How to Evaluate a PEO: Medical Plan & Rate Details
Choosing the right Professional Employer Organization (PEO) is essential for small businesses seeking to streamline HR, payroll, and compliance. One of the first factors you should evaluate is the PEO’s medical plan and rate structure. Here’s a quick breakdown of the key elements to look out for in your PEO evaluation.
1. What is the PEO’s medical plan renewal date?
PEOs typically offer group medical plans, which renew at certain points during the year. Make sure you know the exact renewal date so you can plan ahead. This will help you avoid any surprises regarding costs or coverage changes.
2. Will you receive a 12-month rate lock?
Rate stability is crucial. A good PEO will offer you a 12-month rate lock, ensuring that your premiums will not increase during the contract period. This provides budget predictability and peace of mind.
3. Can the PEO cap rate increases (e.g., no more than 9%) in your contract?
Ensure the PEO offers an agreement that caps rate increases. Having this provision ensures that your premiums won’t exceed a certain threshold. For instance, if your PEO contract includes a cap of 9%, the rate will never increase by more than 9% during the contract period.
These medical plan and rate details are fundamental when choosing a PEO, as they directly impact your business’s healthcare costs. Don’t forget to evaluate them thoroughly before committing.
Pro Tip:
There are over 600 PEOs nationwide. Work with a PEO Broker (like us!) to get side-by-side comparisons and unbiased guidance—at no cost to your business.
Download the Full PEO Evaluation Checklist
Want to make sure you’re covering all your bases? Download our full PEO Evaluation Checklist today and make your decision with confidence!