In the wake of Covid-19, people across the globe have seen a constant rise in the prices of healthcare and medical expenses. A good insurance cover ensures that an individual is protected and has financial backup during a medical emergency. Consequently, having an insurance cover has become a necessity and a frequently requested employee benefit.
One of the most common types of health insurance employers provide is group health insurance, in addition to an employee’s monetary compensation.
However, providing health insurance while complying with the relevant local laws can be challenging if you have a global team. This is where partnering with a global PEO to offer the right PEO health insurance can simplify the process.
Understanding PEO Insurance
Providing different forms of insurance is mandatory in certain countries (the UK, Germany, and the US). However, several countries do not have compulsory health insurance as an employee benefit. Employers commonly expect insurance covers in such countries as a part of their annual compensation (alternatively known as a non-mandatory or supplementary benefit). Therefore, if you have a global team, you can benefit from partnering with a PEO to administer several benefits on your behalf, including PEO health insurance.
PEO insurance is coverage administered by a Professional Employer Organization (PEO). The PEO insurance plan often refers to group health insurance covers but includes other insurance covers such as life insurance and unemployment insurance.
When partnering with a global PEO, the responsibility to provide health insurance for a full-time employee falls on them.
Although PEOs provide the best PEO health insurance plans in the markets, a global PEO additionally provides:
- PEO liability insurance
- Workers’ compensation
- Life insurance
- Disability insurance
- Unemployment insurance
Therefore, by collaborating and partnering with a global PEO, you can access several employee insurance options that are otherwise complex to procure, given the different regulatory and compliance factors in different countries.
How Does a PEO Health Insurance Function?
Described below is how a PEO insurance partnership works:
The PEO you partner with selects the right PEO health insurance options for you.
The PEO solution is a gateway between your business and the health insurance broker. PEO solutions such as Multiplier select robust plans from the insurance brokers in any region where your employee resides.
If you are a relatively small business, a PEO gets you access to health policies you would not qualify for due to your business size.
Globally, several insurance brokers do not offer insurance plans to smaller businesses due to the risks of insuring smaller teams. However, PEOs are assumed to be large employers, which makes access to an extensive health plan across several countries relatively easy.
Therefore, a global PEO can provide PEO health insurance to improve your competitiveness during a tight labor market.
Management of employee insurance plans and assist employees when needed.
Although finding the right and affordable health insurance plans for your employees is difficult, it is relatively complex to manage them.
When you collaborate with a global PEO, they manage the entire insurance carrier relationship on your behalf. This makes the health insurance administration easier and helps you focus on your core business operations.
Partnering with Multiplier for employee benefits, such as compliantly providing insurance for your employees, can be done with a click of a button!
Your PEO healthcare partner helps in assisting with the annual renewal of your PEO insurance.
Managing health insurance costs, annual planning, negotiations, and budgeting can be full-time jobs. Even if these processes can be done in-house, they can be very heavy on the pocket.
This is one of the primary reasons why your PEO healthcare partner can help their experienced managers by providing all relevant expertise in offering the right health insurance plans and benefits in the upcoming years.
With a clearly outlined function of a PEO healthcare partner, it is also a relevant question as to why businesses choose PEO insurance. Now that the functions of a PEO healthcare partner has been clearly outlined, let’s take a look at why businesses choose PEO insurance.
Why Should Businesses Choose PEO Insurance?
The core functions of a global PEO (or an EOR) are to act as a ‘labor leasing company’ and manage employers’ health insurance and pension obligations.
Employers have benefited from outsourcing their compliance responsibilities and obligations of offering health insurance as an employee benefit. Consequently, they have been able to focus on core business after having arranged group health insurance plans to a third party.
In recent years, especially post the pandemic, we have seen an effective mechanism to acquire better healthcare benefits and programs for employees in different job markets. Employers must provide health insurance to their resident employees in countries like the United States. However, this can be relatively complex for smaller companies to afford a ‘good deal’ for their employees.
When you collaborate with a global PEO, the latter is often in a position to purchase health insurance on behalf of you ‘as a collective,’ thus getting a better employee benefits program.
How Does a PEO Health Insurance Help?
There are several advantages of partnering with a PEO. One of the major advantages is PEO insurance as an employee benefit.
A PEO health insurance will help your business in several ways that include:
Providing insurance to your employees, especially with a global team, can be complicated. Insurance obligations bring in factors that include
- Internal compliance, HR capabilities, legal assistance and,
- A problem for businesses to operate internationally.
Partnering with a global PEO can ensure compliance with relevant local laws while providing your international team with the best PEO health insurance plans.
Insurance plans at reduced costs
When providing PEO insurance, the global PEO is the ‘sponsor’ of the PEO healthcare plan.
As it would have multiple clients simultaneously, a global PEO will have enhanced purchasing power to ensure they can acquire quality health insurance with affordable premiums for the employees.
For example, if a PEO has 10 clients with 10 employees each, the health insurers automatically deem that the PEO has 100 employees. An ideal insurer would find it less risky to provide health insurance plans for 100 employees compared to an organization with just 10 employees. Therefore, this leads to a lower premium cost for the same number of insurance benefits.
Features of an Employer of Record (EOR)
PEOs assume all their clients’ HR, benefits, and payroll responsibilities.
Therefore, when you engage with a PEO as an Employer of Record for your global team, your PEO partner assumes responsibilities for payroll tasks, withholding payroll taxes and employee contributions, and other HR-related complexities such as termination.
PEOs ensure the carrier risks are mitigated
PEO insurance has an advantage from the initial policy selection to the annual renewal of the insurance policies and is completely handled and administered by the PEO healthcare provider.
PEO Insurance Requirements
Employers working with a PEO and leased employees must meet the PEO insurance requirements listed below:
- Employers must complete the insurance documentation provided by the PEO healthcare provider:
- Personal details of the employee in the Certificate of Insurance (COI)
- Excess liability coverage (it must extend to cover the employer’s liability policy)
- Details on employer’s liability coverage and workers’ compensation
- Description of operations section mentioned in the Certificate of Insurance (COI)
- Employer’s liability waiver and workers compensation waiver of subrogation endorsement
- Any other alternate employer endorsement for employees
- Any other miscellaneous details
- Leased employees and contractors must complete the following documentation for PEO insurance:
- Minimum premium policy (MPP)
- Certificate of Insurance (COI)
Challenges of a PEO Health Insurance
Even though the benefits of PEO Insurance outweigh the disadvantages, you must keep them in mind:
Legal and compliance risks
There are certain cases where the national regulations or legislations do not clearly outline who the legal employer should be. In such cases, you would face risks in collaborating with a PEO due to compliance and legal requirements.
For example, if you have employees working from the US. In that case, you must comply with the legal requirements of the Patient Protection and Affordable Care Act (alternatively known as the ‘Affordable Care Act). The law states that if you have an employee count equal to or more than 50, you must provide an adequate healthcare plan for employees residing in the US – alternatively known as an ‘employer mandate.’
Therefore, upon audit, there is a risk that you will be deemed the employer and made liable rather than the PEO if the regulations are not complied with. You can mitigate the risk by carefully setting out the roles, responsibilities, and indemnities offered by the PEO through an engagement agreement.
Limited flexibility in coverage
Considering that a PEO will purchase employee health insurance in bulk, the flexibility in the type of coverage and variants that you can choose from is limited.
How Does Multiplier Help with PEO Health Insurance?
Choosing the right health insurance for your global team with today’s rise in employee benefits expectations can be daunting. Selecting the right PEO insurance with an international Employer of Record (EOR) can help overcome the obstacle of finding a balance between compliance and choosing the right insurance plans.
Multiplier is a full-service Employer of Record and global PEO that ensures your employees get the right insurance coverage while complying with the relevant local laws.
Visit our website to know more about the solutions we offer!