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Navigating Health Care Reform with a PEO

  • Health Care
  • Article
  • 6 min. Read
  • Last Updated: 11/05/2013

PEO and Health Care Reform
A professional employer organization (PEO) can make it easier for companies to offer employee benefits and competitive rates, and to comply with related regulations.

Table of Contents

More than ever before companies are outsourcing in order to cut costs and improve efficiency, and it’s not just in production areas, but also in human resources and payroll. There are many reasons for small and mid-sized businesses to use a professional employer organization (PEO) to handle some tasks associated with human resource (HR) management, employee benefits administration, compliance assistance with state and federal laws and regulations, and more. In today’s climate of health care reform it is crucial to analyze whether a PEO may be right for your company in order to remain compliant with new regulations.

A PEO is a co-employment model where the workforce of a small or mid-sized business becomes part of a larger benefits and administrative employment group. A PEO allows employees of many companies to adopt large group benefit plans in order to negotiate better rates for all of its members. PEOs specialize in HR management and offer businesses a wide variety of services, including support with employee benefits administration, payroll processing, tax filing, and risk management, which are all tasks that may be affected by your company’s compliance with applicable laws and regulations. 

In this co-employment arrangement, business owners manage their workforce and the day-to-day operations of their business while the PEO takes over some of the HR and payroll-related responsibilities. This in turn allows business owners to run their businesses while also providing the very best benefits to their employees. Under this model, there are many advantages, the most important of which is freeing management resources so that they can be focused on employment productivity. A PEO doesn’t just potentially save you money, but it may also indirectly provide you with more resources to enhance overall profitability.

By aligning with a PEO, a business owner may be able to: 

  • Gain access to the PEOs broader benefit options, including medical, dental, vision, life, disability, and workers’ compensation insurance; 401(k) plans; and consumer-directed health plans such as flexible spending accounts (FSAs) and health savings accounts (HSAs).
  • Establish support systems without having to invest in specialized personnel or additional technology.
  • Get help with all facets of the “employment life cycle,” from hiring and firing employees to job descriptions, employee handbooks, employee retention tools and strategies.
  • Contact a trained HR representative for assistance, access employee and management training, speak with safety and risk professionals, and obtain state and federal tax filing services, payroll processing, and other employee-related services (e.g., employee screening and compensation surveys). 

PEOs can also help you navigate the complexities of health care reform. Without a PEO, businesses may be exposed to penalties for failing to provide affordable and adequate coverage for their employees. In addition, government marketplaces will only be providing medical and stand-alone dental benefits; those companies wanting a full suite of benefit plans will either have to find other independent solutions, or enjoy access to the benefit plans offered by a PEO.

While small businesses sometimes find it difficult to offer their employees multiple benefits options, PEOs help solve this problem by making it easier to provide benefits. By offering benefit plans, small businesses may become better able to attract high-caliber employees and improve employee retention.

In conclusion, the National Association of Professional Employer Organizations reported, “PEOs provide enhanced access to employee benefits for 2-3 million working Americans. This number is growing at a phenomenal rate every year because of the savings and benefits that a PEO can provide to small businesses.” If you’re looking to broaden your benefits options while lowering employee benefits costs or to simply outsource many of your HR tasks, than a PEO may be right for you and your business.

Professional employer organization (PEO) services are sold and provided by Paychex Business Solutions, LLC (PBS) and its affiliates, which are registered and licensed to sell and provide PEO services, including in Florida. PBS FL license numbers are Paychex Business Solutions, LLC, GL7, PBS of Central Florida, LLC, GM14, PBS of America, LLC, GM46, Paychex PEO I, LLC, GM455, Paychex PEO II, LLC, GM456, Paychex PEO III, LLC, GL193, Paychex PEO IV, LLC, GM519 and Paychex PEO V, LLC, GM 522.


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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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