The Four Questions to Ask when Exiting a PEO

Papers About Peo Professional Employer Organization And Folder.

It is very common for businesses to start off with a PEO (Professional Employment Organization) when establishing employees. Also common is for a small business to look at a PEO as an attractive alternative to bundling many employee management functions under one platform. The PEO pitch of outsourcing the employee management process and providing large employer benefits at a low cost sounds like an offer too good to pass on. However, when a company is left feeling like they have outgrown their PEO, have seen substantial rate increases, or lack the services promised, they become paralyzed with the notion of exiting and replacing their PEO.

The thought of reviewing multiple vendors, technologies, and benefits can seem daunting. Beyond the fear of where to start is the concerns around how this will affect employees and the time it will take to implement. Lastly, PEO invoices are designed to create confusion, so businesses do not know how to compare replacements for cost analysis.

This leads to the following questions centering around how to exit a PEO:

  • Have we outgrown our PEO?
  • How do we analyze the value of our PEO?
  • What functions need to be replaced by leaving a PEO?
  • Is there a universal recommended solution for a PEO replacement?

 

Have we outgrown our PEO?

The costs are adding up. PEO costs tend to range between 20% – 30% higher than comparable non-PEO packages. PEO’s charge using a flat PEPM (Per Employee Per Month) admin fee, a percentage of payroll fee, or a combination of the two. With a small handful of employees, these fees seem palatable given the perceived value in return. However, when employee counts start to rise or salaries rise, these reasonable admin fees start to add up compoundingly. Although palatable to start most established businesses with 10 or more employees or higher salaries, begin to feel the pain of these higher costs.

The other concern for outgrowing a PEO is when the employee service inquiries become more rapid or more complex. Small businesses tend to have less employee questions or challenges. As the organization sees growth, a once small tight-knit population becomes a larger pool of personalities and life events. Most PEO’s are not designed to be able to answer employee inquiries or challenges on demand, nor are they designed to put in proactive procedures. Many utilize general helpdesk inquiries which can take several days to receive responses from. Typically these responses are more canned and less personalized than an internal resource 

Ultimately, the triggers for outgrowing a PEO center around inflating costs or not being able to scale around a canned service.

 

How do we analyze the value of our PEO?

Analyzing the value of your PEO can be one of the most frustrating challenges. How can any business put a value to a service in which they cannot understand or quantify? Most PEO invoices are oversimplified into a single line item cost. If a detailed breakdown is requested most PEO’s provide an excel sheet that seems like a riddle more than a breakdown.

The best way to start a PEO analysis is to get rid of any items relating to actual employee pay. Whether you go with a PEO or a Payroll company, the costs associated with paying your employees do not change. Removing items around: wages, 401(k) contributions, taxes, or withholdings, allow for you to eliminate costs that are not able to be changed. A lot of detailed PEO breakdowns also have a litany of employee information that would not be needed when analyzing value. The more columns you can eliminate, the more readable the invoice becomes.

The goal is to be left with the following columns:

  • Employee Benefit Costs (Medical, Dental, Vision, etc.)
  • Workers Comp Costs
  • PEO Administrative Fees

With this information you will have a clearer understanding of your costs you are looking to compare and replace.

 

What functions need to be replaced by leaving a PEO?

Most PEO’s handle the following functions which will need to be replaced:

While this seems like a daunting list of functions to replace, it is more simple than it may appear. The key is sourcing a solution that can easily install, consolidate and replicate these functions. Most businesses upon finding replacement see much better value and service.

 

Is there a universal recommended solution for a PEO replacement?

Every business has their own specific needs based on size, business type, and complexity. As such there is no universal company that can be used as a PEO replacement. The point of exiting a PEO is to get a service tailored to your business at the best available value. While there is not a universal solution, the best recommended starting point is to talk to an expert, like EVCO, in PEO replacements. These experts allow for a consultative approach to provide unbiased feedback to allow for the best options. By tapping into an expert in PEO replacements you can avoid pitfalls and be introduced to the relevant qualified replacement vendors based on your specific needs.

An expert consultant will often provide a review at no cost or contract, they also will provide only the best recommendations for your business. In the end those working with a qualified consultant find the PEO exit to be less challenging and end up with services that are significantly better and less costly than a PEO.

 

Conclusion

There is never a reason to settle for lesser technology or service, nor settle for higher costs. PEO’s can be a fine place to start, but the right consultant can guide your business to a better seamless process that is designed for you at a lower price point.

Should you wish to reach out to an expert consultant in exiting a PEO, you can reach out to Brian Allen of EVCO Insurance Services for a complementary analysis.

 

Brian Allen

brian@evcoinsurance.com

(925) 478-2223

Managing Partner

EVCO Insurance Services, Inc. 

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ZENEFITS BLOG

What they do:  Zenefits offers an online software for small to medium sized businesses to process many employee management needs. This includes new hire recruiting, paperless onboarding, payroll, benefits management, and other HR needs.

History: Zenefits was a disrupter to the insurance industry after raising more than $300 million at a valuation of more than $3 billion. Led by an outspoken CEO, they ultimately faced issues as the company chose to skirt the strict training requirements to gain licenses allowing them to advise on insurance products. Since that time the company has laid off more than 45% of its workforce, replaced CEO’s, and chose a new operating model.

Current direction:  Zenefits continues to build on their cutting edge technology by expanding their products and integrations with other desirable third party applications (eg. Accounting software).  This allows data to flow from the Zenefits platform to many other popular applications saving their clients time, dual entry, and manual error to get employee information from one tool to another.  On this insurance side of the business, Zenefits has terminated their Broker arm and instead now partners with top Brokerages all around the country who can best advise on the complicated landscape of health insurance.

Your opportunity: EVCO is a preferred broker partner of Zenefits. This allows your company to tap into a leading employee management software that is now backed by local Broker expertise. Our partnership allows clients to gain discounts on the Zenefit product, and access to trusted representatives to advise on the best featured and functionality to implement for your specific business needs. With many Payroll and HRIS solutions to choose from, EVCO has found that Zenefits is the best fit for: company size of 5-150 employees, tech capable employee population, limited support in HR and/or a company looking to grow. One primary advantage of Zenefits compared to other solutions in this space is that it ultimately provides one system of record for most/all items in the employee management cycle.

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Deductibles, Max Out of Pocket, Copays & Coinsurance (What’s the Difference)

Making Sense of Benefit Summaries:

Often times employee’s receive a summary of benefits for their medical plan and stare at it with a look of bewilderment.  Sure you can give someone a 9 page document breaking down the structure of services, but most employees really don’t understand the language within this document.  Many employees are embarrassed to ask questions on the language within their document to their employer, especially as a new hire. Those who do choose to ask questions to their benefits contact often time get convoluted answers that don’t really help them understand the plan still.  Typically the issue of confusion revolves around 4 health insurance related terms, once these 4 terms are understood, the ability to make a decision on benefits or comprehend the plan becomes so much more achievable.

Term #1 – Copay’s:

Copays are typically the easiest item to understand as well as the most attractive word when looking over a summary of benefits.  A copay is simply the cost you will pay when you receive a particular service. Copays are very common on items such as seeing your doctor or filling a prescription.  For example if my summary of benefits says that to see my primary care doctor it is a $30 copay and to fill a generic prescription the cost is $20, my total bill for those 2 services is simply $50 combined (no more and no less).  It is important to note that seeing a specialist doctor or filling a brand name or non-formulary prescription will generally entail higher copay’s. Also, it can be advantageous to know that preventative health coverages (such as a routine physical) are covered by your primary care physician at no cost to you and a copay does not apply.  Generally speaking plans that feature more copay related line items on their summary of benefits have stronger potential savings when utilizing health coverage.

Term #2 – Deductibles:

Deductibles are the total dollar amount that you are responsible for prior to your health insurance carrier shouldering any costs.  For example if you have a $1,000 deductible and you needed to be admitted to the hospital, the first $1,000 of services on the insured member.  After the $1,000 of services has been paid by the member then your health insurance plan picks up corresponding costs subject to your copay or coinsurance (see Term 3 for coinsurance).  It is important to note that many items are not subject to the deductible and on your summary of benefits it will note if this item waives the deductible (deducible does not apply) or if this item is subject to the deductible (deducible does apply).  On many plans items such as primary care doctor visits, specialist visits, urgent care visits, and generic medications are not subject to the deductible. This means that for these items you will just pay your general copay which is a good thing. It is important though to note that in this case, the money you pay towards your copay do not count towards your deductible.  It is also good to note that often times there is a deductible for the health insurance portion of your plan and a separate lower cost deductible for the pharmacy portion of your plan.        

Term #3 – Coinsurance:

Coinsurance is the amount that you and your health insurer split the cost of your bill after your deductible is achieved.  Typically the coinsurance splits range between 20% and 40% for the insured member. If the split says 30%, the member would be responsible for 30% after the remaining bill after the deductible and the health insurance carrier would be responsible for the remaining 70%.  As an example let’s say that someone was admitted to the hospital and all services were subject to the deductible and coinsurance with no copays; if the total hospital bill was $5,000 and the deductible was $1,000 then the member pays the first $1,000 and then the remaining $4,000 is split via coinsurance.  At a 30% coinsurance split the member would then be responsible for $1,200 of the remaining bill and the health insurance carrier pays the additional $2,800. This results in a final breakdown as follows:

  • $5,000 total hospital bill
  • $1,000 member cost deductible
  • $1,200 member cost coinsurance
  • $2,800 health insurance cost.

Term #4 – Maximum Out of Pocket:

Maximum Out of Pocket (also known as Calendar Year Maximum), is the most you will pay in health costs in any given calendar year.  This can consist of anything that you run through your health insurance including: copays, deductibles, and coinsurance. It even accounts for prescription drug costs.  The maximum out of pocket is a critical piece of the health plan as it protects you from catastrophic financial burden. There is a varying range on a maximum out of pocket and it can by up to $7,900 for an individual (in the year 2019).  The good news is that regardless of how many medical expenses a member incurs, they will never pay more than the maximum out of pocket in a calendar year.

Concluding Note:

Even with the understanding of the above terms, it can be very difficult for members to understand their coverage.  It is always best practice to speak to an expert (such as their health insurance broker) when reviewing their summary of benefits.  If you would like to speak to an expert on the above, EVCO Insurance Services (925) 395-4566 is available by phone or via email at help@evcoinsurance.com

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San Francisco Employers – How to Provide a Free Health Insurance Plan

Health Care Security Ordinance. If you have a San Francisco based company with at least 20 employees you are likely very familiar with the Health Care Security Ordinance (HCSO). This law requires employers to pay a fee to the City for all hours worked by all employees. Have you ever wondered if any employees are using this “coverage” that your hard earned dollars are funding? Considering HealthySF is NOT health insurance and there is absolutely no reporting available from the City to promote usage, it can be assumed that your dollars are going significantly/completely unused.

What’s the alternative? Did you know that any employer contributions to a Group medical, dental and/or vision insurance plan negates the requirement to fund HCSO? This means that you can provide your employees with real health insurance coverage to assist with the continued battle of attracting and retaining the most talented employees, all at no added cost.

Why EVCO insurance? A complexity of this alternative is to provide the exact amount of funding to negate your HCSO liability without spending any more. The fact is that you want your employees to exhaust all of their funding (so you don’t have to account for any shortage & pay HCSO the difference), but this is challenging considering most health insurance plans have different rates for every single age of employee. EVCO’s paperless enrollment platform allows us to create a “Defined Contribution” in the proper funding amount. This results in your employees spending the proper amount of funding on their health insurance plan, and rolling over any unused funds (typically only for younger employees) so they can spend any remaining funds on dental and/or vision.

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How New Sexual Harassment Laws Effect Small Businesses

Why are there Laws Centered Around Workplace Sexual Harassment?

Sexual harassment in the workplace has been a concern for many years. The first recorded case of workplace sexual harassment was in 1974 which guided the way Equal Employment Opportunity Commission (EEOC) to issue regulations against workplace sexual harassment in 1980. The Civil Rights Act of 1991 then expanded the protections of victims to sue and collect punitive damages as it relates to sexual harassment or discrimination. Although many laws have been in place to protect those who are victims of sexual harassment in the workplace, the #MeToo Movement has sparked greater attention & awareness to workplace sexual harassment. This has created an outcry to not only punish those in violation but to seek ways to prevent workplace sexual harassment from happening.

Sexual harassment in the workplace can be unwelcome sexual advances, physical or verbal conduct of a sexual nature or request of sexual favors. Types of sexual harassment are often referred to as quid por quo sexual harassment or hostile work sexual harassment. Quid pro quo sexual harassment is generally a promise of benefits in the workplace as a means of sexual bribery or coercion. Hostile environment sexual harassment is more subjective and consists generally of often frequent unwanted physical touching, sexual comments, or suggestive material. It is worth noting that a recent poll found that over 30% of people in the United States have claimed to experience sexual harassment in the workplace. Over 50% of reported incidents are from a direct supervisor, and over 20% of reported incidents are from men. These staggering numbers have led to a significant expansion of the recent law in the workplace.

What was the Old California Law that was Replaced?
In January 2005 Governor Jerry Brown enacted AB 1825. This law was dedicated to Harassment Training for supervisors in the workplace. The focus was on general legal compliance and how supervisors should handle workplace harassment issues. The law itself had an on 4 million individuals that needed this supervisor training. This manager based training law gives 2 hours of mandatory training for supervisors every 2 years. Only companies with 50 or more employees needed to comply with this law which alleviated smaller businesses from this training. In August of 2007, the California Fair Employment & Housing Commission issued required content standards and produced training materials and “E-Learning” computer-based programs for the training.

What is the new California Law?
Established in October of 2018, Governor Jerry Brown enacted Senate Bill (SB) 1343. This law then took full effect as of January 1st, 2019. This more in-depth compliance training focuses in on identification, prevention, and intervention. The law will affect around 34 million individuals and 300,000 employers which is a tremendous amount more than the prior bill. The main changes between bills are outlined below:

  • Mandated for companies with 5 or more employees (previously was 50 or more employees).
  • Training is needed for all employees (previously just for supervisors).
  • Supervisor training still is 2 hours every 2 years, but employee training is now 1 hour every 2 years.
  • All employees must be trained within 6 months of hire with the exception of seasonal or temporary employees who must be trained within 30 days of hire.
  • All training must be interactive, time tracked, and records must be kept.
  • Updated DEFH posters including ones on transgender rights must be posted in the workplace.
  • DEFH information sheets must be distributed to each employee.

Are any other States affected, or is this just California?
California, New York, Connecticut, Maine, and Delaware have all re-developed similar laws as outlined above. In light of the growing awareness of sexual harassment and discrimination in the workplace, it is likely more states are soon to follow in implementing similar laws and regulations. At this point, many employers in other states have begun implementing some form of sexual harassment prevention guidelines in order to stay ahead of a possible problem occurring.

What are the Solutions and Timelines?
In California, all businesses must roll out this training and have current employees complete it by January 1st, 2020. This does not, however, mean that most employers can wait until the last day to roll out training since all employees hired after January 1st, 2019 must go through training within 6 months of hire. Furthermore, employers that hire temporary or seasonal employees still must comply with this law within 30 days of hiring such an employee after January 1st, 2019. This really means that all businesses should have a plan in place now for their training.

There are many available solutions with an assortment of correlated costs. These solutions can include:

  • Web-based via a Learning Management System (LMS)
  • Webinar based training
  • Recorded workshop training
  • In-person training

The key is finding training that is an approved training based on being administered by someone authorized to do such training; and that the training is interactive, time tracked and records kept. Given the wide range of options, pricing, and administration types, it can be best to reach out to a Compliance Broker to review the options best for a particular business. To learn more about sexual harassment training and learn about different administration options, please visit EVCO Insurance to connect with an expert broker.

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How Do Rx Costs Affect Your Employees?

health insurance provider, prescription drug costs, human resources, health insurance copay

For several reasons, the cost of prescriptions drugs in the U.S. is higher than any other country. While this is an issue none of us can solve at an individual level, how can you best support your employees with this growing financial burden? The answer: education and a proactive broker.

Formulary

Consumers simply want to fill their prescription needs. However, it’s first important to understand the insurance company “formularies” so you know how your prescription plan works. Did you ever wonder why your drug might fall under the $10/$30/or $50 copay? In short, the more common and inexpensive a drug, the less it will cost. These drugs are in categories Tier 1 or Tier 2 formulary; also known as generic. The more rare, specific, or new drugs are usually Tier 3 or “brand”. In the worst case scenario the drug will be excluded from insurance coverage as Tier 4 or non-formulary. A health insurance provider will financially incentivize members to seek lower cost drugs, typically generic, by charging a lower copay.

Most Affected

The common strategy of offering Silver and Bronze plans is cost effective from a premium standpoint, but exposes employees to high Rx costs. Health Saving Account (HSA) plans are a terrific strategy from a tax standpoint, but are one of the worst financial decisions if a brand name drug is regularly needed. Lastly, anytime policies change to a new health insurance provider, it exposes employees to potential Rx costs increases because every insurance carrier has a different “formulary”.

Best Solutions

There is no reason to limit employees to a certain plan(s) that the company contributes towards; instead, allow employees to “buy-up” by paying the additional cost for stronger plans. Employees selecting a Bronze or any HSA plan should be aware of the financial burden if they require a Brand name Rx. Both these solutions of “buy-up” plans and employee education can and should be managed through an automated online platform so there is no added Administrative work. When you require a health insurance provider change at the company level, a proactive broker is crucial. They can  help educate employees by assisting with the “pre-authorization” Rx process. This process requires the prescribing doctor to complete a short form documenting need for Specific Brand Rx to reduced it to a lower cost tier.

Creative Ideas

There are many discount Rx programs now available online. Perhaps one of the best currently available is GoodRx. This site allows consumers to fill prescriptions while avoiding the insurance companies altogether. Financial discounts through discount prescription programs can often be greater than going through a health insurance provider.

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Avoid a Terrible Open Enrollment Experience

Employee benefits, terrible open enrollment, better employee benefits, how to handle open enrollment

Open Enrollment can be a confusing time for employers and employees alike. This is especially true for those companies that use a more manual process when evaluating plans and enrolling employees. Hence, you might currently be frustrated by:

  • Rising costs for seemingly weaker benefits
  • Tough decisions between benefits packages
  • Hosting an open enrollment meeting
  • Communicating plans or rate changes to employees
  • Receiving and tracking employee benefit changes
  • Managing and submitting all the paper applications for benefits
  • ID cards arriving late
  • Employees wanting to make changes after Open Enrollment

Open Enrollment Strategies

There are many ways to combat the yearly frustrations because of Open Enrollment. The most noteworthy ways of streamlining your benefits renewal nightmare include:

  • Outreach and benefits analysis 120 days in advance of renewal
  • Elimination of paper through easy online applications (just click to enroll)
  • Simple benefits data and tracking with a click of a button
  • Better plan communications to employees without an open enrollment meeting
  • Live benefit rates without the need for pulling out a calculator
  • Electronic ID cards in as little as 48 hours from carrier receipt

A Better Way For All

Over 83% of employers state that communication, employee education, and engagement are integral to their overall health benefits delivery strategy. Additionally, almost 89% of employers stated that guided comparison and decision tools were effective in an employee choosing a health plan for their family. Furthermore, the overwhelming majority of employees do prefer an online experience when choosing benefits.

When it comes to a better and easier way of conducting enrollment and renewal decisions, there is nothing more effective than a strong online benefits platform for employees and employers alike. Because this shouldn’t be so difficult, contact brian@evcoinsurance.com for a better open enrollment experience.

 

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Are HSA Plans Becoming Popular Again?

HSA plans, health savings account plan, health insurance savings account, health insurance broker

What is an HSA?

A Health Savings Account (HSA) is a special savings account that you can only use for your medical needs. It’s tax-advantaged and deposits made are free from federal income tax. The employee, employer or both can make contributions into this account.  In order to qualify to open an HSA, you must be enrolled in a qualifying High Deductible Health Plan (HDHP).

HDHP coverage options are available through most medical carriers and are an alternate option to a more standard medical plan. HDHP’s are typically characterized by having much higher deductibles than standard plans and must have a deductible over $1,350 to qualify. For these plans the member traditionally pays the full amount of health services while working towards the deductible prior to any financial splits from the insurance carrier.

Money in an HSA rolls over from year to year and can be used for medical needs as they occur, or saved for future years. Many HSA providers also allow for you to invest your money contributed to the HSA for a larger growth potential.

 

Advantages of an HSA

There are a lot of advantages to having an HSA compatible plan. To start these HDHP options are generally much less expensive in premium than a more traditional plan option. A general initial premium savings can be between 15 – 25% for moving to an HDHP. Beyond the initial premium savings, the main advantage of an HSA plan is the ability to set aside funds on a tax-advantaged basis for your future healthcare needs.

With this you have more control over your healthcare and the associated costs. Essentially you pay for the services you actually use instead of paying advance for services you might use. The other large advantage of the HSA account is the ability to rollover contributed funds from year to year without limitation. The lower premiums and ability to grow a tax-advantaged funds from year to year are especially advantageous to the younger generation as well as those who do not have multiple ongoing medical concerns.

 

Disadvantages of an HSA

Though HSA’s can be incredibly advantageous, they may not be desirable to everyone. Services and prescription medications are often full cost until spending reaches the deductible. Given that these HSA plans are compatible only with HDHP’s the deductible can be very expensive to hit.  Those with continual ongoing medical needs may find these plans less advantageous than a plan with less expensive copays.  Also generally healthy people can have an unexpected unhealthy year, which can be a drain on HSA funds.

 

Are HSA’s Gaining Popularity?

HSA’s gained popularity from around 2005 – 2012.  Insurance carriers had set very low initial premiums for HDHP’s and very low out of pocket maximum expenses.  After 2012 a substantial increase in both premium of HDHP’s and higher out of pocket maximums made them less attractive.  The use of these plans has increased since HSA contribution limits raised to $3,500 per individual or $7,000 per family.  The catch-up contribution (those 55 and older) also has risen to $1,000.  The ability to fund the HSA’s more with tax-advantaged funds have increased interest in these plans.  Also the out of pocket maximums and premiums have leveled off more for HDHP’s making them all the more stable.

Although these plans aren’t for everyone, HSA compatible plans are on the rise and may be advantageous for you.  To learn more about how HSA’s can be administered and offered please visit EVCO Insurance to connect with an expert broker.

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HR – A New Way!

Not every company has a qualified HR department or person that can answer your employee’s questions accurately and quickly. Sure you can hire a lawyer, but do you have the time and money? If the answer is no, then take a look at EVCO HR.


With EVCO HR you will be able to answer any question at a moments notice. You will have the ability to pick up the phone and speak to qualified HR specialists relating to your specific company! You can access forms and paperwork for new hires as well as terminating employees. These forms change each year and it’s difficult to run a business and keep this info accurate. It is as easy as 1, 2!

  • Step 1: Choose EVCO as your broker.
  • Step 2: You now have instant access to this portal.

Email us for more info and/or to get started. Want one more added benefit? You will also have access to EVCO Enroll, which allows you to leave the paperwork behind and have employees make benefits selections online!

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