FAQ: Should you consider a Professional Employer Organization (PEO)?

Many small businesses are joining PEO’s so they can provide a menu of affordable health plans to their employees and outsource the complex administrative tasks associated with them.

PEO’s generally charge a flat monthly fee per employee or paycheck, or they take a percentage of each client's total payroll. If a PEO does its job well, it should generate enough savings for their clients to offset those fees. PEO’s can also save small companies the cost of hiring an in-house health-and-benefits department.

The potential downside here, though, is that the rate your PEO gets for health insurance will depend on the overall demographics and health status of all the employees it is insuring.

But PEO’s are increasing in popularity now because many small businesses simply need help addressing Obamacare.