One of the benefits of a PEO for small businesses in the U.S. is access to better healthcare plans. Since the PEO is an employer of record, they have many employees which improves their buying power when negotiating plans. A small business on their own does not have many employees to negotiate better rates.
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Peos Are an Underwriting Business
Since PEOs are the employer of record, they shoulder the insurance risk for health care, workers compensation, and unemployment. They must be mindful of this exposure as they grow and control for it with risk management.
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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.