR is here to help as you achieve the best health insurance strategy for your growing business. Tap into our network of preferred provider companies for specialists in insurance and employee benefits, as well as virtually every area of talent management. We offer solutions for companies at all stages of development, from start-ups to fully mature. Contact us today to learn more.