Competing with a PEO (Tri-Net)?

Nov 21, 2009

  1. sgriswold
    Offline

    sgriswold Super Genius

    Posts:
    141
    Likes Received:
    0
    State:
    California
    I have a group I'm trying to write. They're coming off a PEO in a couple months and I'm finding it hard to A) save them money, AND B) Offer comparable benefits.

    Yes, they want best of both worlds, which I think is a little unreasonable.

    They're currently with a high-end Blue Shield PPO ($400 deductible, $1600 OOP Max, etc.). Closest match is a premium $250 or $500 plan which is hideously expensive. However, the Blue Shield $500 Premium plan, with savings from WC, is about the same cost-wise. Slightly less robust with benefits.

    Questions:

    - Anyone have good arguments for switching out of a PEO in this case? I can't realistically convince them to spend the same AND lower their benefits slightly.
    - Any ideas for plan structures or maybe employer-funded solutions that they could look at? I quoted benelect but they're not that competitive.
     
  2. YouGotMyMoney
    Offline

    YouGotMyMoney Guru

    Posts:
    5,026
    Likes Received:
    123
    State:
    Florida
    Have you added in the price they pay to be a part of the PEO?

    PEO's are not true group coverage and they do not offer piece of mind.


    I have run into a few of them, and every time the carrier is dropping their coverage.

    PEO's are borderline illegal anyway, the only reason one joins is to get group health insurance.
     
  3. sgriswold
    Offline

    sgriswold Super Genius

    Posts:
    141
    Likes Received:
    0
    State:
    California
    Yes, I included the fees (which also include worker's comp).

    What do you mean piece of mind? Are they missing something fundamental that I don't know about?
     
  4. EmpRx
    Offline

    EmpRx New Member

    Posts:
    2
    Likes Received:
    0
    Super Genius,

    You should have no problem moving your client from Tri-Net who is an excellent Professional Employer Organization with over 100,000 employees. That is why you can't compete with rates from the standard markets. Tri-Net is very expensive - about $1,800 per employee per year. Your client may see cost savings on health, but he is paying for it in very high administrative rates.

    Your client wants to save money, as they all do. Unfortunately, you don't have the answers to move "your" client. Even if you could provide a cost effective health insurance solution, you will have to replace payroll, workers compensation, HR compliance, dental disability, Disney dollars, and more support than you can provide.

    You need to fight fire with fire. Your client really wants what he already has, but for less. We can introduce you and your client to PEOs who can provide the same plans and rates he has from Tri-Net. The difference is that his administrative costs will be cut in half. Then you will have a true "client" that will stay on the books for years, with little or no service on your part.

    PEOs or employee leasing companies are for real. Any health agent or broker that doesn't think so will watch their client base crumble. We work with over 50 leading PEOs across the country, and can help any agent or broker to not only compete, but win.

    Bruce Silver, Founder
    Employer Rx LLC
    The CURE for your employee management headaches
    [email protected]
     
    EmpRx, Nov 22, 2009
    #4
  5. kassmc2000
    Offline

    kassmc2000 New Member

    Posts:
    1
    Likes Received:
    0
    State:
    Alabama
    Super Genius,

    My company, Staff One is a PEO that is highly competitive in the industry. Unlike most PEOs, we value the broker community and provide a cohesive partnership.

    My experience includes 15 years selling PEOs and 5 years as an exclusive group health insurance broker.

    The variables in a PEO arrangement are variable taxes such as SUI, their administrative fee, group health benefits, and worker's compensation.

    If you are looking to replace Tri-Net it is vitally important that you seek out a provider that is ESAC accredited.

    I am happy to answer any questions you may have about the industry.

    PEOs are legal and do offer creditable group health insurance.

    Kassandra McDougald
    Sr. Business Development Executive
    Staff One
    [email protected]
     
  6. Full Throttle
    Offline

    Full Throttle Guru

    Posts:
    1,459
    Likes Received:
    6
    State:
    Alabama
    Sounds like you're fighting an uphill battle, don't invest too much time on this one. A shot in the dark: run a $1,000 to $1,500 deductible plan with no office visit co-pays, but Rx co-pays if available. I don't know what plans exist with your carriers/state, but this is the type of design I typically use.

    See what type of savings can be created, then look at offering the employees a reimbursement with an HRA up to a certain level for deductible expenses (for example, $1,000 per employee per year). The employer retains any unused amounts. Sometimes the numbers work out great, sometimes they don't, but I would at least take a look.

    Like I said above, don't invest much time on this one. Also, make sure you have committment that if you can help, it's your business.
     
  7. ABC
    Offline

    ABC Guru

    Posts:
    4,090
    Likes Received:
    42
    I have gone up against many PEO's and won some of them. You have to sell service.
    When an employee has a claim problem they have almost zero customer service from the PEO. The other issue with the PEO is weak networks.

    Price can be tough. If the client is ok with shitty customer service and weak network its going to be hard to pick them up. Then you just have to wait until the owner has a problem with a claim.

    PEOs are operating under their own rules and i have had clients that have had to sue them to get large claims paid.
    I had a client that had a $42,000 open heart surgery unpaid for 2 years. He sued them and they paid it quickly before going to court.

    I am interested in learning more about these PEO's that are using brokers.

    I wonder what kind of reserves these companies have for paying claims.



     
    ABC, Nov 23, 2009
    #7
  8. stuy119
    Offline

    stuy119 Guru

    Posts:
    1,896
    Likes Received:
    3
    State:
    Illinois
    Call up a couple of PEO's and ask them to meet with you. Ask what type of commission they pay. Typically it's a percentage of the payroll take, but nothing off the health insurance premium. Good money, but it's better money to keep the health - unless you were losing them anyway.
     
    stuy119, Nov 23, 2009
    #8
  9. smccaw
    Offline

    smccaw New Member

    Posts:
    1
    Likes Received:
    0
    State:
    Alabama
    So, they are coming off a peo, not thrilled with the peo model and looking to go direct again? if so, I like Full Throttle's strategy for the benefits. then find a comp-u-pay rep that can handle the payroll piece who may also be able to handle the wc piece too. If you don't have those various connections i can provide some connections for you here in nor cal.
    Best - Smc
     
    smccaw, Nov 26, 2009
    #9
  10. ABC
    Offline

    ABC Guru

    Posts:
    4,090
    Likes Received:
    42
    I am actually getting ready to bid on a group that is on PEO that has about 11 employees.
    I had a conversation with the owner and he flat out said the cost of the HR services did not make sense with just 11 employees.
    I am wondering if this will become a trend with the HR outfits.
    If you have a company under 20 employees does it make sense to use a PEO?
     
    ABC, Nov 30, 2009
    #10
Loading...
Similar Threads
  1. ABC
    Replies:
    18
    Views:
    2,292
  2. scagnt83
    Replies:
    20
    Views:
    10,493
  3. padthaiforlunch
    Replies:
    17
    Views:
    2,101