New PEO

[Joseph H. Deacon III]

I have been approached by a colleague who has worked for a PEO for years and is now going to go into business for himself. He has asked me to handle the group health insurance and other benefits for the PEO.

Who has experience with this here and could anyone give me some pointers. I am well-versed with group health and understand how this is going to work (I think), but want to make sure that I know the ins and outs before committing to something like this. It seems to look and operate a lot like an association plan, and it seems like in order to work it has to remain pretty healthy. BCBS will write it, and Coventry might take a look at it. The thing is, the carrier will re-underwrite as these people come on, and is it a conflict of interest if I bring this up to a prospect and then learn that they are very unhealthy. Not sure how that would work out ethically if I were to recommend a regular, off the shelf group health product in lieu of the PEO plan.

Thoughts? Advice?

 

[ABC]

I sell aginst the PEO plans.

The biggest point that I use is that most PEO plans are renting weak networks so on a healthy group it is usually an easy sell.

The other selling point for me is that most PEO I have come across have very low levels of customer service.

Now they do seem to have better rates with groups that would be max loaded with a private carrier. They also seem to running plan designs that are low out of pocket maxes with co pays.

I thought you had to be captive to sell a PEO but if not that might be a good fit for your max loaded groups.
The other areas I have seen them really compete is group 50-75 lives.

 

[Joseph H. Deacon III]

I would be using either BCBS or Coventry/Carelink Health plans. In my state (WV), there aren't that many networks to begin with. There are 3 or 4 major ones, and that is about it. (BCBS, 4MOST, PHCS, and UHC/Onenet PPO).

A lot of groups in WV are max loaded since this is not a very healthy state anyway. I wish it were different, but that is the way it is here. I am just new to this PEO concept and am trying to learn as much as I can about it.

I'm going to custom design it with a dual option and make sure it is not too benefit rich which will increase utilization but make it a solid plan.

Who knows, it is all in the prelim stages right now anyway.

I really appreciate the advice, thanks.

 

[somarco]

Is this a new PEO? If so, be very careful. A lot of them get in trouble very quickly because they don't know what they are doing when it comes to risk management.

PEO's usually don't have their own network, or even their own plan. They private label something from a carrier.

At one time you could self fund the insurance for a PEO but that is almost impossible now.

The PEO really is an association, but with a twist. You have employees instead of members which gives a bit more control.

Still, you have the adverse selection that comes with association plans.

PEO plans have their pluses but they come with some xs baggage as well.

And no, you do not have to be captive to sell all PEO plans. Some use brokers.

 

[PEO Expert]

I can provide some insight as to what other PEO's are doing successfully in the benefits offering to their clients. Please feel free to e-mail me directly: [email protected]

Thank you.