When it comes to providing employees with healthinsurance, being well-informed will greatly simplify the process.(Image: Shutterstock)

More small business owners want to provide their employees withhealth insurance. However, there are a plethora of importantchoices to make in a limited time frame. When it comes to providingemployees with health insurance, being well-informed willgreatly simplify the process of choosing what health plansultimately make the most sense for the company and employees.

Professional employer organizations (PEOs) offer servicesranging from payroll processing, benefits administration, HRtraining and support, and workplace insurance coverage, to bothsmall and medium-sized businesses.

Related: 6 ways a PEO can help small businessowners

Fully insured medical plans are employer-sponsored health planswhere the premium rates are fixed for at least a year (possiblylonger) and are based on the number of employees enrolled in theplan each month and their ages. The company pays the insurancecarrier a premium.

If you are not entirely sure whether you should use a PEO orconsider fully insured plans, it might be helpful to know the prosand cons of each:

The pros of PEOs

• PEOs include employees with all of the PEO's co-employees tocreate one larger group/pool of employees; This enables the PEO toprovide the employees with access to employee benefits similar toones they would receive as part of a larger corporation, despitethe fact they work for a small business.
• Services offers include more than just healthbenefits. PEOs make available compliance support, payroll, humanresources services, and workers compensation.
• Lower administrative burdens allow small business owners tofocus on their core business strategies in lieu of worrying aboutthe minutiae of benefits.

The cons of PEOs

• Very limited choice in carriers, meaning that your employeeswon't necessarily be presented with the best options for them ortheir families.
• Require administrative fees to support their services and arecharged per month per employee or percentage of total payroll.
• Force small businesses to rely on an external team (rather thaninternal employees) to handle important and sensitive HRprocesses.

The pros of fully insured plans

• The prices are based on ages and/or zip code which allowsemployers to budget. The rates do not vary with the health ofemployees, and you cannot be denied based on the health of youremployees (no medical underwriting required.) The insuranceprovider manages all claims, and the risk is assumed by theinsurance company.
• You can traditionally choose your own package and decide oncarriers, as opposed to being required to stick to a very limitedset offered by a PEO. You can purchase a fully-insured plan if youhave at least 2 employees. Some PEOs require you to have a higherminimum number of employees (5 Employees).
• There are no administrative fees paid to a PEO. You can chooseyour own payroll company and have internal HR resources.

The cons of fully insured plans

• With fully insured plans, premium costs can be higherdepending on your geography and age of employees, regardless of theoverall health of your employees. (Sometimes claims experiencevaries depending on the size of the company.)
• You don't have the “one-stop shop” of payroll, HR, andcompliance that is available with most PEOs.
• The administrative burdens associated with running a smallbusiness fall solely on the business.

The health insurance options available for small businessemployers are vast, and there are pros and cons to each choiceavailable to you and your employees. Prior to making a decision, itis best practice to be as familiar with all of the details aspossible. In the case of PEOs vs. Fully Insured Plans, neither isnecessarily better than the other. The best approach to acquiringsmall business health insurance is entirely dependent on thespecifics of your company and your individual employees. If you doyour research and don't rush into making a final decision, you'llsecure coverage for your team that suits all parties concerned.SallyPoblete has been a leader and innovator in the healthinsurance industry for over 20 years. As a broker and formerindustry executive herself, she founded Wellthie out of adeep passion for making health insurance more simple andapproachable for consumers and small businesses. She had asuccessful career leading product development at Anthem Blue CrossBlue Shield, one of the nation's largest health insurancecompanies.

Read more: 

• The benefits of a broker-only PEOmodel
• 3 ways to position your small business benefitsoffering for success in 2019
• How small businesses are staying competitive in atough recruiting environment