Every small business owner aspires to provide their employees with the best benefits, but the cost of offering a comprehensive package can pose a significant financial challenge.
We're here to tell you it is possible and less costly than you think.
In this blog, we'll explore how small businesses can secure the best benefits package at the lowest cost and why partnering with a Professional Employer Organization (PEO) like PRO Resources can be a game-changer.
Understanding how small business benefits packages work
What is a small business benefits package?
A small business benefits package is a combination of offerings designed to support employees' health, financial stability, and overall well-being. The typical benefits a worker receives from an employer include:
- Health insurance
- Dental and vision insurance
- Retirement plans (e.g., 401(k))
- Life and disability insurance
- Paid time off (PTO)
- Employee assistance programs (EAPs)
- Wellness programs
Do small businesses have to provide benefits?
Small business owners often wonder if they are legally required to provide benefits. By law, employers must offer several benefits, such as minimum wage, social security, Medicare, worker's compensation, and unemployment.
The answer also depends on several other factors, including the size of the business and the type of benefits in question. For instance:
- Health Insurance: Under the Affordable Care Act (ACA), businesses with 50 or more full-time employees must offer health insurance. Smaller businesses are not mandated to provide health insurance but may choose to do so.
- Retirement Plans: There is no federal requirement for small businesses to offer retirement plans, but doing so can significantly enhance their appeal to potential employees.
- Other Benefits: Certain benefits, like paid time off, life insurance, and disability insurance, are generally not required by law but are highly valued by employees.
Providing a robust benefits package helps business owners attract skilled employees, enhances job satisfaction, and reduces turnover.
How to give your employees a benefits package that doesn't break your budget
Cost-effective benefit plan options for small businesses
The following methods help make benefits plans more attainable for small business owners with limited budgets:
- Health Reimbursement Arrangements (HRAs): Employers can reimburse employees for medical expenses and insurance premiums.
- Group Purchasing Alliances: Joining forces with other small businesses to purchase benefits collectively can lead to lower costs.
- Professional Employer Organizations (PEOs): Partnering with a PEO can provide access to comprehensive benefits packages at reduced rates.
Not sure what benefit plan options are right for you? Click here to get in touch with a Benefits PRO.
Why it's cheaper to get a benefits package through a Professional Employer Organization (PEO)
When it comes to acquiring benefits, small businesses have two primary options: purchasing directly from an insurance carrier or through a PEO. Here's a simple comparison:
- Direct Carrier: Businesses deal directly with insurance companies. This often means higher costs due to limited bargaining power and lack of economies of scale.
- PEO: By pooling employees from multiple businesses, PEOs leverage economies of scale to negotiate better rates with carriers. This results in significant cost savings for small businesses.
Beyond the benefits and pricing structure, a proper PEO will also provide all plan administration and compliance requirements to ensure you avoid costly penalties or errors.
PEO benefit plan options for small businesses
No two businesses are alike, which is why we offer a few different choices:
- Master Plan: A standardized benefits package available to all employees across the PEO’s client base. This plan offers simplicity and cost savings.
- Custom Plan: Tailored benefits packages that meet the specific needs of a business and its employees. This option provides flexibility but may come at a higher cost.
- No Benefits: Some PEOs allow businesses to opt out of benefits administration and focus solely on other HR services.
Find out if a PEO benefits plan is right for your business
At PRO Resources, we specialize in helping small businesses navigate the complexities of benefits administration. Our comprehensive HR solutions are designed to save you time and money while ensuring your employees receive the best possible benefits. Click below to learn more about securing the best benefits package for your business.