Partial PEO Exit: When to Consider Dropping Your PEO’s Medical Benefits

Why would you leave the PEO’s Medical Plan?

There are two main reasons why your company may consider leaving the PEOs medical plan:

1. Cost. The customer is happy overall with their PEO service, but can find better rates for their medical insurance outside the. Usually this happens when company has been with a PEO for many years and suddenly gets a large increase. This may be due to the company’s medical claims, but it also may have nothing to do with the customer. The PEO did a poor job of managing its own rates and needs to raise them well above the usual market value raise.
2. Carrier Preference. The customer has found the PEO it wanst to work, but it with doesn’t carry the insurance they want. This is becoming less prevalent as PEOs have expanded to include many carriers in most states.

Will Your PEO Allow, Integrate and Administer a Medical Carve-Out?

So the important question to consider if wanting to do a medical carve-out is, how will your PEO support this? Some PEOs rely on medical coverage and might not even allow a carve-out. But many do, and for those PEOs you may consider asking the following questions:

• Will they integrate the new medical plan with their HRIS platform so employees can see health insurance information on their dashboard?
• Will the PEO integrate the plan into their software for open enrollment and renewals so you can have an electronic enrollment?
• Will they embrace and administer the plan as if it is their own?
• Will they procure the outside quotes, structure employee/employer contributions and provide help desk support?

Leaving the PEO just for medical is a way for some companies to save money while still relying on the PEO. PEO Exit can help you analyze the costs of different options, and help you get insurance on the open market. We will help you work with your PEO to help integrate the plan with your other PEO services.  Interested? Contact us today to schedule an appointment.