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When it comes to the beneficial services professional employer organizations (PEO) can offer your small and medium-sized business, outsourcing tasks like payroll management, tax reporting, and employee relations naturally comes to mind.

PEOs are also offering business owners an insurance lifeline by providing cost-effective and comprehensive healthcare coverage solutions through the offering of Master Health Plans.

The rising popularity of Master Health Plans, which are an alternative to traditional employer-based health plans, comes at a time when Small Business Trends reports that 79 percent of small business owners worry about healthcare costs.Blue Ring Binder with Inscription Budget Planning on Background of Working Table with Office Supplies and Laptop. Budget Planning Business Concept on Blurred Background. 3D Render.

That survey by Enterprise Bank & Trust came before the COVID-19 pandemic which has put a financial strain on businesses of all sizes, but especially hit small and medium-size businesses hard.

Rising Healthcare Costs Put the Squeeze on Smaller Businesses

There was a time when most American businesses could comfortably offer healthcare plans for their employees, but skyrocketing insurance costs have left some unable to offer coverage. In fact, the Bureau of Labor Statistics estimated in 2018 that 43 percent of employees at companies with 100 or less workers were not offered company-sponsored healthcare.

Under the federal Affordable Care Act, businesses with 50 or more employees can face a financial penalty if they do not offer employees healthcare insurance. Businesses with 50 or fewer full-time employees, defined as somebody who works 30 or more hours per week, do not have to pay a penalty if they do not offer workers company-sponsored insurance plans.

Employers and Insurance Carriers Embracing PEO Master Health Plans

When small and medium-sized businesses seek insurance for their employees on their own they often find that their lack of negotiating power results in higher premiums. Those premiums can also grow exponentially over time if a small company has a few high-cost cases.

Enter PEOs such as Employer Flexible which can offer small and medium-sized businesses competitive healthcare coverage for their employees by pooling resources across multiple clients.

PEO business has blossomed just in the last 25 years, so Master Health Plans are much newer than traditional employer-based plans, but insurance carriers are warming to the trend.

Compass Consulting Group said in a 2018 report that “insurers remain bullish on PEO potential to be a profitable alternative to traditional distribution channels, and several insurers that have not traditionally played in the PEO space are looking for opportunities to learn more.”

Benefits of Choosing a Master Health Plan

The benefits to choosing your company’s healthcare coverage through a Master Health Plan pay off in several different ways, including:

  • Lower Rates: PEOs take advantage of an economies of scale, pooling all their employees into one main group, to offer lower annual rates for health insurance premiums compared to small businesses seeking plans on their own.
  • Better Benefits: PEO Master Health Plans often offer benefits that normally are only available to larger companies.
  • Reduce Unexpected Premium Increases: PEO Master Health Plans can offer more stable rates and keep premium increases lower by taking advantage of a larger employee pool.
  • Time Savings: Your company saves the time it would take to research, choose, and administer its own health plan.
  • Recruitment and Retention: Next to salary, health insurance benefits can be a significant factor in employee recruitment and retention, especially in the age of COVID-19.

Employer Flexible can deliver exceptional employee health plans from top-tier providers at competitive prices for Texas small and mid-size businesses. As a bonus, Employer Flexible serves as your full benefits department, allowing you to cut on-site HR costs and devote more resources to operating your business.

Contact Employer Flexible today to find out how a Master Health Plan can benefit your company.


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