Physicians Fortress | Professional Employer Organization: Save Money and Outsource Risk

Professional Employer Organization:
Save Money and Outsource Risk

Professional Employer Organizations (PEOs) can be a terrific way for you to save money on health insurance, worker’s compensation insurance and taxes, while also outsourcing OSHA compliance issues and employee liability.

What is a PEO?

As you know only too well, small employers (with fewer than 150 employees) have very little negotiating power with health insurance or worker’s compensation carriers. A PEO can help remedy this situation. It is a company created to employ your employees and to provide benefits to them.

Basically, what this means is that your current employees would become employees of a large PEO, and they would be leased back to your office where they would work as they do normally.

Cost Savings

When your employees become employees of PEO with 20,000+ employees, they will fall under the health insurance plan of a 20,000 employee PEO that has tremendous leverage when negotiating health insurance premiums or worker’s compensation insurance.

Additionally, the PEO would also do the payroll for your office. Your office would simply cut a check to the PEO who would then pay your employees. This arrangement also ensures that payroll taxes will always be paid on time.

Compliance

Yet another major advantage of a PEO is that it will relieve you from the responsibility for HR compliance and liability issues. By having your employees become employees of the PEO, you effectively outsource both the burden and the liability of any HR/OSHA compliance issues.

So is a PEO the right choice for you? If you want to outsource the hassles and the risk of compliance issue and save on insurance, it may well be. Just make sure to check how much they charge (they tend to charge a percentage of your employee’s salaries) and choose one that caps its rates for high-earning employees. If you don’t, your savings might be more than offset by the cost.

You will find a lot more information on Professional Employer Organizations to consider in The Doctor’s Wealth Preservation Guide.