PEOs Kick You Off if One Employee Overutilizes Insurance

A business can get kicked off of their PEO or unable to use a PEO if even a single employee “overutilizes” insurance benefits. When it comes to health insurance this can mean one person has a severe illness or medical condition.

Why is that?

Since PEOs are an underwriting business that pools together multiple businesses to negotiate better rates from insurance carriers, a business within a pool can effectively raise the premiums of everyone else. PEOs make money by marking up insurance premiums so if premiums go up, they lose margin proportionally.

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