Can Outsourcing HR Help a Company Save on Health Care Costs?

To attract the top talent in any field, it is necessary for a business to have the best possible employee benefits packages. However, paying for employee’s health care can be prohibitively expensive. In order to alleviate this problem, many companies turn toward PEOs like the ones in NetPEO’s nationwide network to lower costs.

Lowering Health Care Costs Through Co-Employment

When a business enters into a relationship with a PEO, the two parties sign a co-employment agreement. Though this may seem like a scary term for some business owners, no control is lost by hiring a PEO. Instead, the business owner becomes the primary, or worksite, employer, and the PEO becomes a secondary employer with limited authority.

The Business Owner

The client business owner in a co-employment relationship retains control of their company’s direction, still has the final say in hiring and firing decisions, and is still considered the primary employer of their employees. When the co-employment relationship ends, all employees remain employed by the client business owner. Bringing in a PEO is often cheaper than hiring an in-house HR and accounting staff and can free time for the business owner to focus on crucial aspects regarding the growth of their company.

The PEO

When a PEO enters into the co-employment relationship, they are given a very clear and limited scope of authority as a co-employer. Essentially, this is a legal way for the PEO to handle sensitive information like health care information, payroll, and employee benefits packages. Again, the business owner has the final say in all decisions and the PEO does not usurp any power or authority from the client business owner.

How Co-Employment Saves Money on Health Care

In addition to lowering overall costs by being cheaper than hiring an in-house accounting and HR staff, entering into a co-employment relationship with a PEO can directly lower the cost of employee benefits packages. PEOs can divide the cost of top-tier benefits packages across the total pool of their employees—and since they often work with numerous companies simultaneously as a co-employer, their employee pool is much larger than any single business. This allows PEOs to lower the cost of health care coverage even as they provide better benefits packages than client businesses are able to provide on their own.

At NetPEO, we act as a PEO brokerage service to connect clients with a PEO that suits their needs and organizational culture. After developing a profile of your business, we match you with several PEOs from our nationwide network and you, as the business owner, are able to choose the one that best suits you.

Other Ways that Outsourcing HR Services Can Lower Health Care Costs

Using the co-employment arrangement to lower the actual cost of health care benefits is only one way that outsourcing your HR needs can lower your overall health care costs. There are a few other indirect ways that PEOs can save you money in this area, in addition to a number of non-healthcare-related ways that PEOs lower general costs.

Workers’ Compensation Claims

Employees who are injured in the course of their duty often are entitled to Workers’ Compensation. Unfortunately, this may come at great expense to their employer. PEOs employ experienced professionals who can help mitigate risks, improve company safety regulations, and handle Workers’ Compensation claims effectively and efficiently. This can help client businesses avoid preventable injuries and exorbitant health care costs.

Avoiding Lawsuits and Fines

Another indirect area in which health care costs can be lessened is by avoiding related lawsuits or fines. These can occur when businesses do not manage or pay out medical benefits or otherwise find themselves afoul of local or federal labor laws. By hiring the experts at a PEO, you can ensure that your business is compliant with all regulations and handles employee benefits professionally and fairly.

Related: What Are the Pros of PEOs for Small Business Health Insurance?

Start Saving Money Now

At NetPEO, we have helped businesses of all different sizes to save money on health care and related expenses. Small and newer businesses with between five and 100 employees are especially susceptible to rising health care costs and can especially benefit from hiring a PEO.

What’s more, we are a brokerage service that you can trust. Our industry-leading 95% client retention rate and 100% client satisfaction rate show our dedication to the welfare of client businesses. When you enter into a co-employment relationship with one of our partner PEOs, we check in with you regularly to ensure that you are satisfied with the services (and savings) that the PEO gives you.

If you are a business owner, start easing the pressure on your bank account today. Contact us by filling out the form on our contact page or by calling (678) 376-1212. We will start profiling your business as soon as possible so that we can match you with a PEO that will save you money!