After wages, benefits are the second highest employee-related cost—and they’re continuing to rise. Health insurance premiums, typically the most expensive employer-sponsored benefit, are set to climb more than 6% in 2024. According to the Kaiser Family Foundation, Affordable Care Act marketplace rate filings will jump by an average of 6% to 9%, with some states increasing small group rates between 10% and 25%.
Businesses keen on controlling benefits spend can use a Professional Employer Organization (PEO) to improve access to affordable, competitive healthcare plans. But there’s a problem: the rate you sign up for the day you join a PEO doesn’t always tell the whole story. PEOs can jack up renewal rates after the first year, creating bloated, unexpected costs. Or you’re faced with the time-consuming hassle of finding a new PEO after just a year.
To avoid these pitfalls, you need to assess how your benefit rates will evolve over time. Here’s how to evaluate your PEO options—including Rippling PEO, which has delivered a below-average renewal rate increase for the third year running.
Evaluating your PEO options
If you want more predictable, transparent renewals, you need to evaluate your PEO options. When weighing whether to break up with your current solution (or how to find one in the first place), here’s what you should keep in mind:
- Does the PEO publicize its annual PEO renewal rate increases? Transparency over how PEO benefit pricing has changed in the past helps companies better predict how their rates may evolve in the future.
- What is the pricing structure? Like renewal rate increases, PEO pricing should be predictable. If your solution comes with hidden PEO fees and extra costs associated with supplemental services, you may want to search for other options.
- Does it offer modern, easy to use software? When you join a PEO, you aren’t just getting its benefits plans. You also have to use its software, which, for many systems, is a relic built in the 1990s. HR admins rely on the PEO’s software to manage their workforce, and employees use it to access pay stubs, tax forms, and other important documents. So look for modernized solutions that are intuitively designed and easy to set up. If you want a test run to see for yourself, ask for a product demo before committing.
- Can it support your company as it grows and your needs change? Your PEO needs will change as your company scales. Some systems make it a hassle to transition away from a PEO when your headcount grows to the point of making it more cost-effective to bring services in-house. Look for solutions that allow you to move on and off PEOs without overhauling existing systems.
Rippling PEO: Fully insured and fairly priced
With Rippling PEO, we pride ourselves on pricing each individual group to their unique risk profile. Since we don’t cross-subsidize between risk groups, you get predictability and fairness with your annual PEO healthcare costs. You won’t get sweetheart rates in year one only to get bait-and-switched in year two. This means you can stick with the same reliable PEO instead of having to shop for a new one every one to two years.
Below-average benefit renewal rate increases, three years running
Rippling PEO delivered a renewal rate increase of 4.5% or less to the vast majority (85%) of Rippling PEO customers—see our 2023 Trust & Transparency Renewal Report. This marks the third year in a row we’ve delivered rate increases well below the national average.
While PEO health benefit costs (and healthcare costs in general) will inevitably rise over time, Rippling PEO strives to offer affordable coverage for worksite employees, without surprising you with a steep rate increase.
See why Rippling offers the #1 rated PEO
Rippling PEO is the only PEO that publicly shares its healthcare renewal rate increases every year. As well as providing predictable costs, partnering with Rippling PEO gives you access to top-tier benefits coverage. In addition to all of the large group plans, you can access 401(k) retirement plans, HSA, FSA, and commuter flex spending accounts.
But with Rippling PEO, you unlock much more than access to benefits coverage. You get software that allows you to manage your entire workforce throughout the employee lifecycle, at every stage of your company’s growth:
- Run payroll in 90 seconds. Rippling syncs all your business’s HR data with payroll, so you never have to use a calculator or manually enter data, like hours and deductions.
- Securely manage devices and apps. Rippling gives you one place to set up, manage, and disable all the apps your employees use. You can even configure and deploy laptops for new hires in a couple of clicks.
- Automate compliance monitoring and let Rippling alert you to potential issues, as well as any changes in federal, state, and local regulations, so you can avoid penalties.
- Smoothly transition off of Rippling PEO once you’re large enough to bring benefits in-house, all while maintaining the same trusted workforce management platform.
- Run countless automations from generating locally compliant offer letters during onboarding to registering employees for state taxes.
- Build custom workflows to trigger reminder emails, Slack messages, calendar invites, and more—without writing a single line of code.
- Pay independent contractors around the world in their native currency alongside your full-time employees—all in a single pay run.
- Manage your entire global workforce across city, country, and continental lines from a single platform—from onboarding to offboarding.
Your PEO should be upfront about how renewal rates will change every year. To control your spend, all while unifying HR, IT, and finance under one, easy-to-use platform, try Rippling PEO today.
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.