Not every company that could benefit from a PEO is struggling. Sometimes it's simply a matter of nobody having run the comparison yet.
The Starting Point
A 24-employee technology company in California was doing things the conventional way: health insurance through Blue Cross Blue Shield on the open market, payroll handled separately through a standard payroll company. No PEO, no master health plan — just the standard setup most companies default to without ever questioning it.
What Shopping the Master Health Plan Found
We took their open-market health insurance and put it up against several PEO companies' large-group master health plans. Every single one came in lower than what they were already paying — not marginally lower, but $102,000 lower in the first year, or roughly $4,271 per employee annually. That's a 30% to 13% swing depending on which PEO in the comparison you looked at.
Why the Administrative Fees Are Higher — and Worth It Here
It's worth being straight about this: PEO administrative fees run higher than what you'd pay a standalone payroll company, because you're getting genuine co-employment — shared risk and liability if there's ever an employment lawsuit, alongside access to the large-group health plan and workers' comp pool. In this case, even after accounting for that higher fee, the health insurance and workers' comp savings more than offset it.
This Isn't Always the Outcome — And That's the Point
I want to be direct about something: not every analysis looks this good. Sometimes the savings only offset the administrative fees exactly. Sometimes it's a small net investment rather than a savings story. But companies often still choose to move forward in those cases, because they're paying for the consolidation, the shared liability, and the HR and compliance infrastructure — not chasing a number on a spreadsheet.
What $102,000 a Year Actually Means
Run that forward five years without ever revisiting it, and it's over half a million dollars — money that could have gone toward hiring, growth, or just better margins. This particular company wasn't doing anything wrong by staying on the open market. They just hadn't compared it to the alternative.
If you haven't run this comparison for your own company recently, it costs nothing to find out where you stand — let's talk.
Suzanna Martinez, President | PEO For The CEO