A PEO (professional employer organization) is a company that offers comprehensive HR outsourcing solutions to small and medium-sized businesses. Essentially, a PEO provides services like an extension of the company’s HR department.
PEOs cover a wide range of functions, including payroll services and processing, HR expertise, and risk mitigation. One of the most critical functions is employee benefits administration. In this article, we'll take a closer look at the direct and indirect ways PEO employee benefits administration can help a business.
Administering employee benefits can be complicated and time-consuming. Nevertheless, it must be done well.
According to research by the International Association of Certified Professional Accountants (AICPA), 80% of candidates would choose a job with benefits over the same job without benefits but with a 30% higher salary.
This statistic speaks to the value of benefits administration, which goes far beyond getting the paperwork right. Mistakes in benefits administration can cause problems with compliance and employee engagement. Just as importantly, excellent service in this area can reverberate through your entire organization.
Benefits administration includes managing plan selection, setting up payroll deductions, helping employees through the open enrollment process, and offering compliance guidance. A PEO can align benefit offerings with employees’ needs while relieving your team of tedious administrative tasks and data errors. A fully integrated benefits solution generally offers:
Let's examine the advantages a business can gain from using a PEO for benefits administration.
A PEO can help employees in obtaining high-quality, cost-effective health coverage by negotiating competitive rates with insurance providers. PEOs can achieve economies of scale, benefits that are generally cost effective and provide access to broader coverage options. Employers also benefit from streamlined benefits administration processes, reducing administrative burdens and freeing up resources to focus on core business activities.
A small company that can offer big-company benefits as well as first-rate benefits administration has an edge in recruiting. When a highly coveted recruit talks to your employees, what do you want them to hear? That the health benefits are okay, but the open enrollment period is a nightmare because deadlines are not spelled out and it's hard to get information on the plans? Of course not.
A PEO can help businesses attract top-tier candidates with access to premium benefits. It can also provide businesses with applicant tracking tools to help simplify the recruiting process more efficiently and access to a background check vendor. But it can't stop there.
Those top-tier candidates will compare offers based not just on the quality of the benefits, but also on the administration of those benefits. Both sides of that coin must shine to build employee wellness, satisfaction and loyalty. In today's job market, we know that caring for employees first and foremost is a long-term investment strategy that will pay off.
PEOs typically stay on top of employment-related rules and requirements. Their best practice expertise helps your business comply and minimizes certain risks, which can be costly for both employers and employees. Additionally, PEOs often provide guidance on best practices for HR policies and procedures, helping to reduce the likelihood of costly errors or oversights. Most PEOs provide experts who are able to help answer employee questions and concerns through online portals, allowing administrators and managers to better focus on day-to-day business operations.
In this day and age, everyone is concerned about data protection in the context of business administration. A PEO is generally committed to delivering customer service and meeting security and privacy expectations by focusing on ensuring compliance and regulatory requirements. PEOs often invest in state-of-the-art technology infrastructure and enterprise wide risk management team to help govern the framework around sensitive employee data.
Imagine a scenario in which an employee, Karah, has just been informed that her small tech startup has engaged with a PEO. Let's look at the ways she eventually may begin to see positive changes in her work life.
Whether you're a small business just starting out or a medium-sized business looking to scale, when it comes to PEO employee benefits administration, TriNet knows that your employees deserve a notable benefits experience. As a business owner or administrator, you also deserve to find ways to make payroll processing, HR operations, and benefits administration as efficient, and cost-effective as possible. That way, you can focus on more important matters — like business growth.
Interested in finding out how your company and its employees could benefit from an expert PEO? Contact a TriNet representative today.
© 2024 TriNet Group, Inc. All rights reserved. This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines.
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