Should you stay with your small group insurance plan?

If your small business insurance plan is becoming more and more unaffordable, perhaps it's time to switch to a large group plan. Here's how.



If your small business insurance rates seem to keep climbing, you may want to reconsider your options since you may not be getting the best deal.

Insurance plan options for small businesses

Most small business owners are aware of the three most commonly-used insurance options to provide benefits for their employees:

  1. Provide their own small group plan
  2. Gift a “benefit dollar” to employees to purchase their own individual policies
  3. Band together with other companies to form an association plan.

What they may not be aware of, however, is this option:

  1. Partner with a PEO (Professional Employer Organization) and join their large group insurance plans.

How do you switch from a small group insurance plan to a large group insurance plan when you’re a small business?

There are participation restrictions enacted by insurance carriers to distinguish between small and large groups. By partnering with a PEO, however, you’re able to outsource all of your HR administrative needs, including benefit plans if you so choose. While not every PEO offers large group health insurance, many do. Since you’re able to use the collective buying power of ALL clients, you gain access to the PEO’s large group plans at competitive rates.

Unlike small group insurance plans, a large group plan uses average, standardized rates and considers risk pools to determine rate structures. In a large group, risk is spread so much further that a single employee with a big insurance claim one year won’t jack up the following year’s rates for everyone within the company. A large group health plan also has less market volatility, there’s more consistency in price for all employees (regardless of age or location), and rates remain more stable from year to year.

What other advantages do PEOs offer for health insurance?

PEOs oftentimes provide large group vision, life, dental, flex spending, supplemental plans, and more to enrich your benefits package. Then they simplify all of these benefit offerings by providing the administrative piece that is so taxing on small employers. This includes:

  • Enrolling employees
  • Setting up deductions
  • Paying carriers
  • Reconciling bills
  • Administering COBRA (where applicable)
  • Fulfilling all compliance requirements with the ACA
  • Answering employee questions about the plans or associated tools

As an added bonus, the PEO does the shopping for you when it's time to review healthcare plan options!

How can I find out if large group insurance will help my small company?

Partnering with a PEO ensures your small business is offering a benefits package comparable to that of a large corporation. That’s always nice for recruitment and retention. But if you’re still unsure whether your business would benefit from a large group insurance plan, simply contact our benefits experts at and we’ll be happy to review your benefits package, free of charge.

There's a simple way for small businesses to become part of a large group insurance plan to spread the risk and get more competitive pricing.

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