PEO: A Fit for You?

PEO: A Fit for You?

Presented by: eESI

Ken Barge

PEO: A Fit for You?

Agenda

• What is a PEO?

• Interesting statistics!!

• PEOs - Solution to business administration needs

• Are all PEOs created the same?

• PEO Friend or Foe?

• Even PEOs love Healthcare Reform

• How do they get those cheap insurance rates?

• PEOs focus on the future

• Question - Is he finally finished?

PEO: A Fit for You?

Who Am I?

• Professional Employer Organizations

• Former Property and Casualty Agent

• Current Life and Health Agent

• Former Worker’s Compensation Adjuster

• Bachelors HR Management

• Masters HR Development

• Teacher / Speaker / Internet Radio Show

PEO: A Fit for You?

What is a PEO?

Professional Employer Organizations

• Enable clients to cost-effectively outsource

– Management of human resources

– Worker’s compensation / Risk management

– Employee benefits

– Payroll administration

• Clients focus on their core competencies

– Drive innovation, productivity and profits

PEO: A Fit for You?

What is a PEO?

Co-Employment

• Contractual Agreement (CSA)

• Sharing of Employment Responsibilities:

– Between PEO / Client / Employee

– Employer of Record

– Grouping of these employment responsibilities

• Administration, Efficiencies and Innovation

PEO: A Fit for You?

PEO: A Fit for You?

What is a PEO?

• License requirements established by each state• Regulated by the Department of Insurance• SUI Account

– Utilization of PEO experience modifier• Some states do require client modifier

• Worker’s Compensation– Non – Monopolistic State

• Private insurers• Self-insurance allowed• Texas is the “Lone Star” state; allows opting out of the

system

PEO: A Fit for You?

What is a PEO?

• Relatively new industry ~ 30 years

• Over 700 PEOs

• 78 Billion dollars in revenue

• 40 Accredited through ESAC

• Average client size ~ 19 employees

• Average wages $34,000

• 2-3 million employed under a PEO relationship

PEO: A Fit for You?

PEO: A Fit for You?

PEO: A Fit for You?

PEO: A Fit for You?

PEOs – Solutions to Business Administration Needs

PEO: A Fit for You?

PEOs - Solutions to Business Administration Needs

• HR infrastructure and technologies

• Mitigate employment risk– Sharing of most employment

liabilities

• Compliance of regulations and future challenges

• Bundle of products and services– Increase profitability

• Ultimately reducing cost and focusing on your business– Maximize productivity

What have we failed to say?

• Enhance benefit offerings

PEO: A Fit for You?

Are All PEOs Created the Same?

PEO: A Fit for You?

Are All PEOs Created the Same?

• All-Inclusive vs Carve out

• National vs Regional

• Accredited vs Non-Accredited

• Licensed vs Non-Licensed

• Large vs Small

• How do they manage risk?

PEO: A Fit for You?

PEO: A Fit for You?

• Leadership and Culture

– Disney Michael Eisner vs Robert Iger

– Smaller vs Larger agencies

• Insurance agents and brokerage firms

– Partnering with PEO opportunities

• Larger regional insurance companies– Partnering with PEOs

– Buying PEOs

• Why? Because it extends products and services within their business model and adds value to current relationships

PEO: A Fit for You?

PEO: A Fit for You?

Questions

• Whose client is it?

• Will I lose control?

• Is there revenue sharing?

• Can I keep my current benefits?

• Who holds the AOR?

• Who services the account?

• Is the PEO accredited?

• What are the competitive advantages of your PEO?

PEO: A Fit for You?

Even PEOs Love Health Care Reform

PEO: A Fit for You?

Even PEOs Love Health Care Reform

Impact on PEOs

• How are they complying with the Act?– Small business tax credits

– Grandfathered plans

– Altered plans to comply with current regulations

• Questions– Management carve outs

– Individual mandates

– Exchanges

– Pre – Existing Conditions

– W-2 Reporting

– MLR

PEO: A Fit for You?

How Do They Get Those Cheap Insurance Rates?

• Multi-employer plans

– Spread the risk

– Underwriting guidelines

– Design own plans

– Uncertain how Healthcare Reform will impact

• Consumer driven health plans

• HRA/HSA/ GAP products/Supplemental insurance

• Strategic alliances with brokers

PEO: A Fit for You?

PEOs Focus on the Future

• Change

• Focus on service and strategy

• Growth and increase in competition

• Mergers and acquisitions

• Growth in PEO market share

PEO: A Fit for You?

• Web: www.eesipeo.com/peopletalk_eevents

• Facebook: www.facebook.com/eEmployersSolutions

• LinkedIn: www.linkedin.com/company/eesi

• Twitter: @eESI_Talk

• Ken Barge: kbarge@eesipeo.com

Thank you to HAHU members and guests for the opportunity to participate at the July Luncheon.