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How to Offer Benefits as a Small Business

While we can all agree that there are many benefits to working at a small business (avoiding bureaucracy, trying new things, knowing everyone in your company), the most important benefits are the benefits benefits. I’m talking health insurance. Retirement plans. Paid leave options. 

So how can you, a small-business owner, provide these kinds of benefits and still have the time and money to run your business? And maybe more to the point: how can you provide benefits that are actually competitive with what your team would get at a much larger company ?

The easiest way is to work with a PEO I know, I know. I’m biased. But hear me out.

Just the Facts: Your Employees Want (Good) Benefits

Before I get to how a PEO can provide top-notch benefits to your team, let’s take a minute to review the importance of benefits.

Unemployment in the US is down to 4.1 percent, which is the lowest it’s been in more than a decade. Translation: almost everyone who wants a job right now has one. In this environment, workers are able to be pickier about the jobs they accept, and they’re prioritizing jobs that offer good benefits:

Other research suggests that employees who are satisfied with their benefits are twice as satisfied with their work overall, which means they’re less likely to leave for a bigger employer with better perks.  

The takeaway: benefits are important to employees, but health insurance is especially important. That’s not surprising, considering that the cost of purchasing individual health insurance through the Healthcare.gov exchange increased 25 percent in 2017 and is expected to continue to rise.

How to Set Up Health Insurance as a Small Business

As a business owner, you probably know that the SHOP marketplace offers health insurance options specifically designed for small employers. You may also know that, while it may have seemed promising once upon a time, the exchange is pretty limited in its current state.

This leaves you with  two major alternatives:: health insurance brokers and PEOs.

Brokers are insurance experts who are familiar with the products available and can help you navigate the market and choose coverage that makes sense for your employees. They’re typically compensated by insurance companies directly via commissions built into premium prices. (Translation: you don’t have to pay extra for their services.)

Pros of working with a broker include…

  • Getting expert guidance on which insurance benefits to choose.
  • Saving time on shopping and comparing plans.

The potential downside of using an insurance broker is that insurance is the only type of benefit they can help you with. So if you’re also hoping to provide, say, a retirement plan you’ll have to look elsewhere. 

That’s one reason I think PEOs are a small-business owner’s best option. PEOs not only help small businesses offer health insurance and retirement benefits to employees, they also handle other HR-related tasks, including employee on-boarding, payroll administration, compliance and risk management, and more.

How to Offer Employee Benefits with a PEO

So while both insurance brokers and PEOs can take the legwork of finding benefits off your plate (researching options, filling out paperwork, meeting deadlines, determining eligibility, etc.), a PEO offers you a team of experts to do much more than than benefits.

Another major benefit of working with a PEO is that you get access to the negotiating and buying power typically held by larger companies. 

Instead of doing hours of research on subject outside your area of expertise, working with a PEO lets you choose from a menu of options of what to offer your employees, including things like…

  • Health insurance benefits. Bonus: your workers will be able to choose from several plans (HMOs, PPOs, HSAs) so that they find coverage that suits their individual needs.
  • Other types of insurance. Disability, life, dental, vision, and more.
  • Retirement plans! Plus, your PEO will take on the fiduciary responsibility associated with managing retirement accounts, meaning you’re exposed to less risk.

What’s even more compelling to many business owners, though, is that a PEO also handles the administration of the benefits you offer, meaning you don’t have to become an HR expert just to make sure your employees can enjoy the protections they want. Among the services a PEO can provide to you, the business owner, are…

  • Liability management (including workers’ comp and more).
  • HR administration (on-boarding, unemployment administration, etc.).
  • Strategic HR consulting for bigger-picture personnel decisions.

The Affordable Way to Offer Small Business Employee Benefits

The Takeaway: Employees want benefits from their employers. Low unemployment means employees are more likely to find a new job if they don’t like the benefits at their current job. Small businesses can compete with big-company benefits by working with a PEO, which pools all of its clients’ thousands of employees for better buying and negotiating power with benefits providers.

Intrigued? We’re happy to help you figure out whether working with a PEO might make sense for your business.   Give us a shout and we’ll be in touch!